• Psychedelic drugs remain the talk of an otherwise depressed market today
  • Newmont bid for Newcrest helps drive Materials sector higher
  • ASX benchmark limps home to be down 0.25% at the end of a gloomy Monday

 

It’s not exactly been a stellar day for the ASX, kicking off the week with a choppy morning’s trade that saw the benchmark wobble its way to a 0.25% dip at the closing bell.

That’s despite a significant amount of interest in the Materials sector, led by a takeover bid for Newcrest (ASX:NCM) from Newmont, which is currently the world’s most valuable gold mining company, clearly looking to grow even larger and add Newcrest’s attractive longevity to its current stable of assets.

That boost saw the Materials sector performing well today, up around 0.7% despite the gloomy Monday mood set by Wall Street’s slump on Friday. Leading the ladder, however, was the Energy sector, which added around 0.99% over the course of the session.

The news that everyone’s gossiping about today, though, is the fallout from the TGA’s decision to down-schedule two psychedelics – MDMA and psylocibin – for use in the treatment of PTSD and therapy-resistant depression.

We’ll get into the Small Caps that have done well in the wake of that decision today a little later, but it’s been the source of a lot of market interest throughout the day.

 

NOT THE ASX

In the US, markets took a downward turn despite previously buoyant sentiment in the wake of US Fed chief Jerome Powell’s post-interest rate hike comments.

Wall Street headed south when US job numbers shocked everyone by being much stronger than expected, which investors took to be a sign that despite the Fed’s more dovish outlook, interest rates will once again continue to rise.

As Earlybird Eddy Sunarto reports, despite the seemingly endless announcements of Big Tech mass layoffs, Americans haven’t been this employed in more than half a century. The unemployment rate fell to 3.4%, the lowest since 1969.

“Everyone was expecting the economy to start to feel the impact of those earlier rate increases, but right now that doesn’t seem to be the case,” said OANDA analyst, Edward Moya.

Stocks began to dip after the data were released, with the S&P 500 eventually closing lower by 1% and tech-heavy Nasdaq by 1.6%.

For the S&P 500, it was its fourth weekly gain in five weeks as investors recalibrated their positions for a peak inflation world.

Meanwhile in Asia, Chinese markets have reacted badly to the shooting down of what was either “an unmanned surveillance craft” or “an off-course weather balloon”, depending on who you ask.

Whichever way you see it, the US was not even remotely happy about the balloon, and sent an F-22 jet into the skies to pop it with a super-expensive rocket, proving once and for all that no balloon is safe from the might of the US Air Force.

Obviously feeling deflated by such a shameful loss of face – and the balloon – Shanghai has fallen 1.0% and the Hang Seng has slumped 2.3% for the session so far.

 

ASX SMALL CAP LEADERS

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In Small Caps news, The day’s biggest climber Emyria (ASX:EMD) says it is well-placed to capitalise on the aforementioned announcement by the TGA, having identified “numerous suppliers of GMP-MDMA  which is ‘patient-ready’, and developed a comprehensive Phase 2B clinical trial protocol for MDMA-assisted therapy.”

The company has secured the rights to a University of Western Australia (UWA)’s library of more than 100 novel MDMA analogues, and have together launched an MDMA-inspired drug discovery program.

Investors are most definitely feeling the love, and Emyria is up 57.9% for the day.

Little Green Pharma (ASX:LGP) is also swinging higher on the down-scheduling news, announcing that it is also well-placed to make a serious play in that particular pharmaceutical space through its psychedelics focused subsidiary Reset Mind Sciences.

“The announcement by the TGA is truly ground-breaking in the field of psychedelics and I welcome their decision,” Reset Mind Sciences CEO Shaun Duffy said.

“There is a significant body of research emerging in Australia and globally for the use of psychedelics to treat mental health conditions and this decision allows the use of these drugs for the mental health conditions that have demonstrated the most potential in the research.”

