That’s what the industry of Pharmaceutical Cannabis is projected to reach by 2027.
The valuation in 2019?
That’s a whopping 75%+ compounded annual growth rate (CAGR) over the forecast period.
As if it wasn’t enough for cannabis to establish its legal market, (which happens to be projected for US$10 billion in annual sales by 2025), it is now a widely sought-after goal for companies to set foot in the world of global pharma, where cannabinoids and other cannabis derivative compounds seem to have found a place.
Other than the staggering rate of growth and opportunity in this under-the-radar world, there are plenty of reasons to consider taking part. We all know the world of recreational cannabis holds more current market share than the world of recreational mushrooms; however, as the world of psilocybin poses great promise for integration into the world of pharma (and investors get excited about this), it’s important we pay attention to the development of cannabis within the space, as well.
The premier compound being looked at by pharma companies? CBD, also known as Cannabidiol.
CBD is known for its anti-inflammatory, anti-anxiety properties, among other benefits. Creating an ultra-pure, pharmaceutical-grade version of this substance to administer effectively to patients of a multi-billion-dollar health problem is nothing but opportunistic, especially at this level.
How costly is it, exactly?
In Canada, heart conditions make up for $22,200,000,000 in health-related costs annually.
The U.S., having roughly 10x the population of Canada, also proportionately racks up nearly $220,000,000,000 per year.
That comes to a cost of approximately $750 per citizen for each respective country.
With that being said, we need to go more in depth on who is playing in this game, and what they’re up to.
The Water Theory
Picture an early-stage company as a roaring river. Windy, full of turbulence, bumpy, and rather dangerous.
The reason the river is such a rough ride is due to the steady stream of water flowing from the mountaintops, headed toward the ocean. As the river nears the ocean, it breaks away into a waterfall.
This waterfall represents a speedy leap into the bigger picture (ie, the ocean). Once that river’s water settles into the ocean, it is there to stay, flowing with the steady movement that the earth’s largest bodies of water facilitate.
Not very many boaters survive a waterfall, just as not very many companies break out from early-stage to big picture.
The ocean, for biotech companies, is the NASDAQ.
The river represents the volatile journey of price movement that is prevalent in many budding industries, such as the psychedelic sector, or in this case, Pharmaceutical Cannabis.
As institutional money becomes more interested in an industry that seems to see more regulation as the weeks go by, all of a sudden there is much more upside promise shown in these formerly “speculative” plays.
Cardiol Therapeutics (CANADA: CRDL) (U.S.: CRPTF) (EUROPE: CT9) has been quite the refreshing early-stage experience. With 3 financings over the last few years, Cardiol has been successfully facilitating the ongoing development of CardiolRx, brought Cortalex to market, and shown a track record of happy investors ($10 million in cashed-in warrants!). Compared to the psychedelic industry, there has been a lot more time to focus on the upside.
Considering the fact that their closest comparable, GW Pharma, was wholly purchased by Jazz Pharmaceuticals for a hefty price tag of US$7.2 billion, Cardiol’s “volatility” is extremely acceptable. With just over 42 million shares outstanding, the company’s fluctuation in market cap ranging from ~$100 million to ~$200 million is hardly turning heads.
As the rapids narrow and the waterfall gets closer and closer, Cardiol is chugging along with some rather impressive topline results from a Phase 1 single- and multiple-ascending dose clinical trial of their proprietary drug, CardiolRx.
The drug is an orally administered cannabidiol formulation that treats acute and chronic inflammation associated with heart disease. This inflammation can have nightmarish outcomes for those with pre-existing heart conditions that happen to be hospitalized due to COVID-19. CardiolRx is intent on becoming a proven, powerful ally for the poor bodies that have to withstand the blow to the immune system that is a COVID-19 infection.
As President and CEO David Esley explains, the clinical trials for CardiolRx were effective and completely free of any adverse effects in patients ranging from age 25 to 60. This phase of the study precedes the trials on patients admitted to the ICU due to COVID-19.
“As our study represents one of the most comprehensive Phase I clinical trials ever conducted in adults with a pharmaceutically produced cannabidiol formulation, we are pleased that the data are consistent with our expectations concerning the drug’s safety, tolerability, and PK profile,” said David Elsley, President and CEO of Cardiol Therapeutics. “Study results support the dosing regimen being utilized in our U.S. Phase II/III clinical trial investigating the cardioprotective properties of CardiolRx in 422 hospitalized patients with COVID-19 with a prior history of, or risk factors for, cardiovascular disease, and our plans to file a IND application with the FDA for a Phase II international trial in acute myocarditis, an inflammatory condition of the heart, which remains a leading cause of sudden cardiac death in children and young adults.”
The key for this kind of drug to make it through to big pharma is the avoidance of any adverse risks or side effects.
How About Phase ll & lll?
The 2nd and 3rd phases of CardiolRx’s journey to success have been dubbed “LANCER.”
The LANCER trial is a randomized, double-blind, placebo-controlled study that has been designed to assess the efficacy of CardiolRx in preventing cardiovascular disease in 422 patients hospitalized with a confirmed case of COVID-19, and who have confirmed pre-existing or significant risk factors for cardiovascular disease.
As the first patients are undergoing LANCER, Chief Medical Officer Dr. Andrew Hamer is pleased to be deploying an efficacy study relevant to the current conditions of the world pandemic.
“There is compelling evidence that inflammation plays a fundamental role in the development and progression of heart disease,” said Dr. Andrew Hamer, Chief Medical Officer of Cardiol Therapeutics. “I am excited to see the initiation of the LANCER trial which will provide a unique opportunity to explore the anti-inflammatory and cardioprotective properties of CardiolRx in COVID-19 patients who are at high risk for major cardiovascular complications.”
The risk for patients in the ICU goes beyond respiratory and pulmonary complications. Not only are pre-existing victims of cardiovascular disease at risk, but so are patients with risk factors, which include but are not limited to:
- Abnormal serum lipids
- Age greater than 64
A number of frequently fatal conditions that can result from COVID-19 positive patients that are at risk due to the aforementioned risk factors include:
- Acute myocardial infarction
- Cardiac arrhythmias
- Heart failure
Keeping these risk factors and their subsequent outcomes at bay is the mission for LANCER. International thought leaders form the Independent Steering Committee, which is designing and overseeing LANCER.
Successful trial results can enable an emergency use authorization of CardiolRx to patients at risk who would have been eligible for enrollment in LANCER. A new drug application is an additional promising outcome, should the trials prove to be successful.
With $22 million on the way from a closed financing at $3.60/share, including full warrants at $4.60, Cardiol Therapeutics is going to be well-equipped for their journey over the waterfall.
Disclaimer: Cardiol Therapeutics is a client of Edge Investments and we own shares in the company