Conventional marijuana has not received federal approval in the United States, but synthetic derivatives have. Dronabinol is one example of a synthetic THC that is utilized for nausea and vomiting caused by cancer chemotherapy. Syndros is the brand of dronabinol produced by publicly traded, Insys Therapeutics, Inc. (NASDAQ: INSY). They are also developing a synthetic cannabidiol oral solution for child epilepsy. Their stock trades on the more regulated NASDAQ exchange, unlike many penny stock or OTC companies in the industry.
Insys Therapeutic's products are not solely in the synthetic marijuana space. They also produce opioid pain relievers and cessation treatment. This diversity of drugs may be of a deterrent to the investor seeking marijuana stocks. For example, it is the company's opioid segment that has brought on the recent law suit and operational loss. Arizona, New Jersey, and North Carolina have all sued Insys for "pushing" fentanyl-based pain medicine. Additionally, arrests were made of physicians that were allegedly accepting kick-backs to push the fentanyl based drug. One of the side affects of opioids, especially fentanyl, is death by suffocation as the body stops breathing.
Some estimates have shown the U.S. market for dronabinol to be as low as $200 million. This is a small market and to make matters worse, the estimated settlement to the U.S. Department of Justice for aforementioned violations is $150 million. However, that expense is possibly the low end of the range, "There can be no assurance that future discussions with the government to resolve these matters will be successful, that the approvals we need will be obtained or that any potential settlement will be agreed to on terms and conditions acceptable to us or the DOJ." - Sept. 2017, SEC Form 10-Q
The 2018 focus on synthetic cannabidiol is sign of Insys moving away from past opioid goals. Their January 2018 presentation at the J.P. Morgan Healthcare Conference stated, "90% of sales force and commercial organization is new" and "Reviewed, revised and enhanced protocols [for compliance]." This does sound promising. The current pipeline status of developmental pharmaceuticals is as follows:
As the settlement expense was first being implemented, the stock price per share went from $10 to $5. That low was likely the best opportunity to buy with high yield reward. Current price range of the $9s may be too high for a bargain buy. In other words, the ship has sailed.
The company's cash flow is non-existent, which isn't too surprising for a developing pharmaceutical company. The net income continues to be at a loss for 2017 and will see further complications due to the settlements. However, the cash on hand with short term investments is approximately $183 million and they do not have any debt.
Insys Therapeutics has a differential angle in the marijuana stock market, because they focus upon synthetics that are permitted implementation. This may be considered a sign of things to come; that medicinal synthetics will be given the green light, while the U.S. organic plant continues to be restricted. Even though medicinal synthetics may have more legitimacy, marketing is not free to expand its demand. On the contrary, it's a controlled market with a quota.
"Quota. Only registered manufacturers are permitted to manufacture FDA-approved products containing dronabinol in an oral solution in accordance with a quota assigned pursuant to 21 U.S.C. 826 and in accordance with 21 CFR part 1303." - U.S. Dept. of Justice
Disclosure: I am/we have no positions in INSY with no plans to initiate any positions within the next 72 hours.
President Donald Trump put pressure on auto makers to keep manufacturing in the United States. The relationship does not appear to be completely adversarial as key CEOs later met with him at the White House for a positive meeting of the minds. Ford Motor Company claims to have canceled $1.6b for a new Mexico plant and diverted $700m towards domestic operations. The company's free cash flow (FCF) yield is strong as so is the dividend yield.
Follow The Swift FCF Yield to read more.
TipRanks, the world's leading financial accountability engine, collects data from over 36,000 corporate insiders and ranks them based on their success rate and average return. Sign up here at TipRanks
Follow for more hot stocks by insiders.
Buy-side analysis of stocks:
1. Interview: Veru Healthcare CEO Dr. Mitchell Steiner
2. The Next Snowbike Could Be A Harley-Davidson Takeover Target
3. Boeing Vs. The Barnstormers Of Space
Articles are written by Travis Brown at Seeking Alpha. Information covers stocks in the NASDAQ stock market and NYSE stock market.