The share price of Australian medical cannabis producer Althea Group Holdings Ltd [ASX:AGH] has surged over the month of June. The company finished trade on Tuesday at its all-time peak of $1.08 per share.
From the beginning of the year, AGH shares have skyrocketed 310.20%, with June alone seeing a 43.50% increase. At time of writing, the stock price was down 4.95% to trade a $0.96 per share.
What’s caused the Althea share price rise?
June has been a particularly busy month for the Aussie cannabis producer. At the start of the month, AGH announced it had been granted a licence allowing it to cultivate and process low-THC cannabis.
The licence also coincided with an agreement between AGH and Tissue Culture Australia, to develop proprietary tissue culture protocols for cannabis plants. Should laboratory tests succeed, it’s a move which will strengthen AGH’s intellectual property holdings.
On 14 June, AGH announced it had hit a 1,000 patient milestone. According to the announcement, within Australia, 1,000 patients have now been prescribed Althea medicinal cannabis products, representing a 53% increase on the 651 patients reported on 29 April 2019.
Since May 2018, AGH has grown the business such that 185 health care professionals have prescribed AGH’s products, averaging to more than 11 new patients per day.
Just last week, AGH then received its first international prescription for medial cannabis with a patient in the UK being prescribed AGH’s products. Further to this milestone, AGH received a planning permit by Frankston City Council in Victoria for Althea’s Australian cultivation and manufacturing facility.
AGH director of cultivation Daniel Mansfield said the goal was to begin production by 2020.
To round out the month of June, the cannabis producer announced on Tuesday it had signed an agreement with the Drug Science Medical Cannabis Working Group in the UK for the first national pilot for medical cannabis.
The pilot aims to enrol 20,000 patients before the end of 2021, with AGH being selected from a limited number of medicinal cannabis companies to supply its range of products to the pilot.
Where does the share price go from here?
It certainly does seem AGH is in a solid position right now, with an ever expanding base of patients, both at home and abroad. The company is also seeking emerging market opportunities in France, South Korea and the US.
AGH has taken a determined approach to the sale of its products, designing and developing a proprietary web-based platform which greatly reduces application times for medical professionals looking to prescribe medicinal cannabis.
In such a regulated industry, this will likely be an attractive point-of-difference for medical professionals.
While the share price is currently down 5% this morning, likely due to profit taking caused by the strong uptrend, interest in the AGH and its products is likely to continue. The combination of intellectual property and access to patients in emerging markets like Australia and UK could make it appealing to a larger cannabis company.
Although, I am a bit sceptical of the current price of AGH. For a company with a market cap of over $133 million to only produce revenue of $300,000, this could be a sign of overvaluing — and the reason we’re seeing the sell off today.
For Money Morning
PS: Click here to read some of our latest coverage and analysis of Althea.