Shares in AFT Pharmaceuticals have risen on the news it has signed a memorandum of understanding to work with medicinal cannabis company SETEK.
The NZX-listed company's shares were up 3.38 percent to $3.06 in morning trading after the deal was announced.
Taupo-based SETEK is the fourth kiwi company to receive a licence from the Ministry of Health to cultivate and process cannabis for scientific and medical research. It was founded by David Peace and Mark Mees in early 2018, and former MP Peter Dunne sits on its advisory board.
AFT chief executive Hartley Atkinson had said in May that the regulatory climate for medicinal cannabis was tough, but it could rapidly change.
While AFT’s major product is the Maxigesic painkiller, it will work with SETEK to develop business models for the development, manufacture, formulation and obtaining regulatory approvals for medicinal cannabis products.
“Medicinal cannabis represents a sunrise industry in New Zealand and is an obvious addition to our broad portfolio of prescription and over the counter medicines,” Atkinson said.
SETEK will be the exclusive supplier of these products to AFT, while AFT will conduct clinical trials and manage regulatory approvals.
AFT posted an operating profit of $6.1 million for the 12 months to 31 March, from a loss of $10.1 million the year before.
The latest move comes amid a burgeoning medicinal cannabis market in response to legal reforms.
Cannasouth was the first New Zealand weed company to go public, having raised $10 million in June at 50 cents per share. Its price has risen since listing, and the shares are currently trading at 64 cents per share, but have declined today by 3.03 percent.
The Ministry of Health is currently working on a scheme to enable the domestic commercial cultivation of medicinal cannabis, which is expected to be operational in the first quarter of 2020. The scheme will cover licensing and production standards and will have a dedicated agency.