Impression Healthcare Share Price Set for Bigger Gains

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.

I’ll explain…

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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:

Impression Health Share price


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.

Regards,

Jason Stevenson,
Resources Analyst, Markets & Money

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Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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