Cryosite appears to have quietly decided to tap into the coming...

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    Cryosite appears to have quietly decided to tap into the coming medicinal cannabis boom.

    The company has yet to make an official announcement.

    However a close reading of its 2019 annual report reveals that the group is now subject to regulations imposed by the ODC/Office of Drug Control.

    The Canberra-based ODC is an offshoot of the Commonwealth Department of Health.

    It was established about three years ago to regulate the introduction into Australia of medicinal cannabis.

    It would be logical to conclude that the ODC is regulating Cryosite because the company has medicinal cannabis on its premises at South Gransville, NSW.

    Oddly, CTE could be storing cannabis compounds without even knowing it - Overseas and local clients may supply material with no conventional descriptions – just semi-encrypted codes.

    The ODC publishes a list of manufacturing licence holders on its website.

    This list includes Melbourne-based $IDT/IDT Australia.

    IDT recently sold its Adelaide-based clinical trials operation to Japan-based I’rom Group Co for ~$14m.

    The ODC list does not mention CTE. Does this mean CTE doesn’t have a licence?

    Not necessarily. There are several listed licence holders who’ve asked ODC to suppress their names from the ODC website. The ODT has obliged.

    But let’s assume CTE doesn’t have a manufacturing licence and doesn’t presently intend to apply for one.

    There’s still plenty of potential in the high margin cannabis trials sector. And Cryosite seems well-placed to mount an assault.

    All the 36 or so listed companies in the medicinal space face a governance dilemma when it comes to disclosure.

    This applies to Cryosite. I think the company should have made – or should make – an announcement relating to its cannabis activities.

    Why? Because taking a position in the medicinal cannabis space – albeit facilitating clinical trials - is clearly a material development.

    Typically, CTE chooses to take a very low public profile. It eschews the four-letter word NEWS, pleading the need to maintain product security and to protect client confidentiality.

    The problem for holders is that secrecy doesn’t typically propel share prices.

    Incidentally, some might argue that it’s better for CTE’s share price that the stock is not widely deemed to be a “pot stock”.

    Maybe. The pot sector is down an average of 30% since that start of the year.

    Nevertheless, I can’t see a problem for Cryosite if it helps better-known cannabis players conduct clinical trials.
    Nor can I see a problem in the group using its ASX platform to broadcast the fact.

    To do so would help lift its profile and crank more trials business.

    Let’s see what happens in the next four months or so. I think we might be surprised.
    Last edited by Medify: 10/12/19
 
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