I have been searching for investment opportunities, and have recently come across this gem of a company. I am also a veterinarian, having worked most of my career as a small animal veterinarian in large referral hospitals alongside specialists. The spike on Monday brought CP1 to my attention, and 4 days of digging anything and everything I could find on the company resulted in becoming a shareholder. It has definitely been flying under the radar for a while, and I predict CP1 may be the one of the top performers on the ASX in 2020.
CPAT-01There is currently an unfilled need in the market for this. Pain relief can be crudely categorised into steroids, non-steroidal anti-inflammatory drugs (NSAIDs) and opiates. Each have their pros and cons, but do come with significant side effects especially when used long term and on compromised patients.
Steroids and NSAIDs both reduce pain by reducing inflammation, precisely by inhibiting the production of prostaglandin (causes inflammation).
Steroids: glucocorticoids that reduce the production of prostaglandin; long term use causes Cushings syndrome (adrenal gland), liver dysfunction, gastrointestinal effects, blood clots, bone changes, immunocompromise (reduced ability to fight infections).
NSAIDs: COX1 and COX2 form prostaglandins but NSAIDs block this pathway; long term use causes kidney failure/disease, gastric ulcers/perforation, liver changes.
Opiates: reduce pain by targeting the nerves and nervous system directly; long term use causes drug dependency, nervous system side effects, cardiovascular changes, sedation, nausea, constipation. Usually given as an injection and is a controlled drug, so cannot be dispensed for clients to administer at home.
CPAT-01: research from CP1 (published May 2019) and also studies from other organisations show that THC and CBD are effective at reducing pain, it affects NMDA receptors of the spinal cord/nerves and also reduces inflammation by downregulating pro-inflammatory cytokines and upregulating . This means that CPAT-01 targets both the neuro pathway as well as modulation of the inflammatory cascade. The major side effect with CPAT-01 would be toxicity, or getting 'high' because of an overdose. The study published by CP1 in May 2019 shows that a much higher dose is required in dogs compared to humans in order to achieve an adequate concentration in the bloodstream, but also points out that no signs of psychotropic effects were seen in any of the candidates of the study. The dose threshold required for pain relief is lower than the dose threshold for psychotropic effects, so it is unlikely that you will see this side effect when used for pain relief. Previous anns show that studies to determine an appropriate dose and target safety studies are already underway and will be completed in H1 2020.
Another point to mention is synergy of various types of compounds. When you use only one drug, a high enough concentration/dose must be administered in order to achieve its purpose, and you must account for its side effects and risks. When you use two or more drugs together, you are able to achieve the same desired outcome with a reduced dose for both drugs i.e. 1 + 1 = 3 meaning that the risk of side effects for both drugs are reduced. Veterinarians can use CPAT-01 as a sole pain killer or use it in conjunction with other types of drugs; this will especially be useful in patients with liver disease, kidney disease, gastrointestinal disease, geriatric patients, paediatric patients. As I anticipate the safety of CPAT-01 to be comparatively the best among current therapeutics, it opens up a whole new world in terms of pain relief for animals (and also humans).
CBD and THC have other known uses as well, such as for seizures, nausea, anxiety, gastrointestinal issues as a few examples. But further studies need to be done to research these effects.
At present, Meloxicam (Metacam) and Carprofen (Rimadyl) are the most commonly dispensed pain relief for animals to be administered at home, but this can all change once CPAT-01 is launched. When you have one drug that causes various side effects vs another that has basically none, it is an easy decision to make.
DermaCann
The current lead therapeutic for allergic skin disease in dogs is Oclacitinib (Apoquel). This was only released a few years ago and is bloody expensive. Most clients can only request a few courses at a time due to its cost. Although there are side effects associated with its administration (vomiting, diarrhoea, lethargy, immunocompromise, skin masses), clients seek this treatment as it is effective. But what would happen when there is an alternative that becomes available on the market for a drug that achieves the same purpose, yet does not cause all those side effects? I am looking forward to seeing the studies for DermaCann once completed.
Intellectual Property
I am surprised that the market cap for CP1 is still around the $15mil mark. CPAT-01 is a pharmaceutical that is effective with minimal side effects. MicroMAX microencapsulation technology exclusive global license granted. DermaCann is under progress. With the progress made on all fronts, I feel that a MC valuation of $100mil is more fitting. This would be much higher once the products are launched and generating revenue (imminent).
The Company93.125mil SOI, experienced management from very impressive backgrounds such as MARS global (Royal Canin, Eukanuba, IAMS etc), Unilever, Elanco (large market share of world veterinary pharma), Jurox, American certified toxicologist, and ex-chairman of the examination committee of the American College of Veterinary Clinical Pharmacology (this is the organisation that manages veterinary specialists in the field of pharmacology).
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