If you still think of marijuana as nothing more than an illegal drug dealt from street corners that just gets you high, you need to completely discard that picture from your mind. Currently, more than half of the states in the Unites States have legalized marijuana use for either medical or recreational use which generated at least $7 billion in sales by the end of 2016.
Cannabidiol or CBD which is a chemical from the cannabis plant that doesn’t get you ‘high’ (not psychoactive like THC) is typically used for health reasons. Cannabinoids are agonists that bind to special receptors on a person’s cells known as cannabinoid receptors. One important thing to note is that certain receptors are heavily concentrated in the central nervous system (CNS) while others are found in almost all parts of the body.
According to The Hemp Business Journal, the CBD market will grow to a $2.1 billion market in consumer sales by 2020 with a significant portion of these earnings coming from medical marijuana plants rather than from industrial hemp plants.
As such, an arms race of sorts has developed as multiple companies have been trying to develop treatments based on CBD with varying degrees of success. However, one company has chosen to go a different route and we believe it stands to benefit from the increasing shift towards marijuana medicine.
While much of the news and hype has been focused on research revolving around CBD and THC aspects only, 22nd Century Group (NYSEMKT: XXII) has developed technology that allows it to alter the profiles of the 100+ cannabinoids in the cannabis plant, something we believe could have far reaching implications for treatment of a number of diseases.
Potential threat to big pharma
While it is widely known that cannabis had been used for many centuries for the treatment of seizure disorders, government regulation in the 1930’s prohibited its use. When government began easing some of the laws regarding medical marijuana use however (e.g. 2014 Farm Bill), research and clinical use of marijuana derived substances reaffirmed its effectiveness and subsequent adoption has been on a steady increase.
Also, new research recently published in the International Journal of Oncology detailed how a study found a compound in cannabis to be ‘significantly’ effective in destroying cancerous tumors in leukemia. The study found that combining existing chemotherapy treatments with cannabinoids, the active chemicals in cannabis – had better results than chemotherapy alone.
The researchers who conducted the study said that the findings suggest that a lower dose of chemotherapy could be used on patients minimizing the side effects of the treatment. The study further discovered that the order in which the treatment was administered was crucial – using cannabinoids after chemotherapy resulted in greater death of the blood cancer cells.
Such news should be well received by XXII shareholders as it further illustrates just how important is 22nd Century’s technology to alter cannabinoid profiles in the cannabis plant. Considering that a large number of people would rather smoke or vape than take pills for their disorder, we see this as an added advantage for XXII.
As more and more people forego pharmaceuticals in favor of medical marijuana, big pharma has responded by creating synthetics which seem to mimic the effects of specific cannabinoids. Valeant Pharmaceuticals (NYSE: VRX) developed Nabilone, a pill which contains synthetic cannabinoids similar to THC used to treat nausea and vomiting in cancer and aids patients.
Sanofi (NYSE: SNY) on the other hand has developed Accomplia, a synthetic chemical that blocks endocannabinoid receptors in an effort to control appetite.
However, there are problems with the synthetics.
When taken orally the synthetic pills result in just a small amount of the active ingredient entering the bloodstream, and when it reaches the stomach, acids completely break down the chemical before it has any effect on the body.
In addition to this, CBD absorbed from under the tongue is in large molecules which are not ready to be used by the body until it gets broken down further which takes time. On the other hand, vaping triggers the effects much faster, usually within 30-120 seconds since cannabinoids enter the bloodstream directly from the lungs and without the harmful toxins found in smoke.
Validation by the scientific community
If you are still not convinced about the prospects of cannabinoids going into the future, think of this. Over two thirds of 60 peer reviewed studies on medical marijuana involving cannabis and cannabis extracts carried out from 1990 to 2014 indeed showed that they offered a number of benefits in the treatment of a variety of conditions and disorders.
One example of a positive study published in 2013 was entitled “Low dose vaporized cannabis significantly improves neuropathic pain” and published in the Journal of Pain. An excerpt states: “we conducted a double-blinded, placebo-controlled, crossover study evaluating the analgesic efficacy of vaporized cannabis on subjects, majority of whom were experiencing neuropathic pain despite traditional treatment… The findings of the study concluded that vaporized cannabis even at low doses may present an effective option for patients with treatment resistant neuropathic pain.”
Another study on pain titled “Therapeutic benefits of cannabis: A patient survey” published in the Hawaii Journal of Medicine and Public Health found that patients reported a 64 percent average decrease in chronic pain after using cannabis. “In stark contrast to opioids and other available pain medications, cannabis is relatively non-addicting and has the best safety record of any known pain medication i.e. no deaths attributed to overdose or direct effect of medication.
So far, Sativex, a cannabis based mouth spray developed by GW Pharmaceuticals (NASDAQ: GWPH) is the only FDA approved treatment that contains non synthetic cannabis extract which contains THC and CBD. The treatment is used for neuropathic and spasticity in patients with multiple sclerosis, was approved in 29 countries and has sales of about $14 million annually.
The company is also developing another highly promising experimental drug called Epidiolex a proprietary oral solution of pure plant-derived CBD. The drug has already shown impressive results in clinical trials for the treatment of Dravet syndrome and Lennox-Gastaut syndrome and if approved estimates project it could hit north of $1 billion in sales.
In our view, the market appears to be discounting the impact XXII’s technology could have on the broader marijuana market. It is the only company currently capable of altering the relative amounts of the different cannabinoids in the cannabis plant which has the potential to render synthetic options obsolete. Currently, GWPH has a valuation of about $3 billion with revenues of $14 million and while we are not suggesting that XXII should trade at similar valuations, we definitely see more upside here from current levels.
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This report/release/profile is a commercial advertisement and is for general information purposes only. We are engaged in the business of marketing and advertising companies for monetary compensation unless otherwise stated below. The Wealthy Venture Capitalist and its employees are not a Registered Investment Advisors, Broker Dealers or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Sometimes human error can attribute to honest mistakes in reporting on issues regarding public companies and overall capital markets, and as such we are not responsible for the complete accuracy in these reports as the reader is required to verify all statements to ensure they are completely accurate. The Wealthy Venture Capitalist’s controlling parent company has been compensated fifteen thousand dollars per month for a 12 month contract by 22nd Century Group. The Wealthy Venture Capitalist’s controlling parent company has since renewed their contract with 22nd Century Group for an additional year for four thousand two hundred dollars per month paid in advance for marketing services. The Wealthy Venture Capitalist encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled through their website, news releases, and corporate filings, or is available from public sources and The Wealthy Venture Capitalist makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects,” “foresee,” “expects,” “will,” “anticipates,” “estimates,” “believes,” “understands,” or that by statements indicating certain actions “may,” “could,” or “might” occur. Understand there is no guarantee past performance will be indicative of future results. Past Performance is based on the security’s previous day closing price and the high of day price during our promotional coverage. Readers must visit our website at www.wealthyventurecapitalist.com/distribution-policy