LGP started well to be up nearly 25% by lunchtime, and continued to do well into the afternoon, ending the day about 48% higher.

Another health stock on the rise is Imagion Biosystems (ASX: IBX), up around 37.5% on  news from an independent blinded review by a panel of expert breast cancer radiologists which has corroborated previously reported positive findings for the company’s MagSense diagnostic tech.

The company says that the radiologists confirmed that the “MagSense HER2 imaging agent produces a change in image contrast and that the contrast in nodes highly suspicious for tumour is distinctly different from the MR image contrast seen in non-involved nodes”.

“The outcome of the independent review is welcome news, indeed,” Imagion Biosystems CEO Bob Proulx said.

“We now have a clear indication that our MagSense magnetic nanoparticle technology could work with the existing medical imaging infrastructure to provide the clinical benefit to breast cancer patients we have been aiming for.

“This takes a lot of the technical risk out of the future and will significantly facilitate market entry by eliminating the need to design, make, sell, and support new machinery.”

And lastly, a winner from last week is once again making waves, with Lode Resources (ASX:LDR) booming again to the tune of 31.3% on news that it has received firm commitments for $4,440,000 in a share placement to existing and new institutional and sophisticated investors.

That climb follows a massive jump in the company’s price last week, after the company drilled into some massive silver intercepts at the Webbs Consol Silver project’s Tangoa West Lode.

 

ASX SMALL CAP LAGGARDS

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LAST ORDERS

There’s a smattering of news that we’ve not covered elsewhere today, so let’s get into it – starting with an announcement from GDI Property Group (ASX:GDI) that it has pushed “go” on a deal to acquire two more properties as part of its broader strategy of investing into and managing workforce accommodation properties.

GDI says it has entered into a call option to acquire the South Hedland Motel (SHM) and the accompanying Lodge Motel (Lodge), for a combined purchased price of $27.0 million, the two properties being pretty-much right next door to each other, about a four minute walk between them

GDI says SHM comprises approximately 107 rooms, and the Lodge 135 rooms, with the ability to add up to another 40 rooms at the SHM site – and between them have performed quite well over the past 15 years.

Both motels have generated an average EBITDA of approximately $6.7 million, with FY22 reported EBITDA of $9.7 million and FY23 EBITDA tracking to be at least 25% higher again.

Meanwhile, Red Sky Energy (ASX:ROG) has announced that the activity by Santos Limited (ASX:STO) at ROG’s Yarrow 3 Well has been completed with an agreement reached to proceed with the construction of a pipeline of approximately 18km to tie into the grid to the south of the Yarrow gas field.

The company says the construction activity will bring Yarrow 3 flowline on earlier (2H CY23) with ability to leverage the current gas market prices and allow Red Sky to receive production revenue from first gas in Q3 2023, subject to reviews and a metering agreement between the parties.

And lastly Nitro Software (ASX:NTO) has reported that the takeover offer from Alludo of $2.15 a share is as high as the bidder is willing to go, beating out the rival Potentia takeover offer of $2.00 a share.

Alludo says that it will declare the offer unconditional it it has a relevant interest in at least 50.1% of the Nitro Shares on a fully diluted basis before 7.00pm on Friday, 10 February 2023, and no outstanding Condition of the Alludo Takeover Offer has been breached.

The Nitro board has already accepted the offer from Alludo, and unanimously recommends that all Nitro Shareholders promptly accept the Alludo offer, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Alludo Takeover Offer is fair and reasonable.

 

TRADING HALTS

Fiji Kava (ASX:FIJ) – Halt requested pending an announcement by Fiji Kava in relation to an update on the status of the acquisition of Leilo Inc.

Revasum (ASX:RVS) – Halt requested while Revasum sorts out its finances, after announcing it’s been in breach of its liquidity covenant with SQN Venture Partners.

Tennant Minerals (ASX:TMS) – Halt requested pending the release of significant drilling results.

AIC Mines (ASX:A1M) – Halt requested in connection with the launch of an institutional placement.

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