We have great news from our best performing stock, OWC Pharmaceutical Research Corp. (OWCP) ("OWC Pharmaceutical"). On April 5, 2017, the company, which is engaged in the development of cannabinoid-based therapies, announced that its preliminary clinical tests results of its topical cream to treat Psoriasis were positive. We will assess the press release in this piece, but first of all take a look at the chart:
The news
The company claimed in the press release that after the application of its cannabinoid-based cream formulation, "there was up to 70% improvement in a variety of inflammation markers directly associated to Psoriasis". In addition, the company stated that after obtaining the results, OWC Pharmaceutical's scientific team decided to expand the size and scope of its clinical study. Mr. Ziv Turner, Managing Director of the company, was quoted in the press release.
"As soon as we announced the efficacy results of our pre-clinical psoriasis treatment, OWC has continued to receive active inquiries from a variety of leading international scientific institutions in Countries like Germany, the Czech Republic, Hungary and more, that adopted or about to adopt MMJ bills. We are currently in negotiations for scientific and marketing cooperation agreements. In addition, we realistically expect product readiness for our topical cream in early Q3 2017 and, subject to regulatory approvals, federal and states laws we will be able to offer our topical cream to those who suffer from psoriasis." Source
The company also noted that the results are very relevant, given that psoriasis affects 7.5 million people in the United States. Thus, if the company can finally commercialize its product, the total amount of customers is expected to be quite large.
In addition, in the press release, it was stated that the company plans to start in 2018 an in-depth multi-layer clinical study on Psoriasis after the collection of data from patients. This study is being directed by Dr. Yehuda Baruch, the Company's CSO & Director of Research and Regulatory Affairs. He was quoted:
"We started safety phase at the hospital by this month, April 2017, and already planning a unique multi-center efficacy study. This is the natural development of the next generation of safe and tested cannabinoids treatments" Source
Review of the balance sheet
The most important assets that the company reported in its last quarterly report as of September 30, 2016 were the following:
- Cash: $90,327
- Total Assets: $129,765
On the other side, the liabilities are not as important, take a look:
- Customer deposit: $150,000
- Accounts payable: $8,866
- Notes payable: $50,000
- Total liabilities: $236,507
Like other R&D companies that we have covered recently, this company owns $8,177,778 in NOLs, which are very valuable since they are tax deductible if the company shows a profit in the future. Finally, the total amount of outstanding shares reported on September 30, 2016 was 121,416,585. Also, we could identify 100,000 warrants, which are exercisable at $0.25 and will expire on August 31, 2017.
The total amount of liabilities due to lenders is not large; the most important is due to customers. However, we believe that it is important for shareholders to know the type of debt that the company is issuing. Showing debt in the balance sheet is good since the company shows that debt holders trust the operations of the entity, but we need to always check the terms of the agreements. We could find the notes payable without conversion rights in the annual report. Following are the terms of the agreement:
"A loan agreement for up to $300,000 was issued September 28, 2016. The agreement allows for six incremental draws of $50,000 to be drawn monthly beginning September 1, 2016 in order to meet future working capital demands. The loan advances are non-interest bearing. The loan is may be repaid at any time but matures 36 months from the date of issue. As of September 30th, 2016 the company has drawn down $50,000 leaving an available balance of $250,000." Source
Conclusion
OWC Pharmaceutical is delivering great news to the market and investors are very positive about its future. The historical stock price shows this idea. If the company keeps delivering good news to the market, we do not see why the stock price won't keep rising.
In this article, we provided some insight about the balance sheet, the total outstanding shares of the company and the type of debt that the company issues. We believe that the investors need to know what they are buying, thus we try to report it. We encourage you to contact your financial advisor if you do not fully understand the financial situation of the company or if you do not understand any of the financial terms that we noted in the article. We will be updating our subscribers as soon as we know more. For the latest updates on OWCP, sign up below!
Disclosure: We have no position in OWCP and have no been compensated for this article.
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