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These 5 Biotech Stocks Should Have Your Full Attention

Jun 22, 2017 • 11:41 AM EDT
BIotech (3).png
6 MIN READ  •  By Michael Berger
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A legal cannabis movement is sweeping the United States and currently 29 states and the District of Columbia have legalized medical marijuana and eight states have legalized recreational marijuana.

Although recent studies have shown that cannabis has medical benefits, the DEA and the FDA still have it classified as a Schedule I substance. The Schedule I category is reserved for substances that have the highest potential for abuse, that have no accepted medical use and even under medical supervision cannot be used safely.

Although researchers are beginning to learn about the medical benefits associated with cannabis, they have not even scratched the surface. The cannabis industry is the fastest growing industry in the world. After spending several years researching cannabis and developing products, companies are just beginning to realize the fruits of their efforts.

Biotech Beneficiaries

The biotech sector will be one of the greatest beneficiaries of the legal cannabis movement and we expect this market to see incremental growth over the next decade.

Cannabis continues to improve daily life for millions of people all over the globe and this multi-billion-dollar opportunity is still in its infancy. The biotech sector of the cannabis industry is comprised of some of the best capitalized and most mature public companies and we have identified five companies for investors to monitor.

Insys Receives a Positive Response to Management Additions 

Insys Therapeutics (INSY) continues to trade higher after the company announced the addition of four pharmaceutical industry veterans to its management team. These additions help remove some of the market’s concerns pertaining to the strength of its management team and we see further upside from current levels.

We view Insys as an acquisition candidate and expect to see the company acquired this year. In July 2016, INSY announced that the FDA approved Syndros, an orally administered liquid formulation of the pharmaceutical cannabinoid Dronabinol, a pharmaceutical version of THC.  At the time of this announcement, INSY said that Syndros is awaiting scheduling by the DEA.

Nemus Advances its THC Pro-Drug

Today, Nemus Bioscience (NMUS) announced that tetrahydrocannabinol (THC) derived from NB1111, a proprietary pro-drug of THC, achieved significant tissue concentrations in multiple compartments of the eye that are correlated with the lowering of IOP in a normotensive ocular animal model. 

The abstract, Intraocular pressure lowering efficacy of NB1111 in a normotensive rabbit model expands on previously reported data by showing that the product safely penetrated multiple ocular chambers and concentrated in key tissues that help regulate intraocular pressure.

Nemus and the University of Mississippi have also collaborated on developing an analogue of CBD into an eye drop formulation called NB2222. The company plans to submit an abstract to an upcoming scientific conference with current to data on the NB2222 program.

We are favorable on this development and view Nemus’ relationship with the University of Mississippi to be a unique and differentiating factor. The shares are trading at $0.28 and this is a company investors should watch.

IGC: A Stock to Watch After Coming Off its Highs

India Globalization Capital (IGC) is one of the few cannabis-focused companies that trade on the New York Stock Exchange (NYSE) and earlier this mont the company entered into a definitive license agreement with the University of South Florida (USF). Under the agreement, IGC is the exclusive licensee of the U.S. patent filing entitled, THC as a Potential Therapeutic Agent for Alzheimer’s Disease.

This is an important development and milestone for the company as it works toward the development of a potential cannabis-based blockbuster treatment for Alzheimers, America’s most expensive disease.

IGC received a muted response from the market and we see upside to current levels following this milestone.   We are favorable on IGC’s recent updates as it has pivoted fully into the biotech cannabis sector and we continue to monitor developments around the company’s cannabinoid-based therapies.

GW Pharma: An Industry Leader

GW Pharmaceuticals (GWPH) has come off its recent lows and the shares are trading near $105 after falling below $93 earlier this month. GW is an industry leader and the company has several catalysts occurring in the second half of this year.

GW is changing the landscape of the biotech industry and the company already sells a cannabis-derived treatment for multiple sclerosis in 27 countries. GW is a company that investors need to watch as it continues to execute on its pipeline and create value for shareholders.

Cara Surges 10% on Positive Data

Cara Therapeutics (CARA) rallied more than 10% yesterday after the company announced the completion of a pre-specified interim conditional power analysis of its adaptive Phase 3 trial of I.V. CR845. The trial will continue to test two doses of CR845 against a placebo in up to 450 patients undergoing abdominal surgery. The Independent Data Monitoring Committee (IDMC) reviewed available safety information and confirmed that both doses of CR845 were well tolerated with no significant changes in the monitored safety parameters.  

The primary efficacy measure is the Change in Pain Intensity over the 24-hour postoperative period using the patient-reported Numeric Rating Scale score collected at pre-specified time points through 24 hours. Postoperative nausea and vomiting will be evaluated as a secondary efficacy measure.

Although CARA has not advanced any of its cannabis initiatives, we continue to monitor the shares closely. Although we do not consider CARA to be a cannabis biotech stock, we continue to monitor the shares due to the potential it has to enter the sector. 


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Important Investor Disclosures 

This report was authored by and is property of Mushroomstocks.  All information and data relied upon in drafting this report is publicly available.  The author believes and considers its sources to be reliable, but does not guarantee the accuracy or completeness of any information contained in this report.  Any and all information, data, analyses and opinions are provided for informational purposes only and is not intended, in any manner, as investment advice.  Any projections or other information generated by Mushroomstocks regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.  None of the material contained in this report is intended as a solution or offer to sell or purchase a specific stock or any other investment.  This report is not directed to, or intended for distribution or use by, any person or entity that is a citizen, resident or located in any municipality, state, country or other jurisdiction where the distribution, publication, availability, or use of this report is contrary to any governing law or regulation.  The securities discussed in this report may not be eligible for purchase and/or sale in certain jurisdictions or by particular individuals.  It is important that you check any and all governing laws and/or regulations that may be applicable in your jurisdiction.  Investing in securities of issuers organized outside of the United States, including ADRs, entail certain risks.  The securities of non-United States issuers may not be registered with, nor be subject to the reporting requirements of the United States Securities and Exchange Commission.  Please contact a Financial Advisor for professional advice regarding any and all securities investments.  This report is intended for informational purposes only

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.


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