These two cannabis-focused biotech stocks are worth a look for investors looking to get in on the ground floor of this budding industry.
The cbd stocks to watch are two cannabis-focused biotechnology companies that have a market cap of $4,000.
As dissimilar as they may seem, there is significant connection between the cannabis and biotech industries that investors should be aware of. Biotechnology may be used by growers to alter the DNA of marijuana plants in order to improve production, and biotechs can utilize the bioactive compounds found in cannabis as a starting point for medication research.
Both of the businesses I’ll be looking at today do business in these overlapping areas. And, if their efforts bear fruit, they’ll be attractive companies to hold, particularly as the biotech sector matures and the cannabis business grows to meet global demand.
Jazz Pharmaceuticals is number one on the list.
Jazz Pharmaceuticals (NASDAQ:JAZZ) is making strides in developing cannabis-derived medications for uncommon illnesses, and it’s gaining traction quickly. Epidiolex, the company’s epilepsy medication, got an extended indication in the United Kingdom on Aug. 10 for seizures caused by a rare condition called tuberous sclerosis complex, after a similar approval in the United States. Epidiolex, a prescription-only version of the chemical cannabidiol (CBD), a non-psychoactive component of cannabis, now has its fourth indication.
Epidiolex revenue is rapidly increasing; in the second quarter, sales increased by 32% year over year to $155.9 million. A phase 3 trial evaluating the drug’s value for myoclonic-atonic seizures (a rare type of epilepsy) is scheduled for the first half of 2022, and the firm is already eyeing a fifth indication.
But cannabidiol isn’t the only cannabinoid in Jazz’s cannabis pipeline. It has numerous clinical-stage studies exploring the cannabis combination known as nabiximols for diseases including multiple sclerosis (MS) spasticity, schizophrenia, and post-traumatic stress disorder, in addition to other secret programs (PTSD). One thing these diseases have in common is that they’re difficult to treat, and the medications that are presently available aren’t very successful.
So, if Jazz’s prospects succeed where other treatments have failed, the company will be able to quickly claim a market-leading position, which is fantastic. Even if Jazz’s programs aren’t game-changers, they may nevertheless gain market share by being utilized as adjunct therapies alongside current treatments.
Jazz is, of course, a relative newbie to the cannabis treatments industry. The firm produced a few of medicines for cancer and neurology uses before acquiring GW Pharmaceuticals, from which the majority of its cannabis portfolio was derived. In fact, Jazz’s oncology portfolio is expected to generate $835 million in sales in 2021, shattering the previous high of $554 million set in 2020. There’s a lot more to this company than its profitable cannabis medications, which is another another incentive to buy it.
2. The Group of the Twenty-First Century
It’s a tried-and-true approach to help other companies earn more money, and that’s precisely what 22nd Century Group (NASDAQ:XXII) does with its cannabis genetics platform. The business boosts the production of important cannabinoid compounds by altering the DNA of marijuana plants.
This is a much-desired feature among cannabis farmers since it allows them to get more out of their limited production area without increasing the amount of work or the size of their growing footprint. And if farmers want to boost the production of some cannabinoids while suppressing the production of others, 22nd Century can accomplish that as well, allowing for a slew of new product diversification options.
22nd Century’s cannabis genetics platform is very important because to two major developments.
To begin with, marijuana pure-play businesses have a difficult time making money. This is due to variations in the fair-market value of marijuana and the related cannabinoid compounds, which must be extracted via processing. Increasing cannabinoid yields may be a big part of the answer, since it would need less plant matter to produce the same amount of cannabinoids.
Second, as legalization progresses, worldwide demand for marijuana is rising. Competitors will have to face the issue of meeting that demand at scale by expanding their production. However, one of the industry’s continuing problems is overbuilding production capacity in relation to demand. If companies can rely on better yields, they won’t need to build as much additional cultivating space to keep up with demand.
In conclusion, 22nd Century’s services will be in high demand from both big and small marijuana growers. If all goes according to plan, the firm will begin to generate more money from licensing its genomics technology in 2021 and beyond, putting it on the road to profitability. Furthermore, the relatively modest quantities of cannabis biomass and cannabinoid distillates that it manufactures in-house may see increased demand. While cannabis businesses don’t need it to thrive, they may gain a significant advantage if they do, which is why this stock is worth purchasing.
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