Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe


Cannabis Company Forms Partnership to Develop Pharmaceuticals
Research Report

Share on Stocktwits


Analyst Russell Stanley with Echelon Wealth Partners explained the significance of the recent licensing agreement signed by this Canadian medical marijuana producer and distributor.

In an Oct. 4 research note, Russell Stanley, an analyst with Echelon Wealth Partners, reported that Emblem Corp. (EMC:TSX.V) entered into an exclusive licensing arrangement with the private company Canntab Therapeutics Ltd. to collaborate on "preclinical formulation, clinical development, regulatory approval, manufacturing and commercialization" of Canntab's "patent-pending oral sustained release formulation for cannabinoids."

About the event, Stanley concluded, "We view this as a positive step towards developing pharmaceutical applications for cannabis, which is a major pillar of [Emblem's] strategy." The company's other two areas of focus are advancing marijuana production and health care services.

Under the agreement, Emblem will have "exclusivity in Canada with respect to Canntab's intellectual property and know-how and would sell the product under the Emblem brand (though the agreement does not include import/export rights)," described the analyst. Either firm could handle manufacturing.

As for the financial component, Emblem must make "milestone payments to Canntab based on completion of stability studies, bioavailability studies and regulatory approval" and, eventually, "royalty payments based on gross product sales," Stanley said.

The major advantage to Canntab's product is that it is sustained release, Stanley indicated. It is "believed to release the cannabinoid content over a period of 12+ hours," he added. "This allows for maintaining a constant drug concentration over a specific period of time, generally with the aim of improving therapeutic outcomes and/or patient compliance."

This compares to "most existing dosage forms," Stanley said, which "release the active drug component right away." As such, these immediate release therapeutics "tend to lose their effect in four to six hours, necessitating frequent dosing, which can impede patient compliance."

Stanley commented on the potential market for such a cannabis pharmaceutical. The sustained release feature makes it "particularly suited to managing chronic pain, which represents a $500 million a year market and affects 2 million Canadians," he said.

Further, according to surveys, "almost 80% of current medical cannabis prescriptions" are for chronic pain management," noted Stanley, "however less than 10% of physicians in Canada actively prescribe cannabis." This suggests that "a product that supports stronger patient compliance could help improve physician penetration and broaden the medical cannabis market's reach."

Echelon has a Speculative Buy rating and $2.25 per share price target on Emblem, whose stock is trading currently at around $1.98 per share.

Want to read more Life Sciences Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following company mentioned in this article is a sponsor of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Emblem Corp., a company mentioned in this article.

Want to read more about Biotechnology / Pharmaceuticals and Cannabis investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe