This ASX cannabis share is sinking lower following its Q2 update

The AusCann Group Holdings Ltd (ASX:AC8) share price is sinking lower following the release of its second quarter update…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The AusCann Group Holdings Ltd (ASX: AC8) share price is sinking lower on Thursday following the release of its quarterly update.

At the time of writing the medicinal cannabis company's shares are down 4.5% to 32 cents. At one stage they were down as much as 7.5% to 31 cents.

What happened in the second quarter?

This morning AusCann provided investors with an overview of its activities for the three months ended December 31.

Although it is still not generating revenue, it may not be too long until this is the case.

During the quarter AusCann reached a major milestone with the successful development, manufacturing, and testing of its proprietary cannabinoid-based hard-shell capsules.

The company is now working to develop a commercially focused, short clinical evaluation.

AusCann's solid fill capsule formulation is a unique presentation for cannabinoid medicines, and the clinical evaluation goal is to provide key exposure information to inform dose selection, bioavailability, and safety.

Management is aiming to have the hard-shell capsules commercially available for physicians to prescribe in Australia through the Therapeutic Good Administration (TGA) special access scheme and authorised prescriber scheme during the first half of calendar year 2020.

R&D Facility.

The company was also busy completing the construction stage of its facility based in Perth during the second quarter.

The site construction was completed on time and on budget with $4.5 million spent to date. An additional capital spend will be deployed for R&D equipment within the original $6 million budget.

This site will provide AusCann with a state of the art R&D facility that it expects to assist in the development of an innovative cannabinoid-based medicines pipeline.

Cash outflows.

Net cash outflows for the quarter were $6.4 million. This was due mainly to product development facility construction costs of $3.4 million. Operational costs were ~$2.9 million, including R&D costs of ~$1 million.

Cash outflows of approximately $4.7 million are expected next quarter.

So, with a cash balance of ~$26 million, I estimate that AusCann has enough cash to fund its activities through to 2021 based on its current cash burn rate.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

The worst 3 ASX 200 stocks to buy and hold in October unmasked

You would have done well to avoid these three ASX 200 stocks in October.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why AFT, Amcor, Corporate Travel, and Macquarie shares are falling today

These shares are ending the week in the red. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why AGL, Imugene, Star, and Woolworths shares are dropping today

These shares are dropping on Thursday. Let's see why investors are selling them.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Fallers

Why Corporate Travel Management, JB Hi-Fi, Mineral Resources, and Syrah shares are rising

These shares are having a strong session. Why are investors buying their shares?

Read more »

A guys points his fingers down.
Share Fallers

Why Brainchip, Cettire, Star, and Woolworths shares are being sold off today

These shares are having a difficult time on hump day. But why?

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why Black Cat, BlueScope, Cettire, and Coronado shares are falling today

These shares are missing out on the good times on Tuesday. But why?

Read more »

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Share Fallers

Why Adriatic Metals, Metcash, Paladin Energy, and Westgold shares are tumbling today

These shares are starting the week in the red. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Down 36% in 3 weeks, why is the Mineral Resources share price getting hammered again on Friday?

ASX investors are bidding down Mineral Resources shares again on Friday.

Read more »