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Here's Why We're Bullish on New Colombia Resources Inc (OTCMKTS:NEWC)

Here's Why We're Bullish on New Colombia Resources Inc (OTCMKTS:NEWC)
Written by
Chris Sandburg
Published on
October 18, 2016
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New Colombia Resources Inc (OTCMKTS:NEWC) announced at the end of last week that it is setting up a joint venture with a company called Advanced Imaging Projects LLC, through which it intends to submit an Orphan Drug application to the FDA in the US.The application in question will target the acceptance of a cannabinoid compound designed to target what has only been described so far as a "rare pediatric disease". If the two companies are successful in their application, it would mark the start of what could be a long road towards commercialization of a cannabinoid target – a road that should be littered with potential catalysts and momentum drivers.For those new to this one, this may seem like a pivot from New Columbia's legacy operations in coal mining. That part of the company is very much still progressing, however, and this joint venture is the result of a long term strategy that – in coming to fruition – has the potential to bring a lot of value to New Columbia going forward.In November last year, New Columbia announced that it and AIP were working together to identify a potential candidate for orphan submission. The two announced back then that once they had identified a candidate, it would submit within a month or two, and get a response back within three months from submission time.Fast forward a little over ten months, and this partnership is now poised for submission, and we expect to find out the target indication within the next sixty days or so.The point here is that this isn’t just a quick fire release designed to stir up some volume, it's the execution of a strategy that has long been in place, and it marks a major milestone in the transformation of New Colombia to a pharmaceutical focus entity.A bunch of companies have undertaken this strategy over the last few years, with great success. GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) has a multi billion valuation on the back of some successful orphan designations and well defined clinical pathway.The question is, can the new joint venture pick up a successful outcome to its application?Of course, it's tough to say for certain, and with no clarity as to the potential indication, it's even tougher to speculate. However, we've got some precedent on which to base a prediction, and that's rooted in New Colombia's partner, AIP.AIP has picked up numerous grants from health authorities in the past, and attracted many millions of dollars in peer revised research capital. Here's one example with the National Cancer Institute. This was a cancer target, specifically NSCLC, which might point towards an oncology indication in the upcoming application, although orphan oncology is a tricky space, so we'd prefer to see the company go down the neurological root initially. Something like epilepsy might be a good bet.AIP also has plenty of experience picking up these Orphan approvals. It's successfully applied for designations in tuberculosis, pediatric neuroblastoma, Moyamoya disease and multiple system atrophy, a Parkinsonian movement disorder. It's now going after another designation with New Colombia. In 2014, only three orphan designations were issued in rare pediatric disorders, and AIP picked up one of the three.So what's next?Well, we're looking to the near term submission of the application so as we can find out exactly what the indication in question is, and what the potential market for it might be. This would offer up some insight into the potential impact of an approval on New Colombia's market capitalization.Financing is obviously going to factor in, and we expect the company to have to undertake some degree of dilutive raise if it is going to carry a drug candidate to the clinic. However, there's the potential for a grant to offset some of this dilution:

AIP received several million dollars in peer reviewed competitive research grants and similarly, could anticipate support for this project from the U.S. National Institute of Health, which may also be a potential collaborator," Dr. Stanley Satz, PhD., Chairman and Chief Scientific Officer of Advanced Imaging Partners.

Bottom line: the company is executing on a long term strategy and this execution has the potential to bring with it a flurry of near term catalysts. It's not only going to be a fun one to trade going forward, but there's some credible long term upside potential here if things stay on track. One to watch.Subscribe below and we'll keep you updated as and when any market moving news hits on this application 100% free of charge!Disclosure: We have no position in NEWC and have not been compensated for this article.

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