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Why the Cann Group share price rose 5% on Tuesday

We look at the news that potentially contributed to the stock’s gains on Tuesday, 5 January, 2021.

ASX-listed cannabis company Cann Group (ASX: CAN) saw its share price rise modestly on Tuesday, 5 January, after revealing details of a cornerstone investment in pharmaceuticals company iuvo Therapeutics.

CAN finished out Tuesday's session up 5.00% or $0.030 at $0.63 per share. At those price levels, the stock remains well off the highs it recorded last January, though significantly off the lows it made in November, 2020.

The strategic investment in focus

Looking at the key aspects of today's announcement, Cann revealed it had made a CAD$1 million cornerstone investment in iuvo Therapeutics Limited – in a deal that will see Cann granted exclusive supply rights to iuvo Therapeutics GmbV ‘iuvo Germany’ with the company’s medical cannabis extracts upto December 31, 2021.

To kick off that supply agreement, iuvo has placed an initial 19,000 unit order for Cann’s products – expected to ship within the next month.

As a result of the cornerstone investment, Cann will hold ~2% of ivuo’s issued capital.

Management commentary

Touting the importance and value of this cornerstone investment, Cann Group’s Chief Executive Officer, Peter Crock said:

'We believe this initial order represents the largest shipment of product produced in Australia for export markets and is a tangible sign of iuvo's commitment to servicing its growing customer base with safe quality GMP standard medical cannabis.'

By comparison, iuvo's Managing Director, Daniel Seidl said:

'This strategic investment will enable iuvo to expand its patient reach throughout Germany and Europe. Cann Group's extracts are manufactured from Australian GMP Cannabis flower, providing regulatory, investment and supply security in a market with superior pharmaceutical standards.'

Building on December’s news

Today’s supply agreement comes after Cann revealed it had shipped its first order to its UK distribution partner Astral Health (part of the LYPHE Group) in late December. The agreement with Astral Health is set to run for five years and will see Cann become 'the exclusive oil supplier to LYPHE within the Project Twenty21 Program'.

That program, for reference, is aimed at helping patients gain access to medical cannabis treatments. At the time of the December announcement, Cann noted that some 8,000 participants had already signed up to the Twenty21 program, while the aim is to have 20,000 signed up by the end of CY21.

Other ASX-listed cannabis stocks struggle

Finally, like Cann Group, the share prices of other ASX-listed cannabis stocks also proved volatile in 2020. Over the last 12-months, Ecofibre saw its share price drop 27%, Althea Group has fallen ~4%, while Zelira Therapeutics has seen its share price gain 50% in 2020.

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