Innocan Pharma (CSE:INNO)
As investors, we always need to be prudent with our research into potential investments. There are tens of thousands of stocks across dozens of exchanges, all with their own individual stories. Everyone wants to be the first to invest in a developing industry, but few manage to get the timing correctly. If it were that easy, we would all be wealthy. When seeking out new industries to invest in, we can generally find higher success with sectors still in their infancy. On top of that, we need to think about which secular trends can be disruptive and sustainable on a global scale.
When we think about innovative industries we immediately turn to things like electric vehicles or artificial intelligence. High-growth tech companies have the ability to grow exponentially into the future. But these stocks come with high-priced valuations and much of the future growth is already baked in.
There are few sectors more boom or bust on the stock market than biotechnology and pharmaceutical companies. Fortunes can be made if you choose the right company, as all it takes is one patented treatment or vaccine to bring in decades of profitability. There is a reason why the industry is dominated by a few giants, but with rapidly advancing technology, the playing field is beginning to even out.
Innocan Pharma (CSE:INNO) is a Canadian-Israeli pharmaceutical company that is revolutionizing the cannabinoid treatment industry. The company has multiple different drug delivery platforms through which patients can utilize CBD treatments for pain management, dermatological health, and reducing inflammation. While Innocan’s stock trades on the Canadian Securities Exchange the firm is based primarily out of Herzliya, Israel.
Innocan Pharma’s stock
The Canadian Securities Exchange is the Canadian equivalent to an OTC or Over the Counter market. The exchange focuses on emerging public companies and helps entrepreneurs and other small businesses get exposure to public shareholders. Innocan debuted on the CSE back on September 25th, 2019, and for the most part, the stock has performed admirably for early investors.
Innocan started out as a true penny stock, with shares trading at $0.25 per share. As with most OTC markets, volume and liquidity are fairly low for Innocan’s stock which has lent to some wild swings over the past thirty-six months of trading. Things really started to pick up for Innocan in 2021 when the stock hit an all-time high price of $1.65 per share in mid-September. Since then, it’s been a bit of a different story.
If you have followed the global markets over the past six months, you shouldn’t be surprised that Innocan Pharma’s stock has pulled back to about $0.60 per share. Over that same period, the benchmark S&P 500 index is down nearly 3.0% and so far in 2022, it has fallen by 8.6%, officially entering into correction territory. The TSX is down nearly 1.0% so far this year as well, while the NASDAQ is down 9.5% over the past six months and 13.5% year to date. It has been a tumultuous time for investors, and not-profitable, high growth companies have taken a lion’s share of the damage.
Closer to home for Innocan, the Canadian Securities Exchange has tumbled 33.3% over the past six months and 51.4% over the past year. In comparison, Innocan’s stock has managed to gain 15.4% for the past six months and 42.9% over the past year. Even with immense downward selling pressure on the CSE, Innocan’s stock has shown relative strength when compared to the market.
Innocan Pharma’s management team
A company is only as strong as its management, and Innocan Pharma has formed a core group of industry veterans from the Israeli biotech sector. The Executive Chairman is Ron Mayron, the former CEO and VP of Teva Israel which is one of the largest pharmaceutical companies in the country. Mayron single-handedly expanded Teva Israel’s market across Europe, building it into the powerhouse company it is today.
The CEO of Innocan is Iris Bincovich, who has more than twenty years of experience in managing publicly traded dermatological and healthcare companies. The founder and VP of Business Development is Yoram Drucker, who has served as executives for several NASDAQ-traded companies including Brainstorm and Pluristem. It takes a lot for a founder to step aside from the CEO position, but it also takes a commitment from Drucker to realize that as Innocan grows, the direction it eventually takes may be outside of his scope of expertise. With Bincovich as the CEO, it is clear that Innocan is focusing on its dermatological CBD treatments as one of its primary revenue streams.
Innocan Pharma’s business
It’s difficult to grasp the real potential of a company and its stock without knowing the core business and income-generating activities. As mentioned, Innocan Pharma is in the business of CBD treatments and while other, larger medicinal cannabis companies are satisfied with patenting some topical creams and CBD-infused beverages, Innocan is looking to evolve CBD treatment and take the industry to the next level.
