Saturday, June 25, 2022

CV Sciences Inc (OTCMKTS:CVSI) On a Roller Coaster Amid Catalysts

CV Sciences Inc (OTCMKTS:CVSI) is a stock that’s been powering in an uptrend helped along by recent momentum in the cannabis-related space as we charge into the major catalyst next week on Tuesday. That’s when nearly a third of the US population will hit the voting booths to lay down judgment on the future legality of marijuana across nine different states.

However, CVSI ran into near-term reality this week when the company came to market with its latest financials. Long story short, the proper move here was taken by the company in terms of investor relations: focus on the pipeline and R&D initiatives because the current numbers aren’t much to write home about.

CV Sciences Inc (OTCMKTS:CVSI) frames itself as a life science company, focuses on developing and commercializing novel therapeutics utilizing synthetic Cannabidiol (CBD).

CVSI operates two distinct business segments: a drug development division focused on developing and commercializing novel therapeutics utilizing synthetic CBD; and, a consumer product division in manufacturing, marketing and selling plant-based CBD products to a range of market sectors, including nutraceutical, beauty care, specialty foods, and vape.

Following the CanX Acquisition in December 2015, CV Sciences commenced its preclinical drug development program during the second quarter of 2016. The Company’s drug development efforts include pursuing synthetic-based Cannabidiol drug candidates in areas that have the potential to provide significant improvements in therapeutic patient treatments with sizable addressable markets.

The company was formerly known as CannaVEST Corp. and changed its name to CV Sciences, Inc. in January 2016. CV Sciences, Inc. has primary offices and facilities in Las Vegas, Nevada and San Diego, California.

CVSI is led by Michael J. Mona, JR. founder of CV Sciences, Mr. Mona possesses over 30 years of senior management experience in a range of industries including real estate/construction, industrial farming, chemical processing and consumer products. Mr. Mona is a recognized industry leader in hemp farming operations and chemical extraction and has established a global supply chain of hemp-derived products.

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In the company’s release attached to the 10-Q, we got some useful summarizing perspective.

“Earlier this year, we pivoted our corporate strategy to include the development and commercialization of innovative medicines that treat unmet medical needs,” said Michael Mona, Jr., chairman and CEO of CV Sciences. “During the third quarter, we continued to lay the groundwork for advancing CVSI-007; our proprietary lead drug candidate, which addresses the multibillion-dollar smokeless tobacco market. We remain on track to advance the program into clinical development next year.”

That gives us a sense of why we are seeing growing net losses and shrinking sales on both a q/q and y/y basis. Gross margins also narrowed from 56.96% to 55.29% compared to the same period last year, with operating (EBITDA) margins now -44.78% from -33.86%.

But, as noted, the company is pushing focus to its pipeline. Specifically, CVSI will hold a webcast on Thursday, November 10, 2016 at 5:00PM Eastern Standard Time to discuss its drug development program and specifically its drug candidate utilizing synthetically-formulated CBD for use in treatment of smokeless tobacco addiction.

As they note in their press materials, “Smokeless tobacco addiction is a huge unmet medical need, as there are currently no FDA-approved drugs to treat this widespread and deadly addiction. The current treatment market in the U.S. alone is estimated at greater than $2 billion.”

Earning a current market cap value of $33.5M, CVSI has a decent store ($847K) of cash on the books, with total assets of nearly $25.7M, which compares with an appreciable load ($3.01M) of total accumulated debt. Shares have popped about 49% over the past month of action, even when accounting for the recent pullback. Furthermore, we’ve seen increased average transaction volume recently, with the past month seeing nearly 240% beyond what we have been seeing over the larger time frame. This should not be overlooked with the stock trading on a float that is very limited at just 9.1M shares.

That’s a very bullish combination if the company can give strong reasons for folks to scramble for shares after seeing the pipeline on November 10. It’s certainly worth keeping an eye on. For continuing coverage on shares of $CVSI stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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