Acerus Pharmaceuticals has a 364 per cent upside, Mackie Research says

Following what he describes as positive results from a Phase 1 study, Mackie Research Capital analyst André Uddin is staying bullish on Acerus Pharma (Acerus Pharma Stock Quote, Chart TSX:ASP).

On Tuesday, ASP reported the results of a phase 1 clinical trial testing its proprietary intranasal formulation of a tetrahydrocannabinol-rich cannabis oil in healthy volunteers. The company says the self-reported outcomes were positive.

“We are encouraged by the results of our phase 1 study,” CEO Ed Gudaitis said. “We believe that the adaptation of our proprietary nasal delivery system for cannabinoids validates our approach to developing safer, discreet and convenient cannabis products for the medical cannabis sector. Our goal is to develop a portfolio of cannabis products having THC and CBD [cannabidiol] in their compositions in order to address a broad set of conditions. These products can be commercialized either through partnerships or through our own efforts.”

Uddin says this development is a clear positive.

“The Positive Phase I Results Suggesting Superiority of Acerus’ Nasal Cannabis Oil Relative to Oral Oil Products: Bioavailability of THC delivered via Acerus’ nasal formulation was approximately 2.2x better than oral THC capsules. The nasal formulation was quickly absorbed and resulted in an extended PK profile with maximum peak levels occurring 7h after administration – which we believe should provide better safety to cannabis users as the nasal formulation should release THC in the blood in a more gradual and steady fashion. In addition, the majority of subjects appreciated Acerus’ nasal oil product due to quick/easy use, consistent dosing, portability and absence of smoke.

In a research update to clients today, Uddin maintained his “Buy” rating and one-year price target of $0.65 on ASP, implying a return of 364 per cent at the time of publication.

Uddin thinks Acerus will post a loss of $0.07 on revenue of $7.6-million in fiscal 2018. He expects those numbers will improve to a loss of $0.02 per share on a topline of $18.8-million the following year.

“ASP has been weak since its weak Q3 results and management changes,” the analyst adds. “U.S. prescription volume of the company’s main growth driver, Natesto, has been building momentum. We expect Acerus to launch additional products in Canada going forward and to be active on the BD front.”