First, a quick look into what the company has developed in recent years and is looking to launch in 2022 and 2023. As you likely already know, CBD and CBD products are gaining popularity and mainstream acceptance in the western world, as well as overseas in the European and Asian markets. We have come a long way in separating CBD treatments from the effects of THC in Cannabis. This is a crucial step towards long-term acceptance and creating a sustainable path forward as a legitimate medical treatment.
Innocan already has its line of topical CBD creams and ointments on retail shelves as of 2021. Innocan has fourteen different CBD topical treatment that are awaiting patent approval for the following maladies:
Pain-relief topical CBD treatment.
Anti-pruritic itch relief.
Vaginal moisturizer and lubricant.
Hair loss prevention.
As you can see, Innocan has cast a wide net for its treatments and patent approval for some, if not all, of these would be a major win for the company. The pain relief topical CBD treatment in particular is a revolutionary combination of CBD, magnesium as a muscle relaxant, and menthol and methyl salicylate. The clinical study behind this treatment saw a 90% reduction in pain from its participants, 83% of which saw a decrease in pain within 20 minutes of application.
In terms of its dermatological cosmetics, Innocan has two lines that have already received trademark approval: Synny and Shir. These products are distributed across Europe as well as in Canada. The Shir product line provides users with non-invasive and non-surgical anti-wrinkle treatments with the following products:
CBD Eye Serum.
CBD Face Glow Oil.
CBD Face Cream.
CBD Facial Serum.
CBD Plus Sleeping Mask.
CBD Recovery Lotion.
Coming down the pipe in 2022 is Innocan’s LPT Injectable CBD drug delivery platform which is currently initiating negotiations for licensing agreements. This treatment is used by injecting CBD directly into one’s bloodstream where it can then be carried throughout the body’s vascular system. By loading CBD into liposomes, Innocan has managed to create a treatment that can provide a prolonged and controlled release into the patient’s bloodstream. The LPT treatment is on the cutting edge of CBD technology and limits doses to once per day, as well as having a more concentrated amount of CBD absorbed by the body. As we will see shortly, this treatment has some fascinating new uses.
Finally, Innocan has also developed a CBD loaded exosome therapy. Exosomes are microscopic particles that are created through the process of stem cell multiplication. These exosomes act as natural drug delivery drones, that Innocan refers to as guided missiles for its treatments. Innocan is creating ways to target systems that are highly susceptible to inflammation, such as the central nervous system. If patients inhale this treatment, it can also have a calming effect on inflamed pulmonary systems.
Innocan Future potential
Here is the most exciting part about emerging companies: the future potential of its business. But, so far Innocan seems like just your average CBD treatment company doesn't it? With three potentially strong revenue streams on the horizon, you would think that a company with a $149 million market cap would be thrilled. Well, in November of 2021, everything changed.
Innocan expanded its revolutionary CPD LPT injection treatment to the world of veterinary services. Specifically, the treatment was given to dogs as a treatment for inflammation reduction, anxiety, and pain management. So you might be wondering why Innocan’s venture into veterinary treatment is so important? For starters, CBD medication and treatments for animals is incredibly early right now. For humans, we have had years of trials and testing that has shown next to no ill effects from using CBD treatments. We haven’t had results of animal testing yet, but so far, pet owners are eager to provide their furry friends with CBD to cure their ailments.
According to Kenneth Research, the Global Veterinary CBD Market is anticipated to grow to $125 million in value in 2022. This is compared to the human CBD market which is already worth tens of billions of dollars and includes everything from chocolate bars, beverages, and cooking oils. The Veterinary CBD market is also being projected to grow by a CAGR of 36.3% over the next few years. Major roadblocks to even higher growth right now include local and federal legislation, as well as supply chain issues from the ongoing COVID-19 pandemic.
For pet owners, an alternative and natural treatment like CBD is welcome news. Veterinary procedures and treatments can often cost thousands of dollars, and unfortunately, is an industry where a better quality of life for pets following a procedure is guaranteed. This is especially true for edlerly pets, who often fall victim to chronic, breed-specific issues that are too expensive to treat. CBD treatments, like the one Innocan is testing, have seen fairly high success levels in dogs and reduce the amount of medication these animals need to ingest.
