INMED PHARMACEUTIC COM NPV (OTCMKTS:IMLFF) taken a bit of a dip since we last looked at the company, and currently trades for a little over $0.44 a share – around 35% off early April highs. This is a company that has picked up quite a lot of positive press of late, however, and that has numerous potential catalysts set to hit press between now and the end of the year that could spark some strength and – by proxy – a return to the upside momentum we saw throughout the latter half of the first quarter. At the beginning of this week, management put out a press release detailing one of the company’s lead development assets, a glaucoma drug called INM-085. The release noted that InMed had filed a provisional patent application for the delivery method used by the drug, and the way we see it, is that this marks the initiation of the asset’s traversing of a pathway towards the clinic and, beyond, into commercialization.

With this noted, here’s a look at the drug in question, how it works and where it fits into the InMed’s longer term strategy.

As noted, then, it is called INM-085 and it is targeting glaucoma. For those not familiar with InMed, the company is a cannabis pharmaceutical stock that is developing cannabis-based assets using a proprietary synthesis technology. The concept behind the technology isn’t new, but its application to cannabis (and specifically to cannabinoid) is; and it’s important.

The company takes a cannabinoid (selected on the back of the research driven database it has put together, and that we discussed in our previous coverage of the stock) and inserts genomic DNA specific to that cannabinoid into an escherichia coli (more commonly known as E. coli) cell. The E. coli cells then produces cannabinoid-based on the genomic DNA it contains. Those familiar with the biotechnology space, and specifically with diabetes, will likely already know that this is pretty much an identical process to that of insulin production using recombinant DNA. Before Genentech and Eli Lilly showed that you could produce insulin using E. coli through this recombinant DNA process back in the late 70s (a breakthrough that many see as the birth of big pharma) we had to use the pancreases of pigs to create pure insulin, and something like a ton of pancreases would only create 8 ozs of insulin.

Right now, using cannabis plants to harvest cannabinoids for drugs is the equivalent of using pig pancreases to create insulin for diabetics. What InMed is doing is equivalent to the breakthrough that Genentech and Eli pioneered forty years ago.

So that’s the science on which the company’s production methods are based, and the drug in question, INM-085, uses this method to create a combination of cannabinoids that the company then formulates into a proprietary gel-like substance, designed for application direct to the eye. The concept behind the mechanism of action is that the cannabinoids, on delivery, increase the diameter of blood vessels. Intraocular pressure is a major symptom (and, in parallel, a cause or aggravator) of glaucoma. By increasing the diameter of blood vessels in the eye, the idea is that this will reduce intraocular pressure, and treat the underlying condition.

Data collected to date validates the drug against this MOA.

So what are we looking for next? Well, and specifically as relates to this program, management expects to confirm the MOA in animal studies during the third quarter of 2017. Beyond that, it expects to find a partner that can fund clinical development. Glaucoma is a $5 billion-plus indication, and if the company can prove its drug can potentially be effective in this underserved population, we don’t expect it to have any trouble finding a partner willing to pay to get it to market. As such, what we’re looking for going forward from this program, is positive animal data and some progression on the collaboration side of the equation.

Keep in mind that the data collected to date is ex vivo, and there’s no guarantee that this gel formulation will work when it transfers into, initially, animals, and beyond that, humans. With a surrogate endpoint like increased blood vessel diameter, however, as opposed to disease progression or anything like that, there doesn’t look to be any clear reason as to why non-transference should be an issue.

Cash at April 20 was $2.7 million, so we’ll probably see a near term raise to fund the animal studies. After that, however, the hope is that a partner should bring with it an injection of capital to the company and negate any medium term dilution risk.

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