The S&P/ASX 200 Index (ASX: XJO) has rebounded strongly from yesterday’s selloff. In late morning trade the benchmark index is up 3.05% to 5,893.4 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

The Auscann Group Holdings Ltd (ASX: AC8) share price is down over 3% to 15.5 cents. Investors appear to have been selling the cannabis company’s shares after it was kicked out of the All Ordinaries index. AusCann’s shares will be removed from the index at the next rebalance on 22 June 2020. The AusCann share price is now down almost 50% since the start of the year.

The Phoslock Environmental Technologies Ltd (ASX: PET) share price has crashed 13% lower to 39.7 cents. Investors have been selling the water treatment company’s shares after it downgraded its revenue guidance for FY 2020. It now expects revenue in the range of $30 million to $40 million. It was previously targeting revenue of $50 million to $70 million this year. Management has concerns that a second wave of COVID-19 could delay projects.

The Kogan.com Ltd (ASX: KGN) share price is down 0.5% to $12.92. Investors may believe the ecommerce company’s shares have now peaked after some stellar gains over the last few months. One broker that appears to believe this is the case is Credit Suisse. Late last week it put a neutral rating and $11.72 price target on Kogan’s shares.

The Village Roadshow Ltd (ASX: VRL) share price is down almost 2% to $2.13. This follows the release of a takeover update by the entertainment company this morning. According to the release, the company has extended the exclusivity period for its discussions with BGH Capital for a further two weeks. Investors may be concerned that these delays are a sign that discussions are not running smoothly between the two parties.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX cannabis shares have staged a mixed recovery since March. The Althea Group Holdings Ltd (ASX: AGH) and Cann Group Ltd (ASX: CAN) shares have had strong comebacks but the Auscann Group Holdings Ltd (ASX: AC8) price has been softer.

Coronavirus has no doubt had an impact on the cannabis industry with patients likely to be reliant on medicinal cannabis in times of stress, and crisis. 

Data from the Therapeutic Goods Administration (TGA) show prescriptions of medicinal cannabis remained steady during the coronavirus. The TGA approved more than 7,300 Special Access Scheme applications in March and April, up from 6,700 in January and February. With this in mind, we take a look at how ASX cannabis shares are performing. 

Althea Group cannabis shares

The Althea share price has recovered nicely from its March low, currently trading at 36 cents. The cannabis share is well up from its 16 cent low although below the January peak of 50 cents. 

Althea announced a 3-year supply agreement with Nimbus Health GmbH, a pharmaceutical wholesaler with a 25% cannabis market share in Germany, which boosted its May share price.  

Nimbus will sell and distribute Althea’s full suite of products in Germany under the Althea name. Althea will receive 50% of the net sale profits. In Germany, 120,000 patients have been prescribed medicinal cannabis to date with this number expected to grow to 1 million by 2024. 

In Australia, Althea finished the most recent quarter with 5,803 patients (increasing from less than 500 a year prior) and 509 healthcare professionals prescribing its products. This led to an increase in revenue. 

Revenue for the quarter containing March was up 39% from December. March’s revenue alone was the best month on record, increasing by 30% since February. This was achieved despite multiple challenges during the quarter including the Christmas holidays, bushfires, and the onset of COVID-19. 

Althea CEO Josh Fegan said:

“Against all odds the March quarter was a great success for Althea. Revenue certainly exceeded our expectations, whilst strong patient and prescriber growth continued. Gross profit margins have improved due to restructuring of commercial arrangements, with cash collection also now faster.”

Althea recently completed work on its Canada extraction and manufacturing facility; Peak Processing Solutions. Peak aims to leverage Canada’s legalisation 2.0 to allow the sale of cannabis-infused food, nutraceuticals, and cosmetics. Althea believes Peak is well-positioned to become a leading manufacturer for consumer brands looking to supply recreational cannabis and infused products. 

Auscann Group 

The Auscann share price remains near record lows for the year. It is currently trading at 16 cents up marginally from its 14 cent low in March and well below its January peak of 36 cents. Auscann was removed from the All Ordinaries Index (ASX: XAO) last week as part of the rebalance of S&P/ASX Indices.

Auscann released its prescription hard shell capsules in Australia earlier this year. The capsules are available to patients through the Therapeutic Goods Administrations’s special access scheme and authorised prescriber scheme. 

