Biotech focus

AXIM Biotech Soars After Analyst Issues $17 Price Target

AXIM Biotechnology Inc. (OTCQB: AXIM) shares soared more than 30% on Tuesday after SeeThruEquity analysts initiated the stock with a $17.00 per share price target - a 62% premium to the current market price of $10.52 per share, as of May 17, 2017.

In this article, we will take a closer look at the SeeThruEquity research report and why investors may want to consider buying the stock.

Enormous End Markets

The U.S. cannabis industry is expected to grow from $7.1 billion in 2016 to more than $50 billion by 2026, according to Cowen & Co., thanks to the ongoing legalization of medical and recreational marijuana. At the same time, the market for cannabinoid-based pharmaceutical and nutraceutical products is rapidly emerging as researchers uncover their hidden potential to treat a growing array of serious medical conditions with unmet needs.

AXIM Biotech operates in the legal nutraceutical and pharmaceutical subset of the cannabis industry, but SeeThruEquity notes the rapidly advancing legalization movement is likely to have an impact on its valuation and market perception. This may be especially true with the upcoming launch of several new exchange-traded funds (ETFs) that aim to target the cannabis industry since they will likely hold an oversized position in AXIM Biotech given its market capitalization.

Several Catalysts for 2017

AXIM Biotech has several upcoming catalysts that could favorably impact its valuation over the coming quarters. The company launched its CanChew®, a patented, controlled-release cannabis chewing gum for general well-being, in all 50 states and 40 countries. With more than 10 commercial-ready products in nutraceutical, cosmeceutical, and oral care markets, the company is already generating revenue without the need for regulatory approvals.

In addition to these products, the company has more than 20 clinical products planned and is in the process of developing pharmaceutical candidates using chewing gum and other delivery methods - including suppositories, transdermals, and transconjuctivals. These products are expected to begin reporting trial results this year, which could provide a meaningful catalyst for the stock and insights into the potential across other applications.

SeeThruEquity pointed out that lesser-known products in the pipeline could become new category leaders. For instance, the company’s Oraximax™ is a cannabinoid product that management hopes will define a new category of oral care products thanks to its anti-inflammatory, anti-proliferative, and bactericidal properties. The company also offers lozenge and skin care products that could have similar potential.

Significant Upside Potential

SeeThruEquity views the stock as an “intriguing speculative company” targeting the rapidly growing market for legal cannabis products with “what appears to be differentiated intellectual property and bold development plans” along with an intention to uplist the stock to a higher exchange.

In terms of financial performance, the analyst expects AXIM to begin generating meaningful revenue next year before truly ramping up by 2019. The analyst projects revenue of $49 million, EBITDA of $6.7 million, and earnings per share of $0.01 during 2019E, which would translate to a relatively modest 11.5x revenue multiple. The company has the potential to dramatically expand these revenues at a high margin through licensing opportunities as well.

AXIM Biotech has the self-issued goal of reaching an annual run rate of $1 billion by 2025, including $203 million from nutraceuticals and $200 million from pharmaceuticals. With 17 patents and 20 trademarks, the company is positioned to grow its portfolio through both internal product development and licensing opportunities with other industry leaders. It points to leaders like GW Pharmaceuticals plc (NASDAQ: GWPH) as an example of such ambitions.

Looking Ahead

AXIM Biotechnology Inc. (OTCQB: AXIM) has a market capitalization that greatly exceeds many companies in the cannabis industry, but SeeThruEquity believes that it could be just scratching the surface of its true potential. The analyst’s $17.00 per share price target represents a significant 62% premium to the current market price, as of May 16, 2017, and investors may want to take a closer look as key catalysts approach.

For more information, visit the company’s website or investor presentation.