Beginning in 2014, marijuana stocks were in vogue. Investors were scrambling the markets to find almost any stock that promoted themselves as an emerging player in the cannabis industry. The drawback in that investment strategy, however, was that many investors were too preoccupied with finding a company with a catchy name, rather than a company that actually had some substance.
While many investors were drawn in by the myth that millions would be made by investing in the companies that purportedly planned to cultivate and sell medical and leisure based marijuana, they should have been focused on investing in companies that are intent on utilizing the plant's cannabinoid properties, which are consistently demonstrating extraordinary benefit in treating a host of medical conditions.
With that said, if investors had only remained diligent on seeking realistic and lucrative potential through cannabis pharmaceuticals, Vitality Biopharma (OTCQB:VBIO) would not have been overlooked. In fact, VBIO is one of only three cannabinoid related companies that I see as actually being able to produce any meaningful revenue within the next few years.
The Difference In Vitality Is VBIO
The so called "green rush" that began in 2014 led investors to a host of penny stock names, many of whom misled investors with pipe dreams of securing a position in the emerging multi-billion dollar marijuana market that has developed through the relaxation of marijuana laws throughout the United States and abroad. In fact, while many of these penny stock lottery tickets were pumping out press releases touting the potential in their future, only three stocks were actually working on initiatives that can lead to actual long term shareholder value and a dominant market position in both the near and long term.
Vitality Biopharma is one of those three.
Investors need to separate themselves from the nonsense being promoted by companies that are looking to cultivate and sell the product. Despite what they say, once Big Tobacco decides that it's time to enter the market, these small time entrepreneurial bud houses will be pushed out of business faster than a bee to a beetle. For those investors betting a small fortune on any of these penny stock names, consider saving your money while you still can. The real money will be made in cannabinoid pharmaceuticals (CP), and VBIO has carved out a respectable niche.
VBIO is one of only a few cannabinoid drug companies that can point towards meaningful clinical data that shows cannabis has been useful for its lead drug indication, IBD. They are now undertaking proof of concept and efficacy studies that promote the benefit of using cannabinoids to treat a long list of disease and medical conditions. Two other companies, GW Pharmaceuticals (NASDAQ:GWPH) (OTCPK:GWPRF) and Zynerba Pharmaceuticals (NASDAQ:ZYNE), are also working on extracting the benefits of cannabis in order to address targeted medical applications. While both are formidable contributors in the space, each is targeting a different portfolio of specialization, keeping the market for VBIO essentially free from any near term competition. In fact, with the extensive barriers of entry associated to the CP space, VBIO may enjoy certain exclusivity for the foreseeable future.
VBIO Targeting NBS And IBD
VBIO is intensely focused on treating Narcotic Bowel Syndrome (NBS) and Inflammatory Bowel Disease (IBD).
In the case of NBS, it's been reported that up to 81% of opiate users have functional bowel disorders, with more than 58% reporting chronic abdominal pain during an independently conducted study. From this set of patients, over 6% will ultimately develop NBS. The symptoms associated with NBS can be devastating, and it has been reported that the downward spiral related to quality of life issues has been associated with 61% of all drug overdose deaths. Thus, the need for VBIO.
VBIO is answering that call, working to develop an alternative treatment to opiate prescribed therapy. It has been formally noted that amongst patients that are on an opiate controlled pain management plan, the opiate use often disguises the actual medical condition, leading to misdiagnosis of illness, escalating dosages of the opiate and eventual drug dependence if the pain management program is not appropriately managed.
VBIO's response to developing a viable and well tolerated cannabinoid solution can eliminate both the prolonged use of opiates as well as to eliminate the potential for opiate drug dependence. In that respect, VBIO is conducting its VB100 trial, with Phase I/II studies expected to be advanced in 2017. By leveraging off of clinical data that has previously demonstrated the effectiveness in using cannabis to treat NBS and IBD, VBIO has essentially been provided a springboard to getting the VB100 therapy to market. This saves VBIO both time and money.
The VB100 trial will seek to provide proof of concept data designed to proffer initial drug approvals. These same initiatives will further provide additional proof-of-concept detections in large market disease indications. VBIO's "first in human" clinical study of cannabinoid gylcosides, termed "cannabosides" is the proprietary edge that VBIO will be exploiting, allowing them to focus their efforts in treating multiple clinical indications from the technology.
