Comment on STENOCARE’s Expansion into Canada

STENOCARE announced on June 17^th that the company is planning an expansion into Canada together with North America industry experts, which means that STENOCARE will bring the company’s flagship suite of products to the Canadian market, which is a vast market with an annual revenue of approximately CAD 5bn. STENOCARE are currently exploring different models and sales channels to enter the market with the aim is to sign a commercial agreement in H2-24.

Canada is seen as a global leader in terms of cannabis legalization with both medical and recreational use allowed in the country since 2018, other countries has viewed Canada as a reference for their own path toward the legalization of cannabis. There are numerous industry players in the country, and the competition is considered fierce, which is why few European players have expanded into the country, which STENOCARE now intends to do. To navigate the challenges of entering the market, STENOCARE has partnered with some of Canada’s leading medical cannabis innovators, who previously has led and delivered numerous industry-first innovations in the Canadian medical cannabis segment. Furthermore, to manage the intense competition STENOCARE intends to enter the Canadian market with the company’s premium product, Astrum, which has several benefits compared to traditional medical cannabis oil products. The Canadian medical market has seen very little investment focused on patient and consumer-facing innovation which poses an opportunity for STENOCARE to find the company’s own niche on the market.

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%, which is only one variable, why often only a minimal portion of the cannabinoids are 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 Expansion Plans

With the launch of the Astrum oil, we see STENOCARE as a first mover in next generation medical cannabis oil products. Through Astrum, STENOCARE can position the company’s products within a distinct niche, even in the most competitive markets such as the Canadian, because of the unique benefits with the products patented oil technology. This enables STENOCARE to become one of the few European companies capable of capitalizing on one of the largest medical cannabis markets globally. Moreover, it inspires confidence that STENOCARE has partnered with some of Canada’s leading medical cannabis innovators, who have previous experience in delivering many industry-first innovations in the Canadian medical cannabis segment.

However, STENOCARE is still exploring various models and sales channels for the expansion, which means the expansion is still in the planning stage. The goal is to sign a commercial agreement during H2-24. Given the long lead times characteristic of the medical cannabis market, the expansion to Canada is not expected to have significant financial effects in 2024 but rather represents a long-term value driver.

In summary, Analyst Group views are positive in regards to STENOCARE exploring new markets for the unique Astrum oil and are aiming for one of the largest markets globally with the Canadian market, where we believe that the company can find a niche within the next generation medical cannabis products. Nevertheless, a commercial agreement is yet to be signed on the market, expected in H2-24, and we do not expect any large financial impact in the short-term, but the expansion is expected to represent a long-term value driver.