The Creso Pharma Ltd [ASX:CPH] share price is trading flat despite updates on Halucenex and Californian legalisation of psychedelics.
Despite being down 8% over the last month, CPH shares are still up 15% year-to-date and up 150% over the last 12 months.
While the Creso share price was up as much as 2.3% in early trade, the CPH share price is down 1% at the time of writing.
Halucenex signs LOI with Sixth Wave Innovations
Creso today announced that its target acquisition company Halucenex Life Sciences signed a non-binding letter of intent (LOI) with ‘leading’ nanotechnology company Sixth Wave.
Creso explained that Sixth Wave focuses on molecularly imprinted polymers (MIPs) for imprinting, capturing, and releasing substances.
Sixth Wave’s technology can extract target materials as ‘small as parts-per-billion’.
Why is this important for Halucenex and Creso?
Well, Sixth Wave’s MIP technology extracts materials more efficiently and with higher yields.
CPH expects Sixth Wave’s technology to replace traditional extraction processes and potentially save costs while improving yields.
The idea is for Halucenex to use Sixth Wave’s nanotechnology to purify botanical psychedelics and simplify its processes.
Creso reported that the nanotechnology may provide a ‘sustainable method for utilising real plant extracts opposed to synthetic molecules which may not provide the same access and flexibility.’
Under the LOI, Halucenex will work with the nanotech company to develop a definitive agreement by 31 May 2021.
Creso’s Non-Executive Chairman Adam Blumenthal commented that the LOI with Sixth Wave is a ‘very pleasing development for Halucenex and has the potential to provide considerable upside to near-term clinical trial initiatives and cultivation activities.’
Creso welcomes California push to decriminalise psychedelics
Apart from the Halucenex update, CPH also stated that it welcomes the recent motion to legalise psychedelic substances in California.
Creso reported that on 13 April 2021, California’s Senate Public Safety Committee approved the Senate Bill 519.
The bill would make a wide range of psychedelic substances legal to use and possess for people over 21 years of age.
Creso revealed that should the bill pass, it will work with its Director of US Business Development to ‘progress opportunities in California’.
CPH shares largely treaded water upon the announcement.
What are some possible explanations?
For one, investors may have thought the letter of intent was difficult to extrapolate from as the agreement was non-binding.
Halucenex and Sixth Wave still need to define ‘system requirements, identify target molecules to be purified, and develop psilocybin separation.’
Investors may be waiting to see if Halucenex can reach a definitive agreement by 31 May 2021.
If that agreement gets struck, investors will likely get further clarity on what the partnership between Halucenex and Sixth Wave will look like.
Importantly, investors may then assess how value-additive that partnership can be.
Finally, investors may have wanted more detail on exactly how Creso plans to progress its opportunities in California pending the potential legalisation of psychedelics there.
If you would like further insights into the evolving regulatory picture regarding cannabis, as well as discussion of three different ASX-listed cannabis companies, then be sure to check out this free report.
For Money Morning