These Phase I/II trials for both NBS and IBD will examine the use of multiple cannabinoid agents for initial evaluation of the pharmacokinetics and systematic relief of the chronic pain and cramping associated with NBS and IBD. Along with the preliminary importance of a stellar safety and tolerability profile, VBIO will further attend to secondary endpoints as part of its trial design, details of which will be forthcoming.
A prime advantage for VBIO is that they can quickly advance these trials by relying on the development of proprietary molecules and manufacturing processes that have been developed internally. This ability provides Vitality Biopharma insulation from technology poachers and adds an additional layer of exclusivity in treating targeted diagnoses. VBIO already has the manufacturing capability to enable large scale development of small molecule drugs by using the process of enzymatic biosynthesis, and by having this part of the infrastructure already in place, the need for additional funding to build out the manufacturing structure is minimized.
VBIO Has A Targeted Prodrug Delivery Method
VBIO utilizes its proprietary cannaboside prodrug, which allows VBIO to deliver a targeted and specific dose of its cannabinoid compound. In prior, non-related studies, cannabinoids have proven the ability to effectively treat Crohn's disease patients, with over 40% of the patients having had the disease put into remission. These prior results, though unrelated to Vitality Biopharma, do have the potential to open additional regulatory pathways for expedited approval, with both 505(b)1 and 505(b)2 filings potentially available to VBIO.
VBIO has shown itself to be a revolutionary presence in the CP field, developing a new class of cannaboside prodrugs that can provide a potent site-specific method of delivery to render local therapeutic effect, while at the same time reducing or eliminating the systemic delivery into the bloodstream and brain of THC, the chemical compound within the plant that causes a psychoactive response. Utilizing the fortified strength of the prodrug, the company is in the unique position of providing patients with an extremely potent dose of the active cannabosides that induce the response. This is a huge differentiating factor for Vitality Biopharma, because as others may potentially be progressing through pre-clinical and clinical trials, the amount of cannabinoid that can be used by them is significantly reduced due to the effects of the excess THC that is sent to the brain. This makes the proprietary VBIO prodrug an exceptionally important component of the company's clinical trials, and offers more promise than its competitors in getting a product quickly to market.
Cannabinoid Prodrugs At VBIO
VBIO's stable of novel cannabinoid prodrugs has shown reliable improvements in both drug solubility and stability within the cannabosides. These betterments have led to over twenty patent pending cannabinoid compounds that will not only bolster the VBIO intellectual property portfolio, but can also provide additional revenue generating resources for Vitality Biopharma. While the prodrug technology itself is not a new concept, VBIO's novel compositions of matter, including its glycoside prodrugs of THC, CBD and CBDV related compounds are, and each may help to secure an enormous competitive advantage, especially with the potential that each compound may enjoy patent protection through the year 2035.
Independent clinical trials have already demonstrated the benefits of using cannabis compounds to treat both Crohn's and IBD. In fact, the results have shown that at least 75% of patients reported improvement and relief from visceral and abdominal pain. Capitalizing off of the promise of these independent results, VBIO is advancing its clinical initiatives to target the 1.4 million Americans that are affected by IBD, with most being diagnosed prior to the age of 30 years old.
From a targeted revenue perspective, the market for VBIO can be substantial, with current classes of drugs available to treat IBD alone, including anti-inflammatories, immuno-suppressants and antibiotics projected to generate over $9.6 billion in revenue in 2017. While these drugs may contribute to controlling and easing the painful symptoms of NBS and IBD, Vitality Biopharma is searching for a way to actually control the disease and to stop its progression. While large pharma seeks to manage pain, VBIO is looking to control the disease.
With cannabinoids being proven to have a far higher degree of therapeutic effect over opiates in certain applications, VBIO's prodrug technology offers the best of both worlds. First, it could provide enormous and systematic relief in abdominal pain in the patient. And second, it may allow patients to refrain from using potent and addictive opiates that often lead to misuse and additional exasperating complications that include constipation, inflammation of the intestinal tract and psychoactive symptoms that include nausea, fatigue and restless sleep.
