In its 2Q17 (June quarter), CV Sciences Inc (OTCMKTS:CVSI) reported a respectable growth in revenue on both year-over-year and quarter-on-quarter basis, and we believe this topline growth is only a shadow of what is to come. In this coverage of CVSI, we examine the company’s prospects, especially in the therapeutics market, in light of recent research findings around medicinal value of Cannabidiol (CBD).
But before we get into the details, take a look at CVSI’s share price action.
For the sake of our readers who are not familiar with CVSI, here’s a brief profile of the company.
CVSI is an American company, founded in 2010 and headquartered in Las Vegas, Nevada. The company operates two segments: specialty pharmaceuticals and consumer products. In the pharmaceuticals segment, CVSI is focused on developing and commercializing therapies based on Cannabidiol (CBD), and it is looking at a broad therapeutic area for market for its products. In the consumer division, CVSI is focused on producing and commercializing a broad range of plant-based CBD products for the consumer market.
CBD for PTSD relief
One of the therapeutic areas where CVSI could find a huge market for its CBD-based therapies is in PTSD (post-traumatic stress disorder) treatment. A number of scientific studies have shown that CBD has a potential for not only relieving but also preventing PTSD.
For a little background here, PTSD is a severe anxiety disorder that can lead to impairment in daily functioning and suicidal behavior. In PTSD situation, fear repeatedly returns and may be recalled in the form of flashbacks. PTSD victims exhibit symptoms such as difficulty sleeping and feelings of detachment.
Based on the analysis of the US National Center for PTSD, seven to eight out of every 100 people will experience PTSD at some point in their life. Although the FDA (the US Food and Drug Administration) has approved a number of therapies for PTSD relief, those therapies show variable levels of efficacy. Furthermore, there is no approved drug that can prevent the onset of PTSD following a traumatic event. As such, this situation creates an unmet medical need in PTSD treatment that CVSI is trying to fill with its CBD-based therapeutic products.
On September 26, CVSI published a press release in which it highlighted a new study that showed that CBD can significantly prevent PTSD if taken immediately after a traumatic event. The company referenced a study by researchers at the Federal University of Parana, Santa Catarina, and the University of Sao Paulo, in Brazil.
CVSI noted that the findings have important implications regarding the use of CBD medicines to reduce PTSD. CBD is known to have effects such as increasing anandamide, which in turn activates CB1 and CB2 receptors that disrupt the consolidation of different fear memories, thus reducing the risk of PTSD developing.
Amy McCord, Director of Drug Development at CVSI, commented thus on the findings.
“Research into CBD and its effects on various disease states is mounting, and studies like these support new potential development opportunities for CBD as a pharmaceutical modality.”
Tobacco addiction relief
The PTSD study is just one of the numerous research findings that point to the market potential for the therapeutic products that CVSI is developing. On August 23, for instance, CVSI cited a study that showed that CBD may be effective in preventing and treating drug addictions – including tobacco addiction. Researchers at the University of Mississippi and Elsohly demonstrated in a study that CBD inhibits the establishment of a behavior that gives rise to addiction. The study was carried out in animal models.
The findings of the University of Mississippi and Elsohly researchers echoed another study by researchers at the Federal University of Prana and Santa Catarina in Brazil. The study by these Brazilian universities showed that CBD carries potential for reducing relapse in smokeless tobacco addiction. This is an area that could also open a lucrative revenue opportunity for CVSI.
Smokeless tobacco is a multibillion-dollar industry. According to market intelligence firm Research and Markets, the global smokeless tobacco market was worth more than $17 billion in 2015. Considering the myriad of health risks associated with smokeless tobacco use, the people currently contributing to the more than $17 billion smokeless tobacco sales would be glad to direct their spending to kicking the addiction. CVSI is preparing to capitalize on this opportunity.
Amy McCord, Director of Drug Development at CVSI, stated the following with regards to use of CBD to tackle tobacco addiction relapse.
“Unfortunately, relapse rates after achieving abstinence, in addiction disorders including smokeless tobacco are very high. CV Sciences is pioneering the development of a synthetic, pharmaceutical-grade CBD as an adjunct to nicotine replacement therapy (NRT) for the treatment of smokeless tobacco addiction.”
There is no approved drug for smokeless tobacco addiction relapse, yet the problem affects about 8 million adults in the US.
The major overhang around CVSI is the fraud suit the company is facing from the SEC (US Securities and Exchange Commission) over claims that it inflated assets on its balance sheet. The charges could result in an expensive settlement. The good news is that in the meantime, CVSI continues to pursue long-term growth opportunities, and breakthrough in these efforts should produce gains that would more than offset the impact of a settlement tied to the fraud lawsuit.
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Image courtesy of Dr. Jonathan B. Lauter via Flickr
Disclosure: We have no position in CVSI and have not been compensated for this article.