Towards the end of April, we published this article highlighting OWC Pharmaceutical Research Corp (OTCMKTS:OWCP). At the time, the company was trading for around $1 a share and we hypothesized that at or around then-current levels we would see a bottoming out of the overarching decline from February highs and, by proxy, a longer-term turnaround in fortunes for OWC and its shareholders.
Turns out we weren’t quite on the money.
Subsequent to that coverage, the company has continued to depreciate in value, and currently trades for a little over $0.66. That’s a 35% or so decline on end April pricing.
Against this backdrop of market capitalization decline, however, we are going to stay the course on our thesis, and – once again – suggest that, at current levels, this company cannot fall much farther before revaluing to the upside.
Our thesis last time was based on two primary catalysts, one near-term and one slightly longer term. The first was data from a study of the company’s lead topical administration cannabis type development asset, which the OWC is trialing as a potential therapy for the treatment of psoriasis. At the then-time of writing, the company was conducting a safety trial that would serve as underpinning a commercialization run, and management had stated that data would hit press either during the second quarter (which we read in an interview with the CEO) or during the third quarter (which was a period taken from a recent company presentation). Either way, it’s near term, and it’s enough to inject some considerable upside momentum into the company if we see a clean safety profile for the product.
The second catalyst was rooted in the bringing of a sublingual administration version of the primary active compound (cannabidiol) to market in its own target indications, which initially look to be various pain management-type indications, as a replacement for the current smoking administration method.
This latter catalyst is a late 2017 early 2018 target.
Subsequent to our coverage, management gave word that it expects to put out further data that will serve as a third catalyst; one that slots nicely between the first and second catalysts outlined above.
The data relates to an administration-type study of what the company intends to be a multiple myeloma cannabis-based drug, which is in place to determine the most effective method of getting the active compound into the bloodstream. Preclinical studies have suggested that the formulation created by the company can destroy cancerous cells by up to 60%, which is pretty remarkable for an oral administration cannabis type drug, and when the new data hits press, it should be able to underpin an Investigational New Drug Application (IND) and – in turn – move the drug into the clinic.
Again, just as with the other two trials noted above, this one is being conducted in Israel, a region that is extremely friendly to cannabis development, and the most recent communication suggests that it is on track to read out during the third quarter of this year. Well, to be specific, the trial should complete during the third quarter. Whether it actually reads out before September-end remains to be seen. If it takes a little longer, however, it’s not that big a deal. With any luck, the psoriasis asset should get the company moving and draw speculative volume ahead of the multiple myeloma asset readout. If the latter then comes out positive, the cycle starts all over again ahead of the pain management trial readout.
Cash came in at around $2 million at the end of March, so we are probably going to see some degree of raise as and when these assets advance in their respective clinical pathways, but any dilution brought about in the back of this race will likely be mitigated by the upside we see on the back of any advance-inducing data hitting press.
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Disclosure: We have no position in OWCP and have not been compensated for this article.