VBIO's prodrug, in sharp contrast to current methods of treatment, enables the selective delivery of therapeutic value to specific tissues or organs, including the gut and brain, enabling the compound to have a more targeted and therapeutic effect. VBIO, with its prodrug, is in select company, with only about 15 prodrugs being classified as potential blockbusters, those drugs classified as being able to generate in excess of $1 billion of revenue per year. With a $9.6 billion market potential, VBIO can quickly join the club.
VBIO Pipeline Broadens
While VBIO is targeting NBS and IBD as a primary clinical initiative in 2017, the company is also making significant progress to treat additional medical needs. With the NBS and IBD human trials set to begin its Phase I/II trials in 2017, the company also plans to advance an additional Phase I study in 2017, VB210, to treat neuropathic pain, irritable bowel syndrome, opiate induced bowel dysfunction, muscle spasticity and Multiple Sclerosis.
Additionally, VBIO will be initiating pre-clinical studies to advance drug indications where cannabis has already proven itself to be useful, which can lead to shortened clinical trial time, less cost and less regulatory burden.
Regulatory Changes Benefit VBIO
While VBIO is essentially isolated from much of the legal confusion that is being generated between Federal and State enforcement of marijuana laws, the company is actually a benefactor of the ongoing referendums that have been pushing the legalization of marijuana in at least 26 states. And, although the legalization may not directly impact Vitality Biopharma from a clinical standpoint, the trend toward acceptance of the drug's use has also enlightened many people to the tremendous medicinal benefit of the drug.
With the public, and regulators, finally recognizing the enormous medicinal benefit of cannabinoids, VBIO is taking advantage of the sentiment, seeking both DEA and FDA approval for its cannabis pharmaceuticals, utilizing the low cost, low risk prodrug strategy that was discussed earlier.
And, if VBIO can demonstrate that their proprietary glycosylation platform can enable existing drugs to be tailored for selective delivery to the brain and gut, substantial partnership opportunities may arise from large pharmaceutical companies that are working to comply with an FDA that is struggling to curb the opiate abuse in the United States.
VBIO- The Stock
VBIO has seen a steady rise in trading volume during the past few weeks, with investors apparently coming out of their shell to recognize the potential that VBIO has to offer the cannabinoid based pharmaceutical market.
While VBIO trading has become active, the price volatility has remained fairly flat. This, though, is not necessarily a bad thing for investors. With an outstanding share count at roughly 14.3 million shares and with an associated trading float of less than 11 million shares, the more it churns at current levels the tighter the springs may become for an upside move. The exchange of VBIO shares from weaker to stronger hands, perhaps traded by some who are taking advantage of end of year strategies, may create a short lived opportunity for investors at these levels.
With two key trials set to advance in 2017, VBIO has set the stage for at least two catalysts that investors can expect to occur in the near term. In addition,VBIO will be providing interim data from the ongoing trials and will further educate investors as to how the cannabinoids are faring against neurological disorders in their pre-clinical studies.
VBIO has virtually no debt and does produce revenue, separating itself from the early stage companies that are years away from producing even a penny of revenue. With only 14.3 million shares outstanding, raising funds will not be a materiel detriment to investors. And, if VBIO catches up to the share price that more directly reflects its current clinical position, raising funds at levels in excess of $2.00 a share may not be materially dilutive to shareholders.
As I said at the onset, too many investors took their eye off of the fundamentals of the emerging cannabis players and did not take the time necessary to speculate on where the real money in this industry will be made. Now, many are holding stocks at sub penny levels with little hope to recover losses in the future.
In sharp contrast, VBIO offers investors an opportunity to invest in a cannabis company with real infrastructure and a data set that provides a compelling argument for its continued success. Too often, stocks are simply missed by the market, and once the market finally recognizes them, the moves can be swift to the upside.
In the case for VBIO, the low float, coupled with the catalyst driven potential in 2017, makes VBIO an attractive investment opportunity for any speculative investor.
Disclosure: I have no position in any stock mentioned and no plans to initiate any positions within the next 72 hours.
I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.
This article first appeared on CNA Finance.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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