Cannabics Pharmaceuticals Inc (OTCMKTS:CNBX) Has Some Near Term Upside Potential On Catalysts

The ballots are in, and cannabis is getting a boost from the legalization wave we are seeing across the space. Recreational use is set to bring a flood of new dollars into the marijuana sector in California, Nevada and others, and – as we've highlighted for a while now here at Insider Financial – there are a number of opportunities to pick up an exposure to the growth of the industry.In what will likely be a day filled with cannabis related coverage, here's one of our first focus stocks – Cannabics Pharmaceuticals Inc (OTCMKTS:CNBX).The company is up more than 20% on its Tuesday open, as part of a trend that has seen record volume boost Cannabics' share price from sub $0.1 mid to late October to where it currently sits just shy of $1.5 a share. The primary driver behind these gains is the speculative cannabis capital wave, but markets like to buy news, and shortly before this one stared to run, news hit press that the company had made a breakthrough in its cannabis based oncology efforts. This is the seeming driver behind the gains, and so we're going to take a look at exactly what this news implies, and what it means for Cannabics going forward.The company is an Israel based development stage pharmaceutical company investigating the impact of various ratios of cannabis plant extract (specifically, CBD and THC) in oncology indications. It's doing this in two ways. First, the Cannabics team has developed a capsule that allows for the administration of THC and CBD in predefined ratios, with the goal of tailoring these ratios to a patient's specific requirements, depending on cancer type, stage, etc. Current oral administration of cannabis (and by proxy, the extracts Cannabics is working with) is pretty limited in method variety, and not very targeted. The most common oral administration of cannabinoids is through eating edibles, mainly, cookies, chocolate bars and lozenges. High doses need to be administered because of the gastric pass, and this results in unwanted side effects out side of the therapeutic benefit.The Cannabics capsule is designed to resist gastric breakdown, and in turn, reduce the concentration requirements of the administered dose.Which brings us to the latest release.The company is testing various ratios of THC/CBD on glioblastoma cells (glioblastoma is a form of brain cancer the most common and aggressive form in humans) using a process called HTS (High Throughput Screening). This process is widely used in preclinical testing in biotech, and it essentially involves putting hundreds of different cell variations in a mixture with the compound that you want to investigate their reaction with, and getting a robot to scan all of the interactions and present them electronically. In this instance, Cannabics used U87 cells, which is the term used in oncology for a glioblastoma cell line (in the PR the company actually referred to them as U87MG, but this is outdated) derived from a single 44-year-old cancer patient and then multiplied out for global investigation. The company spread these cells throughout the assay plate on the HTS machine, mixed in various different concentrations of THC and CBD, and let the machine do its thing.Now, the goal was to show that some ratios induced a higher degree of what's called apoptosis (this is basically just the process through which cells die, a sort of cell suicide mechanism, that cancer cells don't usually have) than others. If the results came out in line with this hypothesis, it would pave the way for an optimization of the approach to target – eventually – in vivo GBM cells with the most effective THC/CBD ratio.The end goal, is to pull cells from a biopsy of a GBM patient's tumor, test them using HTS and then give the patient the optimal ratio to treat their cancer. Targeted therapy.So did the results fall in line with this hypothesis?In a word, yes."…results from the company's latest cancer HTS research overtly conclude that, depending upon the THC/CBD ratio, specific Cannabis extracts are directly contributive to reducing U87MG glioblastoma cell viability."So where does the company go from here?Well, the next major catalysts involve demonstrating a similar impact on other cancer cell types outside of GBM, and we don't have long to wait before these hit press. Cannabics expects to put out data for these before the end of December 2016.If the company can replicate the impact in other cancer types, it's going to benefit from further upside revaluation heading into the first quarter of 2017.It's important to note here that these are early days, and that ex-vivo activity is very different from in-vivo clinical benefit. Said another way, these outcomes far from predict chances of a drug even reaching the clinic, never mind commercialization. That said, for a preclinical biotech in a space set to catch fire over the coming twelve months, there's plenty of opportunity for upside on catalysts related to early stage studies, even without any confirmation of an IND.One to watch.We will be updating our subscribers as soon as we know more. For the latest updates on CNBX, sign up below!Disclosure: We have no position in CNBX and have not been compensated for this article.