The general trend in the cannabis sector has been upturns driven by the growth in the industry as well as the continuous increase in the demand for their products. Companies within the industry, especially first movers, have been swimming in glory and cashing in profits with the boom in demand for their products presenting them with their hay days.
This, however, has not been the case for Cannabis Science Inc (OTCMKTS:CBIS) which has been facing a serious bear run since April 2017. This period to date saw their share price fall from about $0.09 to $0.028, a near 75% fall as in the chart below:
The company which is a player in the cannabis industry through its investment in research and development has in the recent past made some significant breakthroughs that are deemed to have significant bearing on their future revenues therefore growth prospects.
We shall, in this piece, review the company, their model and revenue generation prospects through its products and finally how their financial strength will affect their ability to get to this forecasted position.
The Morphosis to CBIS
Cannabis Science, Inc. (formerly Gulf Onshore, Inc) was incorporated under the laws of the State of Colorado, on February 29, 1996, as Patriot Holdings, Inc. On August 26, 1999, the Company changed its name to National Healthcare Technology, Inc. On June 6, 2007, the Company changed its name from National Healthcare Technology, Inc., to Brighton Oil & Gas, Inc., and converted to a Nevada corporation.
On March 25, 2008 the Company changed its name to Gulf Onshore, Inc and finally on April 7, 2009, the Company changed its name to Cannabis Science, Inc.
Since then, they have focused their efforts on the cannabis industry, mainly basing their focus on research and development in the medical cannabis segment.
According to the company, they take advantage of their unique understanding of metabolic processes to provide novel treatment approaches to a number of illnesses for which current treatments and understanding remain unsatisfactory. They work with leading experts in drug development, medicinal characterization, and clinical research.
They have currently focused their effortson skin cancers, HIV/AIDS and neurological conditions.
The Recent Phases
With all the morphosis that has taken place in CBIS, their new outlook and investment in the cannabis sector has come in different stages, all which have had serious ramifications on their financial position.
However, the most recent news affecting the company have more positive than negative implications with the future of the company seeming brighter in light of this news.
First, the company announced that they had accelerated the harvesting phase on 15 acres situated in their farm: a 250-acre plot CBIS/FSO NAC, to pave way for the completion of the 60-acre hemp project on the same land. The harvests from this project are meant to be sold as raw material to authorized processors of cannabis on till next year.
The most important part for them, however, is the expected yield.
According to the company CEO and CO-Founder, Mr. Raymond C. Dabney:
“The 2017 CBIS/FSO NAC MBS001 harvest is still expected to yield approximately 70,000-pounds of raw inventory with wholesale numbers around $500.00 per lb. Again, there is a possible high demand for quantity and high-quality profiles that can create a considerable increase in value for the initiative…”
The revenue expected from the above will have significant bearing on the company’s profits in the next period.
Second, and more importantly, they released a publication dubbed ‘Nanoparticle drones to target lung cancer with radiosensitizers and cannabinoids’, a piece of research that details the implication of cannabinols on the fight against cancer.
The paper can be summarized as follows: currently, early results show that using smart drug-delivery systems to deliver cannabinoids directly to tumor cells leads to increased tumor cell kill in animal models of lung and pancreatic cancer, which are some of the deadliest cancers.
Their Chief Medical Officer, Allen A. Herman, MD, Ph.D., was quoted saying:
“This publication reflects our initial work and we are assiduously working on using our drug delivery system to examine the effect of cannabinoids with and without radiation therapy on lung and pancreatic cancer. This work will form part of our applications to the FDA….”
Such comments speak volumes to the ability of the company to commercialize their venture and sell drugs made as a result of this research to the public.
This venture, similar to investing in an expensive option, will have significant payoff opportunities for the company that will last long into the future.
Over the two quarters of 2017, their financial position has improved in a few areas. Their net loss nearly halved, falling from $4 million to $2.3 million in a period when their research and development costs rose from $95,537 to $168,889, a near 80% increase.
Moreover, the fall in loss was driven by an imminent decision to cut costs, exemplified by the reduction in their sales, general and administrative expenses from $3.4 million to $1.4 million.
Despite the poor performance shown by their loss position and the lack of appeal due to these numbers, the management at CBIS seems to be doing a lot to manage costs as well as generate revenues into the future. It is our view, and the hope of shareholders, that these developments detailed above payoff for them over time.
CBIS has made strides to end a bear run that hit them. If the information detailed above is anything to go by, the company is on the path to ending this run and growing long into the future.
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Image courtesy of Medical Jane via Flickr
Disclosure: We have no position in CBIS and have not been compensated for this article.