Medical cannabis is being touted as the miracle cure for everything from acne to cancer. To better understand the merits of the drug, we need to understand what medical cannabis is and how it is being used as a therapeutic product.

Similar to commonly prescribed drugs such as codeine and morphine, which are derived from opioids from the opium poppy plant, medical cannabis therapies are derived from the active pharmaceutical ingredients (APIs) in the cannabis plant itself.

There are more than 400 compounds in the cannabis plant known as cannabinoids that form the APIs. The most common cannabinoids are cannabidiol (CBD) and tetrahydrocannabinol (THC).

Opioids are a regulated and frequently prescribed narcotic for pain relief that have negative side effects and are highly addictive. It has been estimated that more than 100 people in the United States die every day from opioid overdoses.

Medical cannabis has been hyped as a viable alternative to opioids in the reduction of chronic pain, and different formulas are being tried and tested. It is likely to be most widely used for the treatment of pain, be it as part of palliative care, or as pain relief in inflammatory diseases.

ASX-listed AusCann (ASX:AC8) have teamed with Tasmanian opioid producer, Tasmanian Alkaloids, to produce an alternative medical cannabis product for chronic pain.

In addition to chronic pain, medical cannabis is also being used in the treatment of epilepsy, and there is plenty of anecdotal evidence to show that it is successful at suppressing and controlling seizures.

ASX-listed biopharma, MGC Pharmaceuticals (ASX:MXC), is seeking to treat drug-resistant epilepsy with its Investigational Medical Product (IMP) that is approved by the Therapeutic Goods Agency (TGA) for prescription under the Authorised Prescriber Scheme in Australia. As an IMP, the drug is still being tested or used as a reference in a clinical trial.

While there are a wide range of anti-epileptic medications available in Australia, MGC has chosen a target market that has no alternative: drug-resistant epilepsy, which accounts for 30 percent of all epilepsy cases.

MGC’s first shipment of its IMP – CannEpilTM – arrived in Australia, from its Slovenian GMP (good manufacturing practice) manufacturing facility, in December 2018.

Cannabis also has a place in the health and beauty sector

 

Interestingly, cannabis products are also being used in the treatment of skin conditions, giving it a place in the health and beauty sector, which was estimated to be worth $6.5 billion in Australia alone in 2018.

MGCs also has a range of cannabidiol beauty products that have been proven to be effective in the treatment of acne and psoriasis.

MGC has sold its dermatological division (MGC Derma) to Canadian-based CannaGlobal. Its derma products are distributed throughout Europe, on platforms including Cult Beauty.

As part of the sale of the division, MGC now holds a 10 percent equity stake in CannaGlobal, giving it exposure to the future success of its derma business and removing any future cash burden that may be required.

CannaGlobal will continue to enhance the MGC Derma offering by expanding the range, and is also pursuing other strategic investments within the cannabis industry.

CannaGlobal existing investments include Cannasmoke, a leading international producer of branded hemp cigarettes, and Cannaconnect, a cannabis lifestyle content platform. It is also pursuing commercial opportunities in traditional consumer categories including chewing gum, water, chocolate and alcohol.

Recreational market set to take off

 

Beyond the uses of cannabis in medical treatments, the recreational market in the United States and Canada is taking off, with Canada passing a bill to legalise the use of recreational cannabis in October 2018.

Whilst recreational cannabis is likely a long way off in Australia, the medicinal market for medical cannabis products is similar to that of Canada’s when it first legalised medical cannabis back in 2001. Its market for cannabis products is expected to total CA$6.5 billion by 2020, indicating that Australia has significant growth ahead.

The main barrier constricting the rapid growth of medical cannabis in Australia is red tape and research. This is why companies such as MGC and Zelda Therapeutics (ASX:ZLD) are investing in research and development.

As doctors and patients begin to better understand the drug’s applications and benefits, the regulators will eventually follow suit, making it simpler for patients to gain access and eventually creating a thriving local market.

 

Star Investing has a commercial partnership with some companies mentioned in this article. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.