Comment on STENOCARE Launching Next Generation Medical Cannabis Oil Product in Australia

STENOCARE announced on May 23^rd that the company’s premium product, the Astrum oil, is ready for launch on the Australian market. The product is expected to have several benefits compared to the medical cannabis oil available today, including a higher, more uniform, and faster uptake in the blood. The first product, Astrum 10-10 oil Stenocare, with 10 mg/ml THC and 10 mg/ml CBD, are expected to be available for patients in Australia from the summer of 2024, six months ahead of schedule.

The Benefits with the new Astrum Oil

Today, doctors encounter challenges when prescribing medical cannabis to patients due to the body’s metabolism, which significantly reduces the uptake of cannabinoids to approximately 15%. This results in only a variable and often minimal portion of the cannabinoids being actively delivered to the body with therapeutic effect. Additionally, the absorption by the body varies from person to person and depending on whether the medication is taken before or after food consumption. This variability leads to unpredictable effects and complicates the doctors’ ability to prescribe the correct dosage.

STENOCARE’s new Astrum oil addresses all these problems as it is based on a new innovative oil technology. In H2-22, STENOCARE released a study in dogs, showing that the Astrum oil improves the uptake in the blood with a factor of 2.6 compared to a reference MCT-oil product in the market. Moreover, the Astrum oil delivers a uniform uptake in the blood across individuals and regardless of food consumption. Lastly, the Astrum oil improves the time from dosing to full effect from 2-4 hours to just 1 hour, an important step to help patients manage their symptoms.

Analyst Group’s View of the Launch of the Astrum Oil

The launch of the Astrum oil comes earlier than expected, as we had anticipated a launch at the end of 2024. With this launch, we see STENOCARE as a first mover in next generation medical cannabis oil products, why we see positively on the earlier than expected launch, to gain an advantage against potential competitors. STENOCARE are dependent on doctors prescribing the company’s products and considering the advantages of the Astrum oil, we expect doctors to appreciate the new product. The Astrum oil is expected to be a more predictable medical cannabis product, helping doctors to prescribe the correct dosage.

Nevertheless, doctors need to be educated about a new product, which STENOCARE will now start work on with existing local partners. For instance, STENOCARE entered a new partnership agreement with Quest Biotech Pharma (QBP”) in December 2023 to reach more patients and doctors. QBP has a pharmaceutical approach to medical cannabis education and offers free and balanced educational resources on medical cannabis to patients, nurses, doctors, and pharmacists. For instance, QBP partners with a holistic tele healthcare clinic – TeleDocs Clinic – serving patients with convenient access to medical care services nationwide. Hence, we expect STENOCARE to be able to use these channels to spread the benefits of the Astrum oil in Australia.

In summary, Analyst Group views positively on STENOCARE’s earlier than expected launch of the Astrum oil. We expect the product to be an important sales driver going forward, initially in Australia, but with launches in additional countries expected in the future, given that the company obtains approval by authorities. We do not expect a significant financial impact during 2024, but, as mentioned earlier, considers the Astrum oil as an important sales driver in the coming years through the advantages the product has compared to traditional medical oil products.

How Analyst Group sees STENOCARE as an investment

With a new THC/CBD medical cannabis oil approved, which is ready for sales under the Danish pilot program, STENOCARE A/S (“STENOCARE” or the “Company”) has regained the position as the only provider of all three essential oil products under the program; a THC oil, CBD oil, and the new THC/CBD oil. The last time STENOCARE had all three products approved in Denmark back in 2018/2019, the Company reported net sales of DKK 4.3m in Q1-19 with a positive net result. STENOCARE are now back in the same situation in Denmark, and with products approved in five additional markets. With estimated net sales of DKK 66.6m by 2026, and with an applied P/S multiple of 4.5x, a potential present value per share of DKK 8.8 (8.8) is derived in a Base scenario.