Health: Althea highlights local growth potential as major shareholder sells up

Medicinal cannabis stock Althea (ASX:AGH) had a mixed bag of news for investors in its market update this morning.

The company said patient numbers for its prescription medicinal cannabis products in Australia are on track to reach 4,000 by the end of the year.

Concurrently, it announced that a major shareholder is selling up; Aphria Inc will sell 36.697 million non-escrowed shares in the company at 40 cents per share in a block trade — equivalent to 15.7 per cent of Althea’s issued stock.

Aphria will still maintain a 12.25 per cent shareholding in the company and stay involved as a commercial partner.

But news of the block trade weighed on Althea shares this morning, as they dropped back towards the 40-cent sale price:

Battle for momentum

2019 has proved to be topsy-turvy year for Althea shareholders, as the stock began the year at around 20 cents and climbed all the way to $1.20 by June.

But shares have struggled for traction since the company raised another $30m — at a price point of $1 — in July to fund the acquisition of Peak Processing Solutions, a Canada-based cannabis extraction company.

In today’s update, Althea said Peak remains on track to become fully operational in the first quarter of next year.

CEO Josh Fegan also highlighted some regulatory developments in the local market, pointing to news that Queensland has followed New South Wales in removing its state-based application process for medicinal cannabis products.

Patients in those jurisdictions now only need approval in accordance with federal guidelines administered by the Therapeutic Goods Administration. Fegan said he expected other states, including Victoria, to soon follow suit.

“This will certainly lead to wider acceptance of medicinal cannabis treatment within the medical community and we believe will significantly increase Althea’s patient base,” he said.

In other ASX health news today

Medical tech company HeraMED Limited (ASX:HMD) said it’s making progress in distribution for its SaaS-based platform into the Indian market. The company makes pregnancy-monitoring software to help customers make better assessments of pre-natal health. The company announced it has received a US$45,000 purchase order for HeraBEAT units by Consultus India. The two parties have also signed an MoU to extend the partnership. Shares in HMD were up six per cent at 17.5 cents.

And shares in Imagion Biosystems Limited (ASX: IBX) fell sharply after the company announced unexpected cost increases in the manufacturing process for its proprietary nanoparticle formulation for diagnostic imaging technology. The company said it will need to defer the project until additional capital has been raised.