ASX cannabis shares were nothing short of a mixed bag last month. Several names did well but a large body of shares missed the benchmark completely.
For some context, the S&P/ASX 200 Health Care index (ASX: XHJ) regained steam over the course of last month. It came off a 3-month low to post a solid return of almost 5%. With that in mind, it was pleasing for investors to see several ASX cannabis shares lead the index.
So, without further delay, here are 3 of the best performing ASX cannabis shares in October.
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Incannex Healthcare Ltd (ASX: IHL)
Shares in medicinal cannabis innovator Incannex climbed 34% in October, reaching a closing high of 47 cents at the end of the month. This was also a new 52-week high, with the share price coming off a low of 33 cents earlier in the month.
A suite of regulatory and company-specific tailwinds helped prop up the Incannex share price ahead of its peers.
For instance, it engaged drug manufacturer Procaps Laboratories S.A to develop its IHL-42X soft gel capsules. IHL-42X is Incannex's proprietary cannabinoid formula and that is used to treat obstructive sleep apnoea (OSA). Incannex has filed patent protection in several jurisdictions for the drug.
In other news, studies have confirmed success in Incannex's IHL-675A label. It has shown to be effective in reducing inflammatory-type symptoms in conditions like rheumatoid arthritis.
Incannex also filed for F-1 registration to list on the US NASDAQ exchange earlier in the year, which is akin to an initial public offering (IPO) in Australia.
Incannex shares have started the session poorly today, and are now trading 1% down at 52.5 cents apiece.
Creso Pharma Ltd (ASX: CPH)
After trading sideways for the majority of October, investors piled into Creso Pharma shares in the final days of the month after a suite of market updates.
The cannabis-focused biotech advised it had purchased Canadian life sciences entity ImpACTIVE for $217,000.
Creso intends to widen its territory in North America, seeking to penetrate those markets further with its product line.
Aside from this, Creso made a curious move in releasing a prospectus outlining the sale of bonus options to its shareholders.
Whilst the company stated this was in part a reward to shareholders for their support, it actually serves a deeper purpose. The options, if exercised in full, give Creso access to approximately $100 million in liquidity by earning 25 cents per option.
Not only that, the contracts are tradeable on any ASX exchange that permits derivatives trading. This gives investors the opportunity to participate in price discovery of these assets.
To cap off the month, Creso also reported its quarterly earnings, recognising a 92% year-on-year gain in revenue.
In early trading today, Creso Pharma shares are almost 4% higher at 14 cents each.
Althea Group Holdings Ltd (ASX: AGH)
Medicinal cannabis distributor Althea Group was also a net winner last month, with its share price rising 21%.
Despite no announcements from Althea early in the month, investors still bid up its share price from a low of 24 cents on 4 October.
Investors started buying in rapid succession, sending its share price north in almost vertical fashion over a 2-week period. The resulting 32% gain corresponded with the performance of the broader S&P/ASX 200 Health Care index.
Unfortunately for Althea shareholders, the steam was let out at express-pace after the company released its quarterly update.
Although it posted a record quarter with 116% year-on-year growth in customer receipts — up 57% on the prior quarter – investors were quick to exit their positions. This created a wave of selling pressure on Althea's share price. It fell sharply by about 10% in the final 2 weeks of October.
The Althea share price is flat today at 27 cents.
A quick rundown on medicinal cannabis
There is no special type of cannabis plant (also known as marijuana) that is medical. Medicinal cannabis is just regular old cannabis.
Cannabis has been used as medicine for thousands of years in many cultures. It is only relatively recently that the plant has gained traction as a mainstream treatment for various ailments.
Medicinal cannabis production is highly regulated in order to comply with Australian medical standards. Our standards are (correctly so) some of the tightest in the world.
The plant's primary active compounds are cannabinoids called delta-9 tetrahydrocannabinol (also known as THC), terpenes, and cannabidiol (CBD).
It is these three ingredients that contain the medicinal properties of the cannabis plant.
They work by binding to the body's own cannabinoid receptor sites – yes, we have our own internal cannabinoid system – to produce a range of therapeutic effects. These include pain relief, anti-nausea and appetite enhancement.
They can even stabilise uncontrolled body movements in neurological disorders like Parkinson's disease.
