Aurora Cannabis’ (ACB) is receiving a lot of flak from analysts and investors. This happened after its disappointing first-quarter performance. The company reported a 24% sequential decline in revenues and a much higher EBITDA than previously expected. Also, the company announced plans to halt construction at its Aurora Sun and Aurora Nordic 2 facilities.
Thus, the stock crashed by 17% on November 15, 2019. This was the highest one-day decline ACB ever posted in the last five years. ACB’s closing price on November 15 was also the lowest it had ever reported since October 17.
Analysts are concerned, but medical marijuana gives hope
However, ACB’s woes are not limited to the dramatic share price decline. Analysts are concerned about the growth prospects, capital position, and possibility of goodwill write-down. Per a MarketWatch report, Jefferies analyst Owen Bennett justified the investor distrust for the company. Also, analysts reduced the consensus target price for ACB by 33.21%. This was from $8.73 Canadian dollars in October to $5.83 Canadian dollars in November. Also, many law firms are launching investigations related to federal securities fraud against ACB.
However, amidst this chaos, investors and analysts are discounting ACB’s strengths in the medical marijuana space. The company’s first-quarter medical cannabis net revenues rose sequentially by 3% to $30.45 million Canadian dollars. ACB reported a gross margin of 63% for its medical cannabis net revenues, a sequential rise of three percentage points. Also, ACB’s medical patient base grew sequentially by 8% to 91,116. However, the average selling price for medical cannabis shrunk sequentially by 6% to $8.00.
ACB targets the cancer pain segment
According to Allied Market Research, the global cancer pain market will grow at a CAGR (compounded average growth rate) of 4.5% from $5.53 billion in 2018 to $7.54 billion in 2025. Market Research Engine estimated the global pain management market to be $83.0 billion by 2024.
Aurora Cannabis is targeting a slice of this opportunity by studying cannabis oils for cancer pain. ACB is working with OCOG, Sunnybrook Health Science Center, Hamilton Health Sciences, and Juravinski Cancer Center.
The study is a single-arm phase two clinical trial called COPE (Cannabis Oil for Pain Effectiveness). ACB is studying the safety and efficacy of cannabis-oil formulation as an add-on to current treatment regimens. The company is studying 40 cancer patients over a time frame of one to two years. COPE study is scheduled to finish in September 2020.
Peers look into cannabis for cancer pain, too
ACB is not alone in its quest to add cannabis-based medications to cancer pain plans. In 1985, the FDA approved Marinol (dronabinol) for managing symptoms associated with cancer and cancer treatments. The annual market opportunity for generic Marinol stands at $300 million. Also, in April 2019, Kali-Extracts Inc. announced an ongoing R&D (research and development) program for cancer pain management.
Also, GW Pharmaceuticals (GWPH) and Otsuka Pharmaceuticals studied Sativex in cancer-related pain in two Phase 3 trials. However, Sativex failed to show statistically significant improvement compared to placebo.
The company targets osteoarthritis
Per Zion Market Research, the global osteoarthritis drug market will grow at a CAGR of 8.1% from $5.99 billion in 2018 to $10.33 billion in 2025. According to an investor presentation, Aurora Cannabis is studying vaporized cannabis for painful osteoarthritis of the knee in an ongoing Phase 2 trial.
The CAPRI (Cannabinoid Profile Investigation of Vapourized Cannabis in Patients With Osteoarthritis of the Knee) has 40 participants. ACB is studying the efficacy of dosages with varying proportions of THC and CBD to control pain.
ACB looks into the epilepsy market
Per Market Research Future, the global epilepsy market could be worth $9.51 billion by 2023. The Asia Pacific market will exceed $2.0 billion by 2023. GW Pharmaceuticals’ cannabis-based Epidiolex already secured FDA and NHS approvals in two rare forms of epilepsy: Lennox-Gastaut syndrome and Dravet syndrome. Also, the company plans to submit an FDA application seeking approval for the drug in another epilepsy type, tuberous sclerosis complex, by mid-January.
ACB is studying the efficacy of CBD in children with refractory epilepsy in an ongoing Phase 2 trial. The company is working in collaboration with the Royal University Hospital and the University of Saskatchewan. On October 25, the University of Saskatchewan published preliminary results from the ongoing trial. These results showed the efficacy of CanniMed® 1:20 cannabis oil in reducing or stopping seizures in children with drug-resistant epilepsy.
Besides, according to an investor presentation, the company is also studying the efficacy of CBD and THC as adjunctive therapy in adults with refractory seizures in an ongoing Phase 3 trial. Here, the company has collaborated with Ontario Brain Institute, UofT, University Health Network, University Hospital London, and Toronto Western Hospital.
ACB sees scope in other therapeutic areas
Additionally, ACB and University Health Network are studying vaporized cannabis in Tourette’s syndrome. Also, the company partnered with the University Health Network in an ongoing Phase 2 trial. They are studying pharmacokinetics or bioavailability and pharmacogenomics of cannabis in healthy patients. According to an investor presentation, ACB and Mount Sinai Hospital are trying to identify genetic biomarker signatures that are indicative of the efficacy and safety of cannabis in patients.
On July 24, Aurora Cannabis entered into a partnership with the UFC (Ultimate Fighting Championship) to study the efficacy of hemp-derived CBD in treating chronic pain and ensuring an overall recovery of athletes. According to an investor presentation, ACB, CFL Alumni Association, and CannaConnect Clinic are studying the efficacy of cannabis in managing chronic pain and quality of life for retired athletes. Finally, ACB partnered with the University of Alberta to assess the health and economic implications of cannabis-based therapies.