At the time of writing, shares of Impression Healthcare Ltd [ASX:IHL] are down by around 10%, to 1.9 cents per share. The share price hit a high of 3.1 cents at one point yesterday, up close to 23%.
It appears the market isn’t convinced on the story yet.
But that could change early next year.
But on a side note, want to know the ASX Resource Stocks you should be watching? read more about them here (for free).
What caused Impression Healthcare shares price fall
Yesterday, Impression Healthcare announced its second major pot-related distribution deal since September. The company executed an exclusive global license agreement with Resolution Chemicals Ltd (ResoChem). Impression negotiated the rights to produce and commercialise generic Dronabinol capsules in the US, Canada, Australia and New Zealand.
Dronabinol (pure delta-9 Tetrahydrocannabinol (THC)) is used to treat:
- loss of appetite in people with HIV/AIDS,
- nausea and vomiting caused by chemotherapy, and
- pain management and sleep apnoea.
Dronabinol was the original cannabinoid medicine permitted for patient use by the Drug Enforcement Administration in the United States. It goes under the trade name Marinol®, which is currently marketed by US$140 billion market cap AbbVie Inc [NYSE:ABBV]. AbbVie Inc no longer has exclusive patents for the product.
There is one catch right now: Impression Healthcare anticipates to distribute Dronabinol under the Special Access Scheme and the Authorised Prescriber Scheme in Australia. That license is expected to be granted in late January, however it may take a tad longer. The company is also working on the encapsulation formula to support either a synthetic or non-synthetic Dronabinol product relevant to the current laws of each country, which will take up to 12 weeks.
The market simply wasn’t convinced.
It wants results today ― not tomorrow.
Impression Healthcare share price leading into 2019
It’s unlikely that the share price will stay this cheaper for much longer.
If you didn’t know, Impression Healthcare submitted an application to obtain licences from the State Department of Health, Victoria and the Federal Office of Drug Control for the importation, storage, distribution and export of medicinal cannabis products in October. The company’s main product range includes Dronabinol (as per above) and biotech-pot products, which were negotiated exclusively with US$80 million market cap AXIM Biotechnologies [NYSEOTCQB:AXIM] in September:
Source: Impression Health
Impression Healthcare believes it should have its import-export license granted ― at the earliest ― by late January, 2019. I believe that would put a rocket under the share price. The market doesn’t believe the license will be granted for six to nine months. That provides a compelling deep value investment opportunity today.
The bottom line: If Impression Healthcare obtains its regulatory approval early next year, as expected, the share price could skyrocket to new highs. The company is building a cannabis-related distribution business similar to Bod Australia Ltd [ASX:BDA]. Bod has a market capitalisation of roughly $35 million today, compared to Impression’s of less than $10 million. If the regulatory license is granted early next year, there’s a good chance that gap could close quickly.
Resources Analyst, Markets & Money
PS: Interested in mining stocks? My free new investor report, ‘A Detailed Look Into Australia’s Top 10 Mining Stocks’, does exactly what it says in the name. I look at 10 companies that could make you huge money in 2019, and beyond. To download that report free, go here.