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Broad Street Alerts Mission Statement
Cannabics Pharmaceuticals, Inc. (OTCQB: CNBX), is engaged into development of Personalized Anti-Cancer treatments. The Company’s principal product is Cannabics oil capsule that provides a safe, effective and reliable administration of cannabis. The Company’s R&D is based in Israel, where it is licensed by the Ministry of Health for its work in both scientific and clinical research. On February 2017, CNBX announced it will begin providing personalized cannabinoid anti-tumor tests for cancer patients. The results are expected to enable doctors to make better informed decisions by providing personalized patient data as supporting evidence to available medical treatments. Through an exclusive collaboration with Cancer Hope Israel, commercialization is expected to commence in March 2017. In 1st phase, CNBX plans to make this service available to cancer patients in Canada, Europe and the USA, under local medical cannabis regulations in each country and state, by the end of 2017. With these recent developments, CNBX has become one of the few companies in the world who does Cannabinoid scientific research, developing Cannabinoid-based treatments and performing clinical studies for cannabis medicines. Also, it is the first company to offer cancer patients personalized cannabinoid anti-tumor diagnostics. CNBX operates in Marijuana industry that has rapidly & recently turned into a multi-billion dollar massive growth market across US and Canada with many new states legalizing it. According to a recent estimates, cannabis market crossed $6.7 billion from the U.S. alone in 2016, and that sale of cannabis are set to rise to $22.8 billion in the U.S. by 2020. The company’s stock has unsurprisingly found enormous strength in the recent past. It has been powering due to the favourable impact of the company’s recent announcements and growing popularity of the industry.
Description & about the Company:
Cannabics Pharmaceuticals Inc. is a US based company founded in 2012 by Israeli researchers from the fields of molecular biology and cancer. CNBX’s entire R&D activities is based in Israel and involves both scientific and academic research as well as current ongoing medical clinical studies which are registered with the US NIH.
CBD Products, Therapies and Treatments continue to advance through research and development breakthroughs, prompting strong forecast for 2017 performance.
Despite some concerns regarding how the new administration in US is going to favor the Cannabis industry, the perception seems to be changing now. Four states in the U.S. already voted in favor of legalization during November 2016. The results on Election Day confirm that the cannabis industry has a stronger support among Americans than ever before. A study conducted by Pew Research in the U.S. found that the percentage of adults in favor of marijuana legalization is an around 57%.
Major product pipeline:
CNBX’s scientific focus is on harnessing the proven therapeutic properties of natural Cannabinoids and to create tailored therapies for cancer patients. The Company’s principal product is Cannabics oil capsule that provides a safe, effective and reliable administration of cannabis. Composed solely from food grade materials, Cannabics oil capsule delivers a steady level of beneficial effects for 4–8 hours.
Recent Break through:
On Feb. 7, 2017, CNBX announced offering personalized cannabinoid anti-tumor tests for cancer patients. The service, based on liquid biopsies, will test patients’ sensitivities to cannabinoid compounds in parallel with conventional chemotherapy. Commercialization will commence next month in the U.S., Europe and Canada.
The aim of the testing is to support doctors’ decisions regarding the best therapies for individual patients. Under an exclusive collaboration agreement with Cancer Hope Israel, the company will provide its proprietary cannabinoid-based compounds to be assessed for their anti-tumor properties.
Also on, January 3, 2017, CNBX announced a New Dosage of 5mg THC Cannabis Capsule Treating Cancer Patients. The Cannabics 5mg THC capsule is currently being evaluated in a clinical study as a palliative treatment, which is conducted by the oncology department at the Rambam Medical Center in northern Israel and under strict regulations of the Ministry of Health, by whom CNBX has been licensed since 2014.
The majority of CNBX’s cancer trial patients have no previous experience with Cannabis, hence this recalibration of the THC level may be more amenable. Management believe there is a significant potential medical market for its 5mg THC capsule in countries that have now instituted medical cannabis regulations.
These recent breakthroughs in discovering a more potent formulation ratio of cannabis components THC and CBD in combating cancer cells, have enabled CNBX to create marijuana medicines boasting greater efficacy, possibly enjoying a stable share of the medical marijuana market. Aside from that, the company could also generate extra revenues by monetizing its discovery to third-party developers of marijuana medicines.
Key Stock Influences:
Some key influences that might govern future stock price performance include:
(1) Timely commercialization of CNBX’s personalized cannabinoid anti-tumor tests for cancer patients by next month in the U.S., Europe and Canada.
(2) CNBX is still a pre-commercial stage biopharmaceutical 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. Therefore, any time or cost overrun in its ongoing R&D activities and its impact on business & financial profile will remain a key business sensitivity factor.
(3) CNBX is having a constrained financial position. Therefore, its ability to maintain liquidity and financial flexibility to fund its incremental capital requirements will remain a challenge for the company.
(4) CNBX ability to revamp its sales strategy and to align with mainstream markets would hold the key over the near to medium term.
CNBX is still in pre-commercial stage and therefore had no revenue for the three months ended November 30, 2016 and 2015.
For three months ended November 30, 2016, its total operating expenses were $102,876 compared to $52,937 for the three months ended November 30, 2015 resulting in an increase of $49,938. The increase is attributable to increases in general and administrative expenses of $36,694; research and development expenses of $13,736; and a decrease in sales and marketing expenses of $491.
Cash Flow & Balance Sheet:
As of November 30, 2016, the Company had $278,151 in cash. This stands against virtually no total current liabilities. Notwithstanding current cash balances, it is evident that CNBX do not have sufficient resources to effectuate its future business.
Management expects to incur a minimum of $1,000,000 in expenses during the next twelve months of operations. These expenses will be comprised primarily of general expenses including overhead, legal and accounting fees, research and development expenses, and fees payable to outside medical centers for clinical studies.
Therefore, it has to raise significant incremental funds over the near to medium term. It may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party.
Their ability to secure required financing will depend in part upon on investor perception of the company’s ability to create a viable business.
Moreover, Capital market conditions and other factors beyond control may also play important roles in their ability to raise capital. The Company can offer no assurance that it will be able to successfully obtain additional financing, or that future financing occurs on terms satisfactory to management and/or shareholders. If funds are unavailable in the future, or unavailable in the amounts that the business requires, or unavailable on acceptable terms, the company may be required to cease operating or modify its business plans in a manner that undermines its ability to achieve business objectives.
Furthermore, factors such as pricing ability, product quality, geographical diversity and product range would also affect the business risk profile of the company.
These weaknesses are partially mitigated by extensive track record of management with strong R&D experience with a particular emphasis on clinical development. Management’s adequate knowledge and network in the field of drug development will play a significant role in advancing CNBX’s products through the clinical and regulatory process.
On Friday, February 17th, 2017, CNBX shares surged by 36.52% to $4.0 on an average volume of 936,967.00 shares exchanging hands. Market capitalization is $662.13 million. The current RSI is 91.08.
In the past 52 weeks, shares of CNBX have traded as low as $0.021 and as high as $4.41.
At $4, shares of CNBX are trading above their 50-day moving average (MA) at $0.96 and above their 200-day MA at $0.38.
The present support and resistance levels for the stock are at $2.8 & $4.77 respectively.
Broad Street Alerts is a wholly owned subsidiary of small cap specialists LLC, herein referred to as SCS LLC.
SCS LLC has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.