Auscann Group Holdings Ltd

AC8 Details

Favorable regulatory developments: Recently, the Australian government has announced changes to existing medical practitioner’s norms by increasing the ability of Australian medical practitioners to prescribe cannabinoid medicines to critically ill patients. The Therapeutic Goods Administration (TGA) currently has two access pathways in which Australian medical practitioners may prescribe unregistered cannabinoid medicines, the Authorised Prescriber Scheme (APS) and the Special Access Scheme (SAS) Category B. Both of these pathways require the medicinal practitioner to apply for and wait for approval from the TGA prior to being able to prescribe. SAS Category A does not require prior approval but is a process where the medical practitioner notifies the TGA they have prescribed the medicines.Prior to the changes, any unregistered therapeutic goods can potentially be supplied via the SAS Category A process, except for prohibited substances in schedule 9 of the poisons Standard; and medicinal cannabis products.

The industry was cheered as the terminally ill patients will now be able to access cannabinoid medicines through the TGA’s Special Access Scheme Category A. Category A patients are defined as 'persons who are seriously ill with a condition from which death is reasonably likely to occur within a matter of months, or from which premature death is reasonably likely to occur in the absence of early treatment'. The medical practitioner completes the relevant category A form and sends it to the supplier of the product and a copy to the TGA. This provides the supplier, such as AusCann, with the legal authority to supply the product.

Recommendation: The stock has declined over 55% in the last three months, while it was up 72.7% on year to date basis as on 28 June 2017. We believe that the recent regulatory developments in the industry for medicinal cannabis and AusCann’s partnerships with global players will act as a catalyst for future growth. Hence, we reiterate a “Buy” recommendation on the stock at the current price of $ 0.40
 

AC8 Daily chart; (Source: Thomson Reuters)

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