The week in Small Caps: MMJ grows its cannabis reach, Patrys targets brain cancer, Galileo Mining rallies on ASX listing
WEEKLY MARKET REPORT
Small ordinaries index maintained its composure and held its ground above 2800 points this week underlining the resilience of small cap Australian stocks.
The ASX 200 closed below the key psychological mark of 6000 to finish the week at 5995 points.
Small cap stocks in review
The small cap sector had a diverse week with immunological biotech companies, oil and gas companies, borate producers and medical device manufacturers all grabbing a share of the headlines.
With the ongoing theme being the explosion of resource exploration towards supplying the rampant energy-storage sector.
As the clean energy revolution continues its march towards providing low-cost abundant energy for all while hoovering up a whole range of resources including lithium, alumina, vanadium, graphite and cobalt, just to name a few).
MMJ (ASX: MMJ)
One of only a handful medical cannabis stocks on the ASX, MMJ is picking up a head of steam with several changes over the past few weeks including a rebranding phase that saw the company drop its PhytoTech nomenclature.
Most recently, a slew of corporate boardroom deals that have seen the company acquiring (and divesting) several stakes in a range of medical cannabis-related companies in both Australia and Canada.
This week saw MMJ announcing the acquisition of a 12.6% stake in Australian medical cannabis research start-up Martha Jane Medical and a 12.7% stake in Bien Ventures, a company with intentions to commercialise cannabis-infused powders to be used in edibles in the US.
MMJ has teamed up with one of Canada’s shrewdest young entrepreneurs who co-founded Canada’s largest cold-pressed juice chain at the tender age of 28.
The decision could prove to be one of the most lucrative, given Bien’s intention of marketing its CBD/THC powders under a healthy lifestyle banner, as opposed to a medicinal one.
The Martha Jane Medical stake is aimed at medical research and developing potent and high-value medicinal products whereas the Bien acquisition is all about the health-conscious retail consumer.
Patrys (ASX: PAB)
Patrys has published a further round of pre‐clinical data for its ongoing brain cancer drug candidate that’s currently undergoing studies at the Yale School of Medicine.
PAT-DX1 has shown significant ability to kill cancer cells in human tumour explants, xenograft and orthotopic models with ongoing research being published periodically by the therapeutic antibody developer.
According to Patrys, its latest data strengthens the case for glioblastoma as a development path for its DX1 technology platform, after doctors at the Yale School of Medicine confirmed that PAT-DX1 was successful at targeting “tumour spheres” originally derived from human glioblastoma cancer stem cells.
The findings mean that Patrys will now look to execute its research plan with the Yale to test PAT‐DX1 in a proxy for the current human therapy regime for glioblastoma.
Andromeda Metals (ASX: ADN)
Andromeda Metals has the commercial sheen of high-grade world-class alumina in its sights.
This week saw Andromeda announcing the successful development of an alumina product with a purity as high as 99.99% after testing feedstock from its Poochera kaolin-halloysite project in South Australia’s Eyre Peninsula.
The feedstock tested by the company was obtained from Carey’s Well deposit where Andromeda already has indicative offtake agreements in place.
Carey’s Well has now been advanced to the stage where it is ready for a mining lease application as part of a feasibility study.
If all goes well over the coming months, Andromeda hopes to fast-track the deposit through to mining.
Alumina is joining the ranks of other so-called “new age” metals such as cobalt, vanadium and zinc given its use in the emerging lithium-ion battery space as a coating on battery separators.
American Pacific Borate and Lithium (ASX: ABR)
American Pacific Borate and Lithium announced a double-whammy of offtake deals this week – both with state-owned entities in China, thereby underlining the strong industrial demand for its unique borates (boric acid) product currently being developed at the Fort Cady project in Southern California.
With macroeconomic trade relations between China and the US seemingly at a low ebb, demand for one of the most important industry-enabling resources continues to grow.
Industry analysts have said that very few global sources of borates and demand remain with demand believed to be increasing at 6% per annum.
In the same slipstream of borate demand growth, American Pacific says it has its hands on the largest known contained borate occurrence in the world outside the hands of major borate producers Rio Tinto and Eti Maden.
