Here’s why this fundie expects MGC Pharma’s share price to more than double

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Fundie Canaccord’s research note indicates that MGC Pharma has several favorable winds, including short-term revenue and potential for clinical trials over the next year.

UK-based wealth manager Canaccord Genuity has just initiated a speculative buy note on ASX-listed MGC Pharma (ASX: MXC), with a price target of 8 pence (or around $ 0.15 TO).

MGC Pharma currently maintains a dual LSE (London Stock Exchange) and ASX listing.

According to Canaccord’s research note, MXC has the potential to increase the valuation based on a combination of short-term revenue generation and a rich pipeline of clinical trials that are expected to announce their results soon.

Storer spoke exclusively with Alex Brooks, the Canaccord analyst who wrote the report, to learn more about his predictions.

Brooks said MXC’s revenue potential is four-fold – ranging from short-term sales of CimetrA to clinical trials of CannEpil, CogniCann and its dietary supplement ArtemiC.

“If I divide the price target by 15 cents, about seven cents of it would be CimetrA, five would go to CannEpil, and the rest are relatively small,” Brooks said. Storer.

According to him, CimetrA, a treatment to fight anti-inflammation and cytokine overproduction (known as cytokine storm) in COVID-19 patients, would start generating revenue by the end of 2021.

This revenue would come primarily from its supply agreement in the United States with AMC Holdings and in India with Medopharm, Brooks said.

MGC CEO Roby Zomer previously mentioned that there is an active business development campaign around CimetrA, so we can reasonably expect more countries to join these two countries in the not too distant future. Brooks said.

“This means they could get a big increase in their income next year, and that would start to get substantial around fiscal 2023.”

The potential of CannEpil

MXC is currently conducting a double-blind, placebo-controlled Phase 2b study in Israel for CannEpil with the first patient expected to be enrolled this month. Intermediate results are expected from 1T FY22.

Canaccord considers CannEpil to be the most valuable asset for MXC, given the known effectiveness of cannabinoid therapy for drug-resistant epilepsy.

CannEpil tackles a disease (epilepsy) that is already well served by Epidiolex, produced by GW Pharma, a UK-based company, which was recently acquired by Jazz Pharma, listed on Nasdaq.

“CannEpil is in an advanced clinical trial stage and will be sold at a lower price than Epidiolex. So that’s a pretty clear economic argument, ”Brooks said.

CannEpil treats epilepsy that does not respond to other treatments, known as intractable epilepsy.

Epilepsy itself is a widespread disease, affecting around five in a thousand people around the world.

“If you add up the five largest countries in Europe, you get an addressable market of 20,000 to 25,000 children and 150,000 to 200,000 adults.

MGC Pharma has also made several breakthroughs for CannEpil in Europe.

In Ireland, CannEpil just became a fully reimbursable drug under the country’s Medicinal Cannabis Access Program from June.

And this week, the UK government granted an import license for CannEpil + to be imported into the kingdom.

Brooks estimates that peak CannEpil sales alone could exceed $ 600 million by the early 2030s.

But could something possibly go wrong with these projections?

“Obviously, clinical success is subjective,” explained Brook.

“There are two distinct problems in a clinical trial, one is technical success, that is to say; does it work at all? But then there is a separate question, which is, can it reach a commercial stage?

You can have products that are clinically effective, but only sell in a limited number of territories, Brooks explained. For example, they can only sell to Europe or the United States.

For CannEpil, Brooks says the clinical risk isn’t huge because the drug doesn’t take a whole new molecular path, and there are already some pretty well-proven side effects using ingredients like THC and CBD.

Treating dementia with CogniCann

MGC Pharma is currently developing a cannabinoid spray formulation product using a blend of THC and CBD, called CogniCann.

The concept is very similar to Sativex, a GW Pharma product approved in 2006 in some European territories, including the UK, but not yet in the US.

According to Brooks, while Sativex is indicated for the relief of spasticity in multiple sclerosis, MGC Pharma is trying to develop a new market in the relief of symptoms of dementia such as Alzheimer’s disease (AD).

AD is the most common form of dementia (50 to 70% of cases), although there are several other types, mainly vascular dementia (20 to 30% of cases).

In addition to the cognitive decline characteristic of AD, patients often present with behavioral and psychological symptoms, particularly restlessness, short-term memory loss, and aggression.

CogniCann is a spray formulation with one ml containing 17 mg of CBD and 25 mg of THC. It is believed that CBD can reduce anxiety, although there are currently no good large-scale clinical studies.

MGC Pharma is testing CogniCann in an exploratory Australian study in 50 patients with AD, who reside in nursing homes and have mild to moderate dementia (allowing them to express informed consent).

The results are expected mid-2022.

Canaccord estimates that CogniCann could achieve sales of more than 150 million euros per year when it hits the market.

ArtemiC and CimetrA – supporting COVID care

In FY21, MXC was successful in developing a significant line of cannabis-free products. This includes a nutraceutical brand product, ArtemiC, and a potential pharmaceutical equivalent, CimetrA.

ArtemiC is now sold by Swiss PharmaCan with MGC Pharma as supplier.

The pharmaceutical version, CimetrA, is at the end of clinical development and sees active commercial development as a potential product for early use in a number of countries, with the United States and India being the first two to register.

The main differentiator from generic formulations appears to be the nanoparticulate MyCell formulation.

Swiss PharmaCan claims that MyCell technology improves individual bioavailability of oily components 100/250 times, but there is no data on this beyond leading claims.

MGC Pharma claims that the activity of ArtemiC and CimetrA is anti-inflammatory.

The reduction in the hyper-inflammatory response seen in some COVID-19 patients, known as the “cytokine storm”, has been shown to improve survival and shorten intensive care time for a proportion of these patients.

Canaccord expects ArtemiC and CimetrA sales to reach $ 8.6 million by Q4 2022, up from $ 0.4 million today.

And he is optimistic about the potential of what MGC Pharma will bring to the market.

“The heart of what MGC Pharma does is to integrate plant molecules or phyto-drugs with proven effects into a clinical trial delivery mechanism,” explains Brooks.

“They turn what is actually a folk remedy into a pharmaceutical treatment. And it is very impressive.

This article was developed in collaboration with MGC Pharma, a Stockhead advertiser at the time of publication.

This article does not constitute advice on financial products. You should consider getting independent advice before making any financial decisions.

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