PreveCeutical Medical Inc. (OTCQB – PRVCF) is a health sciences company that develops innovative options for preventive and curative therapies utilizing organic and nature identical products. The Company has a strategic partnership with Aurora Cannabis, a leading producer and distributor of high-grade medical cannabis and the relationship is key to PreveCeutical in securing the supply of cannabinoids that are consistent and of the highest quality.
In keeping with its vision of becoming a global preventive healthcare company, PreveCeutical is continuing to meet key milestones with its portfolio of research and development programs that will boost shareholder value.
Key recent announcements:
- Update on Sol-gel’ R&D (research and development) work: On July 11, 2018, they provided an update on the soluble gel (“Sol-gel”) drug delivery research and development program (the “Sol-gel Program”), that involves testing an array of cannabis strains for the development and commercialization of cannabinoid-based Sol-gels. The management confirmed that the preliminary findings on its custom soluble gel applicator are encouraging as it updated on its R&D (research and development) work.
- This preliminary screening of non-cannabinoid constituents has heightened the Company’s understanding of how components (other than CBDs and THC) impact the formulation of Sol-gel systems and provided insight into chemical compatibility, physiochemical stability, and biocompatibility of Sol-gels with biological membranes, paving the way for the optimization of engineered Sol-gels that possess the Company’s target gelation and adherence properties.
- Oversubscribed private placing: Before this, the company confirmed about its oversubscribed private placing, which raised C$6.54mln (gross). In all, around 130.8mln units were issued at $0.05 per unit for gross proceeds of $6,539,987.50. The funds would be used for research and development (R&D) programs and general working capital purposes.
- This oversubscribed placement speaks about the investor demand in PRVCF and is a strong endorsement of the quality of its research programs and management team.
- Additional permits by the Australian Government: In May this year, PreveCeutical said it had been awarded two additional permits by the Australian Government, Department of Health, for the importation of a second shipment of cannabis plant materials into Australia for research purposes and the shipment of dried cannabis materials.
- In addition, that month, it inked a non-disclosure agreement (NDA) with a globally recognized, innovative drug delivery device manufacturer. This will allow the firm to enter discussions with the manufacturer for the supply of spray devices for use in the company’s soluble gel drug delivery research program.
The Company’s Sol-gel Program uses five distinct Cannabis sativa L. strains containing a broad
range of CBD: THC concentrations, which allows for the development of medicinal cannabis
products tailored for a broad range of ailments and diseases. The current focus of the Sol-gel
Program is preparing Sol-gel formulations containing fixed CBD: THC concentrations, which,
when sprayed using a custom applicator, will be able to safely and consistently deliver CBD: THC
to the central nervous system in predefined ratios.
Before the Company obtained its medicinal cannabis, import permits and licenses, it laid the
groundwork for the Sol-gel Program by evaluating the non-cannabinoid constituents of
commercially sourced cannabis plants and assessing the feasibility of incorporating them into the
Sol-gel delivery platform. This preliminary screening of non-cannabinoid constituents has
heightened the Company’s understanding of how components (other than CBDs and THC) impact
the formulation of Sol-gel systems and provided insight into chemical compatibility,
physiochemical stability and biocompatibility of Sol-gels with biological membranes, paving the
way for the optimization of engineered Sol-gels that possess the Company’s target gelation and
PreveCeutical is also currently developing the custom Sol-gel applicator. The Company’s research
partner, The University of Queensland, has received several prototype Sol-gel spray devices from
the Company’s manufacturer. Although evaluations are ongoing, the preliminary results are
Conventional methods of nasal drug delivery, such as drops and sprays, fail to deliver the
therapeutics far enough into the nasal cavity and are rapidly removed by the nose’s self-cleaning
mechanisms, decreasing their efficacy. The Company’s Sol-gel formulations aims to resolve these
issues, making them an ideal vehicle for the nose-to-brain delivery of a host of therapeutic agents,
including cannabinoids, for the treatment of central nervous system conditions, such as pain,
inflammation, seizures and neurological disorders.
The Company believes its Sol-gel platform is an ideal vector for improving therapeutic outcomes for patients seeking access to cannabinoid-based products and therapies.
Guidance for the near to medium term: As per management, throughout the remainder of 2018 and moving forward, PreveCeutical is focused on key acquisitions and the pursuit of assets/preventative products that are commercially viable in order to create a diverse and robust revenue stream. Additionally, the company is working toward the achievement of several milestones within its R&D pipeline with an intention to advance future clinical trials of its products.
About the Company: PreveCeutical aims to be a leader in preventive health sciences and currently has five research and development programs, including: dual gene therapy for curative and prevention therapies for diabetes and obesity; a Sol-gel platform for nose to brain delivery of medical compounds including cannabinoids; Nature Identical™ peptides for treatment of various ailments; non-addictive analgesic peptides as a replacement to the highly addictive analgesics such as morphine, fentanyl and oxycodone; and a therapeutic product for treating athletes who suffer from concussions (mild traumatic brain injury).
Current Programs: PreveCeutical has partnered with the University of Queensland in multiple research and development programs. Under the agreements, intellectual property and results arising from these programs will be owned by PreveCeutical.
Overall Market Opportunities: PreveCeutical began as a platform to capitalize on the $3.8 trillion preventative health sector and to take advantage of the mostly untapped industry through combining pharmaceuticals and natural products. The company developed the phrase “PreveCeutical” with the vision to research, develop and market products designed with unique delivery technologies while focusing on preventative health.
Financials: The company has made no meaningful revenues thus far. Moving forward, given their investments, they are well poised for substantial traction.
At March 31, 2018, the Company had working capital of $262,416 compared to working capital at December 31, 2017, of $1,066,337. This included cash of $204,038 (December 31, 2017 – $104,478) available to meet short-term business requirements and current liabilities of $1,106,591 (December 31, 2017 – $304,491). The Company might require additional financing. The Company’s accounts payable and accrued liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.
Key risk factors and potential stock drivers:
PRVCF is still an early stage cannabis company and has not yet generated meaningful revenue and will likely operate at a loss as it grows its market position and seeks ways to monetize it.
It said the company is likely to see meaningful results from their current investments. Analysts remain hopeful that these payoffs will take shape quite soon and stay bullish about the stock price.
Regulatory Risk: Notwithstanding the current operational and marketing progress, the company continues to remain exposed to regulatory and legal risk.
Scaling risk: Cannabis is a difficult plant to grow in scale while meeting quality standards. Therefore, any time or cost overrun in PRVCF’ ongoing activities and its impact on business & financial profile will continue to remain a key investor sensitivity factor.
PRVCF’ ability to maintain liquidity and financial flexibility to fund its incremental capital requirements will remain a challenge for the company. Additionally, the industry is competitive, and PRVCF will be competing with many other and better-financed companies.
- On July 17th, 2018, PRVCF was at $0.05, on an above average volume of 401K shares exchanging hands. Market capitalization is $17.457 million. The current RSI is 32.06
- At $0.05, shares of PRVCF are trading below its 50-day moving average (MA) at $0.13 and below its 200-day moving average (MA) at $0.41
- The present support and resistance levels for the stock are at $0.0149 & $0.0541 respectively.
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