Axim Biotechnologies Inc (OTCMKTS:AXIM) is running up up on news of its development pipeline advancing in some key early stage studies, and the company is drawing plenty of speculative capital as a result. There’s a lot of capital flowing into the marijuana space right now, much of it erroneous in advance of the spate of near term legalization votes, and so we thought we’d take a look at the catalysts behind Axim’s run in an attempt to identify whether or not the gains are warranted.

Let’s take a look.

By way of a brief introduction to the company, Axim is a development stage biotechnology company (it’s the portfolio arm of parent company Medical Marijuana Inc (OTCMKTS:MJNA), which is also up close to 50% this week) that focuses on the development of cannabinoids for application in various target indications. Right now, and with the latest announcement, the company is setting its sights on irritable bowel syndrome (IBS). The IBS market in the US is set to hit $1.5 billion in the US alone by 2023, and according to analysts, is currently naïve and underserved, with only four treatments approved as SOC in the seven major global markets (United States, France, Germany, Italy, Spain, United Kingdom, Japan). None of these are cures, and all try and alleviate symptoms in one way or another. The major symptom is pain, and this is what Axim is going after.

So what’s the treatment?

It’s called CanChew Plus, and it’s a type of gum infused with varying doses of cannabidiol (CBD) – we’ll look at these shortly when we get to the trial. Cannabidiol has a whole raft of legacy data supporting efficacy in pain indications, and Axim is trying to build on this data in its IBS indication, with the specific remit of reducing pain associated with the condition.

The chemical technology that underpins the cannabidiol release in the CanChew gum is patented, and the company has the exclusive rights to distribute the product globally (the founders of Axim are the inventors of CanChew, which is where the rights acquisition derived).

The trial is what’s called a pharmacokinetic/pharmacodynamics (PK/PD) study. Basically, these measurements determine how the active ingredient of a treatment transfers systemically from the drug to the patient, and then how much of the active compound (i.e. the concentration) is put to use.

This specific study is designed to underpin the protocol for a phase II study, with the goal being to determine an optimal dose (concentration of cannabidiol) in the gum, and in turn, to establish an optimal effect on the patient in questions IBS pain.

The two doses under investigation are 10mg and 30mg, and patients will chew one dose of the gum for 30 minutes before the measurements are taken.

That’s the trial and the treatment, let’s circle back round to our initial question – does this development warrant the run up we’ve seen?

The thing with these sorts of trials is that they aren’t overly value-inducing on their own, but the data produced can make a huge difference in the success or failure of a candidate at phase II, and that’s where the importance lies Get the dose wrong, and clinical benefit at phase II is unlikely. Get it right, and companies lie Axim could go from low to mid single dollars per share to ten dollars a share overnight.

With this in mind, we’re looking for a couple of key things to supplement the latest announcement as validating the latest run. The first, is a correlation between dose and PK/PD. To put this another way, we want to see data from the trial that suggests the higher dose leads to a higher systemic concentration of CBD in the patient after the 30 minute doing period. In this instance, the higher dose is the 30mg dose, so we want to see that one come out on top from a concentration perspective. Second, we’re looking for a capital injection that comes with the least possible impact on shareholders. Axim has basically no cash on hand (not for this indication, anyway), nowhere near enough to put a phase II in motion, at least, and the company is going to have to raise if it is going to carry its candidate forward, whatever the outcome of the current investigation. Ideally, we’d like to see something like a capital infusion from its parent company, or a partnering with another entity with an upfront capital payment and – in return – perhaps some restricted shares.

The company just secured some financing (undisclosed, private investors) for some additional early stage programs, and we’d like to see something similar support the IBD target.

Bottom line: there’s real potential here, and a novel approach in an already established application is always attention-worthy. The gains are probably bolstered by the enthusiasm surrounding the space right now, but there’s far more reinforcing this company’s valuation than can be said for other companies in marijuana and the marijuana/cannabis crossover sector at the moment.

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Disclosure: We have no position in AXIM and have not been compensated for this article.