Creso up 70% in less than a week

By Trevor Hoey. Published at Oct 24, 2016, in ASX Biotechs

Shares in Creso Pharma (ASX:CPH) have continued to be well supported since listing on the ASX last week, and have traded as high as 34.5 cents on Monday morning, up circa 17% on Friday’s closing price of 29.5 cents.

However, the real indicator of how well the company has been received can be gauged by the premium to its IPO price of 20 cents. This morning’s high represents an increase of more than 70% in less than a week since listing.

Next Investor highlighted the merits of the stock on the day it listed, suggesting the company’s strong management team would provide the necessary direction and strategic manoeuvrability to take advantage of its leverage to the burgeoning medical cannabis industry through the development of cannabis and hemp derived therapeutic products targeted at a range of end markets including veterinary related applications.

However, it should be noted that Cresp Pharma is an early stage biotech company so anything can happen. It is highly recommended so seek professional financial advice if considering this stock for your portfolio.

While the company released an investor presentation on Monday morning, for the best part it reaffirmed news that was already in the market. However, because CPH is a microcap stock that arguably flew under the radar pre-IPO, investors are still getting to know it and there is now a rush to get set before its share price climbs further.

Investors considering this stock should note that historical trading patterns may not be replicated and investment decisions should not be based on the group’s share price performance to date. Given the speculative nature of this stock, independent professional financial advice should be sought.

Leadership, IP and diversification key points of difference

The following highlights the company’s corporate structure, as well as providing a guide as to the end markets that it will be targeting.

Management highlighted several key points of difference between CPH and a number of other newcomers in the industry, both in Australia and overseas. The company believes it fills the void in the current market where there is a growing need for trusted products that meet the highest global pharmaceutical standards.

Indeed, CPH’s high profile management team provides credibility in itself and would fit just as comfortably on the board of CSL as CPH.

Another important issue to take into account with CPH is the fact that it is commercially ready with near-term revenue from its first product. There is also reasonably strong visibility with three other products in the pipeline targeting human and animal nutraceutical markets.

CPH also has access to various drug delivery technologies through multiple licensing deals.

Distribution agreement may be on the horizon

While all these factors suggest the company is a compelling investment proposition, there could be a significant near-term development and share price catalyst should the company be successful in securing a distribution agreement and/or binding letters of intent with European and North American partners to progress the development and commercialisation of its products across both the human and animal health care markets.

Supporting the company’s progress is an industry that is forecast to grow exponentially in coming years.

The following demonstrates that investors are no longer shy of the sector with significant inroads made in recent years by the medical profession in terms of endorsing the merits and dispensing with the myths of cannabis applications.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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