Acerus Pharmaceutical has 189 per cent upside, Mackie Research says

Specialty pharma company Acerus Pharmaceutical (Acerus Pharma Stock Quote, Chart: TSX:ASP) has made the leap into the cannabis sector with its THC cannabis oil nasal spray, which is now undergoing clinical trials.

Analyst André Uddin of Mackie Research Capital Corporation says the move is an important first step into cannabis for ASP.

This week, Acerus announced the first dosing of subjects in a Phase 1 clinical trial which will test its proprietary intranasal formulation of a THC-rich cannabis oil, a way of ingesting cannabis that the company thinks is superior to the more conventional smoking and edibles.

“Smoking and oral ingestion are not optimal routes for cannabinoid administration, especially for medical marijuana users,” said Dr. Nathan Bryson, Chief Scientific Officer of Acerus Pharmaceuticals, in a press release. “The nasal route of administration not only avoids first pass metabolism, it offers precise and consistent dosing, convenience and efficiency; benefits which may also apply to the delivery of THC.”

Based on the news, Uddin is maintaining his “Speculative Buy” rating for ASP with a 12-month target price of C$0.65, representing a projected return of 189 per cent at the time of publication.

“We view initiation of this Phase I study as an important first step for Acerus to branch out to the cannabis business down the road,” says Uddin.

Earlier this month, Acerus closed on a $11 million term loan from SWK Funding, which prompted a revision of Uddin’s estimates for the company’s interest payments and long-term debt.

Uddin thinks ASP will produce revenue and adjusted EBITDA in 2019 of $18.7 million and negative $654,000, respectively, and revenue and adjusted EBITDA in 2020 of $29.9 million and $5.2 million, respectively. (All figures in US dollars unless noted otherwise.)