September 16, 2016
By Mark Terry, BioSpace.com Breaking News Staff
In August, the Drug Enforcement Agency (DEA) loosened its statutes regarding the legal growing and research on marijuana. Prior to that, only scientists at the University of Mississippi, as part of a contract with the National Institute on Drug Abuse, were allowed to do so. This has opened the door, at least partway, for biotech companies interested in developing possible drugs based on marijuana, to forge ahead.
Forbes’ Ken Kam sat down with Todd Hagopian, head of biotech fund at Marketocracy, and Jason Spatafora, co-founder of marijuanastocks.com, to discuss Cannabis-based biotech. Here’s a look at four companies in the market.
First up is GW Pharmaceuticals . On September 8, acquisition rumors drove the from $83.98 on September 7 to $104.03. It’s currently trading for $105.98.
The company is developing prescription drugs based on cannabis. To date, it has Sativex, a nasal spray to treat multiple sclerosis (MS) and cancer pain. It also has Epidiolex to treat childhood epilepsy. Sativex is marketed in 15 countries, including the UK, Spain, Italy, and Germany, but is not yet available in the U.S.
Epidiolex is a liquid formulation of plant-derived Cannabidiol, and the U.S. Food and Drug Administration (FDA) has given it Orphan Drug Designation to treat Dravet syndrome and Lennox-Gastaut syndrome. It has Fast Track Designation for Dravet syndrome.
Hagopian said, “If the rumors are true, there are multiple suitors, and management will have a hard time fighting off an acquisition attempt. There are basically two ways that this could play out. Either GW Pharma gets bought out, or they stick to their guns, remain independent, a move which would result in Insys Therapeutics becoming the next takeover target for all of the interested parties.”
Based in Phoenix, Arizona, Insys Therapeutics announced on July 5 that the FDA had approved its dronabinol oral solution, Syndros, to treat anorexia associated with weight loss associated with AIDS, as well as for nausea and vomiting associated with cancer chemotherapy.
Dronabinol is a pharmaceutical version of tetrahydrocannabinol (THC), the active ingredient in marijuana.
Hagopian said, “It is my opinion that Insys is one of the largest buys in the sector. Either GW will get purchased, and it will illustrate the value of cannabis-based biotech companies, or, GW will implement a poison pill, and the suitors will move on to look at Insys.”
Insys Therapeutics is currently trading for $13.84.
Spatafora notes that Syndros will either be a direct threat to AbbVie , since AbbVie’s Marinol and Syndros are essentially the same drugs in different formulations. As a result, AbbVie might consider buying Insys. “AbbVie would be foolish in my opinion to not make a play for Insys while it’s still relatively cheap and before the two or three companies considering GW look at Insys as a consolation prize.”
Another company is Stamford, Connecticut-based Cara Therapeutics .
Cara Therapeutics is currently trading for $6.56. It presently has a number of products in its pipeline, with its most advanced product, CR845, being studied for acute pain and pruritis. The company announced on September 15 that CR845 had started a Phase IIb trial to treat the pain associated with osteoarthritis. The compound that selectively targets peripheral kappa opioid receptors, which are a target of Cannabinoids.
And finally, Zynerba Pharmaceuticals , which is focused on developing drugs to treat refractory epilepsy, osteoarthritis, Fragile X syndrome, fibromyalgia and peripheral neuropathic pain through synthetic cannabinoid therapeutics formulated for transdermal delivery. On September 6, Zynerba initiated a Phase II trial of ZYN002 cannabidiol (CBD) gel to treat knee pain associated with osteoarthritis.
Zynerba is currently trading for $10.76.
Hagopian says, “All in all, the Cannabis industry is poised to be one of the fastest growing sectors of the biotech industry, which should outpace the broader market in general.”
Which may be true, with these four companies likely acquisition targets. However, Kam writes, “Cannabis-based biotechs are a risky proposition, with no clear winners identified at this point.”
