Here’s why the Creso Pharma (ASX:CPH) share price is up 7%

The Creso Pharma Ltd (ASX: CPH) share price has climbed well into the green in early trade today.

Cresco Pharma shares are now exchanging hands at 11.75 cents apiece, an almost 7% gain from the open.

What is Creso Pharma?

Creso Pharma develops and commercialises pharmaceutical cannabis and psychedelic compounds to treat health and medical conditions.

The company has a wide footprint across Switzerland, Australia, Canada, Colombia and Israel, but realises most revenue from Europe and the Middle East.

Creso Pharma has a market capitalisation of $131 million at the time of writing.

What’s behind today’s gains?

Creso provided an update on “operational progress” achieved through its Canadian subsidiary, Halucenex Life Sciences.

Halucenex is a research company focused on developing novel psychedelic compounds. These products are then sold to the pharmaceutical markets.

Creso announced that Halucenex has completed all satisfactory requirements for USP 61 microbial enumeration testing.

This is a significant milestone that demonstrates Creso’s psilocybin compound is of pharmaceutical grade and safe from microbial nasties.

Furthermore, the company announced it had “commenced USP 62 protocols”.

That is a similar test that examines pharmaceutical products for the presence of additional pathogens and other microbes.

It is an essential phase of any route to market in the pharmaceutical industry because the product must be deemed fit for humans.

Creso seems confident the test will “deem the company’s products safe for human consumption” if successful.

What else does this mean?

Moreover, if successful, it will progress Halucenex’s clinical trial authorisation (CTA) with Health Canada, helping to move forward its clinical trial pipeline.

Receiving the CTA allows the company to commence its phase II efficacy trial investigating the use of psilocybin in the treatment of post-traumatic stress disorder (PTSD).

Creso estimates the PTSD therapeutics market is worth “upwards of US$10.5 billion by 2025” and the company intends to “grow its market share across the sector” in the coming periods.

Market sentiment around clinical trial progress is a major force that drives share price returns in biotech and biopharma companies. That means good news is reflected on the charts for these shares.

In addition, Creso also released its quarterly update on Monday which shot its share price 9% higher on the day.

It stands to reason these two factors are behind the movement in the Creso Pharma share price today.

Creso Pharma share price snapshot

The Creso Pharma share price has posted a loss of 35% since January 1 this year. Over the last month, Creso shares have dipped 13% into the red.

Despite this, Creso shares have still climbed 279% into the green over the past 12 months.

This has outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of around 26% over the past year.

The post Here’s why the Creso Pharma (ASX:CPH) share price is up 7% appeared first on The Motley Fool Australia.

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• Why the Creso Pharma (ASX:CPH) share price is soaring 9% higher today
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Contributor Zach Bristow has no position on any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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