PEAK Pharmaceuticals Inc. (OTC: CTCO) has made tremendous strides over the past year targeting the biotechnology side of the cannabis industry. After signing a worldwide license agreement with Canna-Pet LLC and a cultivation agreement with a Colorado-based hemp farm, the company changed its name from Cannabis Therapy Corp. to PEAK Pharmaceuticals, Inc. to better reflect its focus on development and sales of pharmaceutical grade, hemp-based medicinal products for humans and pets.
In this article, we’ll take a look at the company’s progress in building a biotechnology footprint and what it means for potential investors and existing shareholders.
Over-The-Counter Products with a CBD Focus
The cannabis plant has hundreds of different components, but the two most well-known are tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”). While THC is highly regulated and known for its psychoactive effects, producing a “high” for its consumers, CBDs are widely recognized for their many potential therapeutic benefits. In fact, companies like GW Pharmaceuticals plc (NASDAQ: GWPH) are currently studying these types of compounds in clinical trials.
While GW Pharmaceuticals has been pushing through clinical trials evaluating the efficacy of THC and CBD in treating everything from childhood epilepsy to arthritis, the popular media began taking an interest in the compound after CNN’s Sanjay Gupta publicly shifted his viewpoint from anti-cannabis to pro-cannabis. Surveys have shown that CBDs can reduce seizures in children by more than 80%, highlighting the tremendous promise.
Hemp is becoming an increasingly popular source for these CBDs. In 2004, the U.S. Supreme Court ruled in HIA v. DEA that hemp could be legally processed and sold as a food or beverage in the United States. The 2014 U.S. Farm Bill took things even further by permitting limited cultivation of domestic hemp in certain states like Colorado. Until recently, companies manufacturing hemp-based products were forced to import the raw material.
Hemp’s legal status has made it an attractive target for companies looking to steer clear of the conflicting U.S. law that surrounds the medical cannabis industry. After entering into an exclusive land lease and crop service agreement with Rocky Mountain Hemp Inc., PEAK Pharmaceuticals has had access to high-quality CBDs for its products, while its focus on over-the-counter markets provides a pathway to near-term commercialization.
Diverse End Markets
PEAK Pharmaceutical is targeting potentially massive end markets, which creates blue-sky potential for shareholders. According to Ken Research, the global nutraceuticals industry has grown from $161 billion in 2006 to $259 billion in 2012, driven by increasingly health conscious consumers. The legalization of cannabis and a growing body of research marks the early stages of a potential long-term shift toward beneficial CBD-based nutraceuticals.
The company’s licensing agreement with Canna-Pet LLC also paves the way for diversification into the pet industry. According to the American Pet Products Association, the U.S. pet industry has grown at an 8% CAGR to reach $58.51 billion by 2014. Companies such as PetSmart Inc. (NASDAQ: PETM) and VCA Inc. (NASDAQ: WOOF), who have both had double digit appreciation in their stock prices over the last quarter, are clear examples of the growth in this industry. With PEAK Pharmaceuticals at the helm of the established Canna-Pet™ brand name, the company has a first-mover advantage in bringing the benefits of CBDs to “man’s best friend”.
In addition to these end markets, the company recently entered into a lease for laboratory and office space in Aurora, Colorado, enabling its plans to develop new hemp-based products for launch later in 2015. The facility is initially designed to serve its own needs, but management also plans on offering assistance to outside companies looking for qualified research and testing to be undertaken as a fee-based service, creating yet another potential revenue stream for shareholders.
Management is actively pursuing additional collaborations and partnerships with clinicians, plant biotech companies, manufacturers and certified testing labs. Through these efforts, the company plans on becoming a global provider of completely-legal hemp-based CBD products to these diverse end markets.
PEAK Pharmaceuticals has a number of “irons in the fire” with its hemp-growing operation, CBD-based products for humans and pets, and its upcoming laboratory facility. Over the next year, management anticipates generating revenue from product sales, and initial numbers are expected in the company’s upcoming 10-Q filing, which will include revenues from the Canna-Pet acquisition.
For more information, visit the company’s website at www.peakpharma.com.
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