Creso up 50% in a week with further catalysts imminent

By Trevor Hoey. Published at Dec 2, 2020, in Small Caps

Shares in Creso Pharma Limited (ASX: CPH; FRA: 1X8) have been on a tear in the last week as the company has unveiled a number of promising developments that will materially impact the group’s earnings.

The most recent of these occurred today as Creso Pharma informed the market that it had received three new purchase orders (POs) totalling CHF277,000 (Swiss Francs - A$414,000) for its anibidiol® line of animal health products.

The new orders take total purchase orders generated through Creso Pharma’s animal health segment to approximately A$975,000 (CHF634,000) for 2020, outlining the strong demand for the company’s industry-leading products.

Revenues in the first half of 2020 were CHF354,404 (A$529,687).

Current orders are expected to be shipped to commercial partners in Europe in the coming weeks, and partners will then market the products more broadly to consumers.

These orders are a significant achievement for Creso Pharma and highlight management’s ability to navigate stringent regulatory requirements for marketing hemp products across Europe, as well as its ability to progress growth initiatives in difficult market conditions.

Demand for the products remains high and these additional POs serve as further confirmation of the success of the anibidiol® product line in the rapidly growing European animal health market.

The product uptake since 2017 continues, totalling 4 million anibidiol® doses in purchase orders.

Importantly, management said that product portfolio expansion initiatives to grow its animal health sector footprint are underway.

European Union shaping up as a lucrative market

Creso is continuing to explore plans to expand its animal health portfolio with additional innovative products such as various hemp-flour and hemp seed oil products.

With growing demand for its existing products, management is also progressing strategies to increase its footprint in the sector.

In light of the recent regulatory changes, Creso Pharma sees the European Union and global markets expanding rapidly and is extremely well-positioned to benefit from this.

On this note, it is worth bearing in mind a recent development conveyed to the market by Creso Pharma on Monday.

On 19 November 2020, the Court of Justice of the European Union (CJEU) ruled that member states must not prohibit the marketing of lawfully produced CBD.

Further, the CJEU ruled that CBD is not considered a narcotic, and as a result, CBD can be freely sold in the European Union (EU).

This decision has the potential to provide significant benefits to Creso Pharma, particularly given the company already has commercial agreements in place in the region.

Further catalysts on the horizon

Discussing the group’s animal health business and the prospects for further expansion, Creso Pharma commercial director Jorge Wernli said, “These purchase orders are a major achievement for the company during this challenging regulatory situation and COVID time.

‘’They further highlight the demand we are witnessing for our innovative products across Europe and vindicate the company’s strategy of investing in its animal health business.

“We expect the animal health segment to continue growing, with additional purchase orders expected in the coming months.

‘’Management is also exploring a number of ways to further unlock the market, and we believe we are well-placed to progress a number of initiatives to grow our footprint in this space.”

Taking into account these prospects, as well as the upcoming regulatory changes in Australia which should see TGA approval for CBD products to be distributed over the counter (OTC) and it is easy to identify a number of near-term share price catalysts that could sustain Creso Pharma’s recent share price momentum.

Where to invest $1,000 right now

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.

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