Immutep (ASX: IMM)
Immutep and Merck are progressing a trial of a novel drug combination that may provide a significant breakthrough for cancer and autoimmune disease patients.
The novel immunotherapy approach developed by Immutep intends to treat cancer and autoimmune diseases in unresectable or metastatic melanoma patients that have not responded to conventional treatments.
This week, Immutep said that its latest patient outcomes included tumour shrinkage in 50% of patients including 2 patients with “complete disappearance of all target lesions” – a significant step forward although there is more work to be done.
The company presented its findings to a global audience this past week, first at the 3rd annual Advances in Immuno-Oncology Congress on May 25 in London, UK, and then via an online webcast that’s available on its website.
Nuheara (ASX: NUH)
Nuheara is actively expanding its global reach having signed two key distribution deals this week.
In Oceania, Nuheara secured a deal with Force Technology that will see its products hitting more store shelves across Australia and New Zealand, as part of a retail market push aimed at raising brick and mortar sales.
Force Technology currently services a large portion of the retail market through more than 4,000 reseller partners including Telstra, Harvey Norman, Optus, Retravision, JB Hi-Fi and Officeworks.
Furthermore, the medical device developer has also expanded its Japanese market reach by signing up Value Trade as its distribution partner in the Land of the Rising Sun.
Value Trade is a well-established consumer electronics distributor in Japan and currently supplies more than 5,500 consumer retail stores.
The first phase of Nuheara’s product rollout in the country is expected to commence with the supply of 218 retail stores including retailers such as Yodobashi Camera, Ysamada Labi, Bic Camera, Loft, Tsutaya Electrics and Tokyo Hands.
Galileo Mining (ASX: GAL)
Galileo Mining has hit the ground running after the resources company saw its shares grabbing a 90% premium in its first hour of trading of its stellar ASX debut.
The initial surge has now subsided somewhat with investors anticipating an intriguing week (and the remainder of this year) as Galileo goes into the field with shovels in hand.
The stock was closed trade on Friday $0.345, up 72.5% from its listing price of 20 cents.
After raising A$15 million in a heavily oversubscribed IPO, Mark Creasy-backed Galileo will explore its Norseman cobalt-nickel and Fraser Range nickel-copper-cobalt projects in Western Australia.
Norseman has a JORC-compliant resource containing over 22,000 tonnes of cobalt and 106,000 tonnes of nickel.
That’s more than plenty for Galileo to get its teeth stuck into as it hopes to work up a commercially viable operation to supply the rampant battery-metals industry that’s estimated by many analysts to be running short of cobalt, nickel and lithium.
Brookside Energy (ASX: BRK)
Brookside Energy continues to deliver “excellent production rates” at its series of oil and gas prospects in the Anadarko Basin plays in Oklahoma.
This week, the oiler announced an initial production rate of around 5,400 barrels of oil equivalent (boe) per day and a 30-day production rate of around 4,200 boe per day.
Brookside also said that initial production data from its most recent horizontal well would be harnessed to establish the quantity of recoverable undeveloped oil and gas contained within its development unit and the attendant value per acre.
With its “per acre valuations” increasing, both as a result of prudent portfolio management, ongoing development in partnership with Black Mesa and resilient oil and gas prices, Brookside’s future in Oklahoma is looking bright.
The week ahead for markets
We are heading for quite a busy week of data releases in Australia, with ANZ releasing the May data on job advertisements and the Bureau of Statistics (ABS) releasing the quarterly Business Indicators publication and retail trade data on Monday.
The publication includes data on sales, profits, wages and inventories so it is important in determining the direction of the local economy.
Tuesday is a really big day, headlined with the meeting of the Reserve Bank Board which is expected to make no change to official interest rates for the 22nd consecutive month.
It will also herald the release of data on car sales, consumer sentiment, services gauge, government finance and the quarterly balance of payments.
The numbers should give us a guide on whether improved consumer confidence levels have actually led to increased spending.
On Wednesday, the Australian Bureau of Statistics releases the March quarter estimate of economic growth and on Thursday the balance of payments should reveal another significant trade surplus.