In its November 2021 study, Innocan subcutaneously injected 5 mg/kg of CBD treatment. The single-LPT dose lasted for six weeks, compared to previous treatments which included ingesting 1-4 mg/kg on a daily basis split into two doses. It is remarkable how long the effects of Innocan’s LPT treatment lasted when compared to the industry standard oral dosage. Innocan is undergoing further testing with the LPT CBD treatment, and might have just revolutionized the CBD veterinary industry.
Innocan isn’t the first biotech company to turn to veterinary services as another focus, but it is the first to utilize CBD into such an integrated treatment therapy. Thus far, other companies like Zoetis(Pfizer), Boehringer Ingelheim, Merck, and Elanco, are all major pharmaceutical companies that deal with veterinary medications, but have yet to add CBD to its portfolio. Virbac, a German pharmaceutical company, is in the market of creating CBD oils for pets, but have yet to venture into the actual long-term treatment side of the industry.
Why else is this significant? There has been a rising trend of innovative and smaller biotechnology companies being acquired by major pharmaceutical giants. It’s not unusual to see consolidation in an industry where research and development can often be more expensive than acquiring a finished product. In the case of Innocan, you can be sure that several big pharmaceutical companies, including the ones mentioned above, could be watching the progress of this CBD treatment very closely.
One final hint that Innocan has given us as to what it has planned for the future came in early February of 2022. The company announced that Dr. Kenji Kitatani has joined the company’s Advisory Committee. Normally an advisory position isn’t major news for a company like Innocan, but in the press release the company specifically mentioned that Dr. Kitatani will be assisting Innocan in penetrating the Asian markets of Japan and China. Japan has a strict policy on drugs, but CBD products are legal there, and the same applies to China as well. If Innocan can begin to expand into Asia, we could be seeing the start of a major shift in the global CBD market.
Innocan stock forecast for 2022
So all of this brings us back to Innocan’s stock. Innocan sits at the crossroads of two of the most beaten down sectors on the market: Cannabis and Biotech. Stocks are depressed across both sectors, and yet, we’ve seen how well Innocan’s stock has held up compared to the broader CSE index. But market corrections are temporary and can often lead to bull runs as well. Given the ongoing pandemic as well as the current geopolitical tensions in Easten Europe and the imminent return of a higher interest rate environment, we could certainly see some more market volatility in 2022.
But often in times of market volatility and bearishness, life-changing investments are made. Whether you call it buying the dip or dollar-cost averaging, buying low and selling high is one of the main rhetorics of value investing. Innocan is standing on the precipice of turning into one of the global leaders of both human and veterinary CBD treatments, and has the ability to not just return to its all-time high prices, but far surpass them.
Innocan already has products on the shelf for consumers and even though some of them are pre-patent, it means the company is miles ahead of other biotech firms. Not only can this be sustainable revenues, but it means that Innocan already has the ability to create a proven and tested product with CBD.
Both the LPT and exosome drug delivery platforms are changing the way we think about using CBD and other medications. While most companies stop at simply topically applying CBD or orally ingesting it, Innocan has taken the industry to another level with its subcutaneous injections which have exponentially improved on existing industry standards.
The final catalyst that could launch Innocan into the stratosphere is the timing. The global CBD market is growing at an incredible rate and while it is already worth tens of billions of dollars, it still feels like it is just the beginning. When you add in the fact that the Global Veterinary CBD market is just starting to take flight, it’s easy to see why investors are getting excited about Innocan’s true potential.
If Innocan is successful with its LPT CBD treatment, and that is a big if, it is hard to believe that pharmaceutical giants won’t have the Israeli company on their wishlist. An acquisition or buyout could push the stock price well above its previous all-time highs, and even if that does not materialize, Innocan should be able to get there on its own merit. This is not a case of ‘well a stock traded that high before so it will again’. This is a company that is changing the landscape of the CBD treatment industry as we know it, with existing retail products, two technologies in negotiations for licensing, and being on the cusp of penetrating the Asian market.