Althea (ASX:AGH) share price on watch following 2 new agreements

The Althea Group Holdings (ASX: AGH) share price will be on watch today following the company's announcement it has signed 2 new agreements.

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The Althea Group Holdings Ltd (ASX: AGH) share price will be on watch today after the company announced the signing of two new agreements expected to uplift revenue. At the close of trading last week, the Althea share price was asking 44 cents.

So, let's take a look at what Althea does and what it announced.

What does Althea do?

Althea is an Australian licensed producer, supplier and exporter of pharmaceutical grade, medicinal cannabis. The company offers a range of products, education, and other services to support patients in undertaking medicinal cannabis treatment.

What were the agreements?

According to the release, Althea subsidiary, Peak, advised it has entered into a licencing agreement with Canadian-based, Earth Kisses Sky.

The contract will involve the manufacture of two topical products, with an order of 150,000 units split evenly between the two. Production is expected to commence immediately with all units expected to be purchased in the first year of the agreement.

In addition, Peak also signed a manufacturing and distribution services agreement with Canadian cannabis beverage company, Electric Brands Inc. The new deal involves two canned beverage SKU's with an initial order of 50,000 units.

Electric Brands Inc. was founded by executives from Canopy Growth Corp and Coca-Cola Co (NYSE: KO), Canada. The beverage company aims to develop global cannabis infused drinks for the Canadian cannabis market.

In total, Peak revealed it has projected revenue of up to CAD$4.65 million over the next 12 months. The uplift in revenue over original estimates comes as the company maintains a strong sales pipeline heading into 2021.

Furthermore, Peak's standard processing licence obtained from Health Canada in mid-September is also projected to support greater sales.

What did the CEO say?

Althea CEO, Mr Joshua Fegan, commented on the Peak update. He said:

Since Peak received its Standard Processing Licence from Health Canada a couple of months ago, we have been busy ramping up commercial operations at the facility, and are in the process of expediting the product launch dates for both new and existing customers.

Peak has received an influx of enquiries for its industry leading Cannabis 2.0 product development, manufacturing, and distribution services, and has already signed contracts representing forecasted revenue of up to CAD$4.65m over the next 12 months.

Peak remains uniquely positioned to cater for the big consumer brands seeking to enter the recreational cannabis market and I look forward to updating the market on further agreements shortly.

About the Althea share price

The Althea share price is higher since the beginning of the year, up 12.8%. However, from mid-September, after updating the market with its standard processing licence news, the Althea share price has fallen over 30%.

Motley Fool contributor Aaron Teboneras 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.

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