The company recently began its first clinical pharmacokinetics evaluation for 2 formulations of an orally administered THC/CBD combination. Dosing of the first volunteers has been completed. 

The study will assist medical professionals in prescribing its hard shell capsules and inform the dose selection. Auscann CEO Ido Kenyon said, “we are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard sheep capsule.”

Auscann finished the last quarter in a strong capital position with $24.7 million in cash and no debt. The March quarter recorded gross cash outflows of $2.7 million with net cash outflows for the quarter at $1.4 million due to the receipt of an R&D tax incentive refund of $1.2 million and $92,000 interest received. 

Construction of the Perth-based product development site was completed late last year with $4.5 million spent on the facility and additional capital spent on R&D equipment. The facility provides Auscann with a state-of-the-art centre to develop cannabinoid-based medicines. 

Cann Group 

Cann Group cannabis shares have staged a comeback from the March meltdown, up 50% from its low. Nonetheless, at 92 cents it remains well down from its January high of $1.69. Cann Group was also removed from the All Ordinaries Index last week.

Through new supply agreements executed with UK and European partners, the Cann share price did receive a boost last month. With import restrictions easing, European medical cannabis markets are expanding and wholesalers are building future inventory. 

New Zealand also holds a Cann supply agreement after medicinal cannabis regulations came into effect on 1 April. Cann Group CEO Peter Crock said, “these agreements represent important progress as we execute on our strategy to be a producer of choice for both the Australian domestic market and markets elsewhere.”

More reading

• Why AusCann, Phoslock, Kogan, & Village Roadshow are dropping lower
• Why Cann, IAG, Monadelphous, & Webjet shares are storming higher

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Race Oncology Ltd (ASX: RAC) share price has shot out of the gates this morning on the back of positive clinical trial results.

Race Oncology shares opened 74.6% higher today and raced to an intra-day high of 60 cents in early trade – a 90.48% surge. Shares have slightly pulled back since and are sitting 65.08% higher at the time of writing at 52 cents.

Race Oncology is a pharmaceutical company with a focus on later-stage drug assets in the cancer field. Its flagship product is a cancer drug called Bisantrene. The company is currently pursuing a ‘5-Path’ clinical development strategy that involves parallel US and Australian clinical trials for Bisantrene in acute myeloid leukaemia (AML), breast cancer and ovarian cancer.

Why is the Race Oncology share price skyrocketing?

This morning, Race Oncology reported clinical data from the Phase II clinical trial of Bisantree conducted at Israel’s Sheba Medical Centre.

The open label, single agent trial studied 10 patients with relapsed or refractory AML who, on average, had failed three prior lines of treatment. Race Oncology stated that Bisantree was found to be “well tolerated” and after a single course of treatment, had an overall clinical response rate of 40%.

According to Race, relapsed or refractory AML remains a significant therapeutic challenge. While meaningful therapeutic gains have been achieved in recent years with the introduction of new targeted drugs, the company believes clinical outcomes are still unsatisfactory.

Commenting on the trial results, Professor Borje Andersson, chair of Race’s advisory board, said:

“Importantly, in this study we saw a meaningful reduction in leukaemic disease burden and an overall response rate in 40% of the patients. While we must study the drug further, it appears that with this kind of response, bisantrene based therapy may have potential to serve as an important bridge to an allogeneic stem cell transplantation in patients who otherwise have few therapeutic options.”

What next?

Executive chair Dr John Cullity also shared his thoughts, commenting: “This drug is talking to us. As this was an open label, single agent trial, we can be confident that it was the bisantrene exposure which generated the positive results.”

“The patient cohort had advanced AML and had previously failed an average of three lines of therapy, so they were always going to be tough to treat. A 40% overall response rate after only a single course of treatment markedly exceeds expectations. It’s a hugely promising result and one which reinforces our development plans for bisantrene.”

In line with Race’s ‘5-Path’ clinical development strategy, a follow-up study combining Bisantrene with other anti-leukemic drugs is currently in advanced planning.

The company will also hold an investor briefing to discuss the significance of the trial results in more detail on Wednesday, 17 June.

With a current share price of 52 cents, Race Oncology’s market capitalisation is sitting at around $60 million. So if you’re looking to invest in larger and more liquid companies, check out the top ASX growth shares in the report below.

More reading

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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