Medicinal cannabinoid company Incannex Healthcare Ltd [ASX:IHL] is one of the leading stocks of the ASX’s recent cannabis resurgence.
At time of writing the IHL share price is up 12.82%, or 2.5 cents, to trade at 22 cents per share, on news that the company is seeking to dual list on an American exchange.
Source: Trading View
Despite a rise in healthcare stocks during the height of the pandemic last year, cannabis stocks were either dumped or ignored due to investors’ small appetite for risk.
This year, however, a rally reminiscent of 2018 could be on the cards as cannabis stocks globally began to rally in December.
Incannex seeks global exposure
IHL announced today that it is undergoing preliminary efforts in order to dual list its securities on a US main market, such as the NYSE or Nasdaq.
IHL has entered into a binding consulting agreement with EAS Advisors to facilitate introductions to US banks and institutions with the aim of dual listing.
Essentially this preliminary work entails introductions to equity research providers in order to secure analyst coverage.
The goal of which is to generate global investor awareness with potential strategic investors to help secure better funding.
And to assist with financial modelling, presentation preparation, and external data room maintenance.
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CEO and Managing Director Joel Latham commented on the company’s decision:
‘We have made this decision because of deep investor interest and corporate activity in both cannabinoid-based pharmaceuticals and psychedelic therapeutic endeavours in North America. We’re delighted to be working with the team at EAS, which has an excellent track record of growing international awareness for ASX companies.’
Why the IHL share price action?
If you’re wondering why the share price would react to IHL merely announcing they have hired someone to help them make introductions, think of it this way:
Many US states have legalised cannabis, and the country is well on its way to decriminalising the drug.
Meaning the US industry has had far more time to mature and attract investors compared to Australia.
Which means there is more money for funding.
And more opportunities for growth.
Now, dual listing can be an expensive operation and can demand significant ongoing listing expenses.
However, I suspect part of the share price action today is a subtle nod to the outlook of IHL’s shares.
The cannabis company said as part of the term of its contract with EAS it would release two tranches of 10 million options exercisable at 20 and 25 cents per security.
Which could be a nice little vote of self-confidence.
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For Money Morning