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Technology Bio Tech

Incannex Healthcare Share Price Down Despite Positive Results (ASX:IHL)

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By Lachlann Tierney, Friday, 26 February 2021

Shares trading in medicinal cannabinoid producer Incannex Healthcare Ltd [ASX:IHL] share price are flat today, despite posting positive results in its half-yearly report. The IHL share price is up 2.27% to trade at 22.5 cents per share....

Shares trading in medicinal cannabinoid producer Incannex Healthcare Ltd [ASX:IHL] share price are flat today, despite posting positive results in its half-yearly report.

IHL’s results follow Althea Group Holding Ltd’s [ASX:AGH] bumper half-yearly report, hinting at a revival of the cannabis boom we saw just a few years ago.

At time of writing the IHL share price is down 2.27% to trade at 22.5 cents per share.

ASX IHL Share Price Chart - Incannex Healthcare Ltd SharesSource: Trading View

Although trading volume is relatively low thanks to a poor day on the broader market.

Regardless of today’s share price action, the IHL share price has seen big upwards movement this month on a slew of positive results relating to its treatments.

Revenue kicks off

The key result in IHL’s half-year report today is the big jump in revenue.

IHL posted revenue growth for the half of 11,859%.

No that’s not a typo.

Revenue ballooned to $1.23 million during the December half, from $10,279 in the previous corresponding period.

With sales of their cannabinoid products finally kicking into gear during the September quarter, with cash receipts of $695,000, IHL is looking well positioned to springboard sales even higher in the current half.

Aussie cannabis boom — discover why the Aussie cannabis market is ready again for long-term growth and how you can capitalise. Click here to learn more.

The strong sales result has also allowed IHL to invest strongly in research and development.

With R&D spending exploding from $313,426 in 1H2020 to $2.04 million in 1H2021.

However, this increase in expenses also meant IHL’s net losses grew by 31% to $2.89 million in the half.

Although this isn’t necessarily a bad result.

It is quite typical for small-cap stocks to post operating losses during their growth phases — IHL is not expecting this.

IHL also managed to raise a hefty $11.2 million from share placements in the period, helping to maintain a healthy cash balance to invest in further growth.

What to look for in Incannex’s growth prospects

Firstly, the beginning of product sales during the half is a key factor in my books.

Not only does it show proof-of-concept — particularly in a small Australian market — but it also helps set them up for potential expansion into overseas markets.

In the long-term, IHL is seeking FDA registration of its four therapeutic products, which would allow for sales in the booming American market.

However, legislative changes here in Australia could see IHL products being sold over the counter of your local pharmacy this year.

Which could spell further significant growth for the IHL share price.

If you’re thinking about making a play into pot stocks, we have a great resource for you; it’s our 2021 pot stocks report which profiles three different options in the growing cannabis market after a consolidation period.

You can download that for free, right here.

Regards,

Lachlann Tierney,
For Money Morning

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

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