Our Corbus Pharmaceuticals Stock Prediction in 2019 (Buy or Sell?)
To quote the title of Cole Porter’s classic song, it’s “All or Nothing at All” for clinical-stage biotechs.
Clinical-stage biopharmaceutical firms often have no drugs on the market and only have one or a few drugs in the clinical testing phases. That means they aren’t earning much revenue and literally have everything riding on these clinical trials. If their drug candidates succeed in trials, investors strike it rich. If they fail in trials, shareholders get… nothing at all.
That’s the dilemma, but enormous opportunity, facing Corbus Pharmaceuticals (NSDQ: CRBP), a $485.7 million market cap clinical-stage biotech that’s developing new drugs to commercialize.
Corbus is focused on cannabis therapies, adding yet another layer of risk and uncertainty to the investment.
Corbus Pharmaceuticals is a speculative investment. It is the kind of stock that could go much higher, or right to zero. This is not a stock for the queasy. However, maybe risk-tolerant investors should take a look.
Below, we examine the pros and cons of the company and see what may be in store for its stock in the coming year.
What Is Corbus Pharmaceuticals?
Based in Norwood, Mass., Corbus is a Phase III clinical-stage pharmaceutical company. That means it is involved in double-blind randomized trials for drugs, in which one group of patients receives the drug, while a control group is given a placebo. The trick is that neither the patients nor the researchers know who gets the drug.
Phase III studies have hundreds or even thousands of patients and studies can go on for years. The goal is to root out all possible side effects or adverse conditions, as well as study the long-term effectiveness of the drug.
Corbus specifically works with drugs to treat inflammatory and fibrotic diseases using endocannabinoid system-targeting candidates.
The company’s top candidate is Lenabasum. It’s entirely synthetic and designed to stop chronic inflammation and fibrotic processes. Lenabasum is being used to treat trial patients suffering from systemic sclerosis, cystic fibrosis, dermatomyositis, and lupus.
Corbus also is exploring CRB-4001, designed to treat cholangitis, idiopathic pulmonary fibrosis, radiation-induced pulmonary fibrosis, myocardial fibrosis, and acute interstitial nephritis, among other ailments. CRB-4001 is pre-clinical and set to begin Phase 1 this year.
The company is looking into another 600 molecules for possible clinical trials.
How Has Corbus Stock Performed?
What Is Corbus’ Stock History?
- Over the past 12 months, Corbus shares have gained 11.6% whereas the S&P 500 has gained 1.3%.
- Over the past two years, Corbus shares have gained 9.3% whereas the S&P 500 has gained 17.7%.
- Over the past five years, Corbus shares have gained 158.6% whereas the S&P 500 has gained 35.4%.
How Has Corbus Performed in 2017/2018?
- In 2017, Corbus shares lost 15.9% whereas the S&P 500 gained 19.4%.
- In 2018, Corbus shares lost 31.2% whereas the S&P 500 lost 7.5%.
Who Are Corbus’ Rivals?
Let’s look at Corbus’ main competitors, all of which face strong prospects and pose formidable direct challenges.
Roche Holding (OTC: RHHBY)
Corbus has its hands full with Roche, the mega-cap ($228.2 billion) company that has scores of drugs and therapies, of which fibrotic diseases are included.
Esbriet, for example, is a Roche drug that treats idiopathic pulmonary fibrosis. This disease creates scarred lungs and makes it hard to breathe. It is particularly effective in patients whose disease is rapidly progressing.
Pulmozyme is an aerosol treatment for cystic fibrosis. The disease is caused by a defective gene, which creates mucus buildup in the lungs and pancreas. This traps bacteria and leads to a lot of infections and lung damage. Eventually, the patient experiences respiratory failure. In the pancreas, the mucus prevents the release of digestive enzymes which means vital nutrients can’t be broken down and received by the body.
Roche is a huge player with extensive infrastructure and it’s developing drugs that directly compete with Corbus.
Cronos Group (CSE: CRON, NSDQ: CRON)
Cronos Group (market cap: $3.5 billion) grows and distributes weed and it’s making forays into medical marijuana development.
The company has a 100% ownership position in Peace Naturals, a Canadian company that produces and sells medical marijuana that already has consumers in Canada, Germany, and Poland. Cronos also owns 21.5% of Whistler Medical Marijuana Company.
Cronos is in joint ventures with no fewer than four other companies around the world. Ginkgo Bioworks will produce cannabinoids for Cronos, which gets a royalty-free and exclusive license for production and commercialization.
Consequently, other companies with cannabis-derived therapies may inadvertently become benefactors of Corbus’ own research.
Canopy Growth (NYSE: CGC)
Based in Smith Falls, Canada, Canopy Growth grows and sells medical cannabis in Canada and around the world. Its products include dried flowers, oils and concentrates, softgel capsules, and hemps.
The company (market cap: $15.5 billion) offers its products under the Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow, and Foria brand names.
Founded in 2014, Canopy Growth by 2016 was Canada’s first cannabis “unicorn” with a $1 billion dollar valuation. The company went on to become the first federally regulated, publicly traded cannabis producer in North America.
Will Corbus Go Up in 2019 (Should You Buy?)
The risk with clinical stage biopharmaceutical companies is that you are essentially rolling the dice. There is no guarantee whatsoever that its clinical trials will be successful. We’ve seen far too many drugs have great early stage trials, only to fall flat in Phase II or III.
The other risk is whether the company can even stay in operation during the trials. Trials are expensive and there’s no money coming in, other than investment.
Corbus is different from most weed companies on the market, though. Rather than just muck around with weed as a general pain management system, Corbus is taking specific molecules and designing therapies around them.
If any of these therapies work, it will be big news for the company. Some analysts put the value of potential sales at $2 billion a year.
Here’s a video presentation that examines whether Corbus is a hot prospect or just a lot of hype.
Will Corbus Go Down in 2019 (Should You Sell?)
Corbus generates scant revenue. The company only has $56 million in cash and burned through $27 million in the past 12 months.
Considering Corbus’ valuation, the market is putting an awful lot of faith in a company with one drug in Phase III and another in Phase II. No third party has put up big money to market or distribute anything the company develops.
The market thinks the company is worth eight times the amount of cash on hand. That’s wildly optimistic.
Overall Corbus Forecast and Prediction for 2019
Trying to predict how a biotech will move in a single year when its leading drug candidate’s clinical trial isn’t over until 2020 is problematic. It mostly involves guesswork, not empirical data such as operating results.
Nevertheless, some of you own CRBP or are seriously looking at it.
So what is our CRBP stock prediction for 2019? The stock will either stay flat and move nowhere for the entire year, because the clinical trial is slated to continue until the end of next year. Or it could crash along with other overvalued marijuana stocks.
Cannabis stocks are all the rage and to be sure, some of them will prove solid growth investments. However, the weakest pot stocks will go the way of dubious cryptocurrency plays. They will implode.
Stay away from Corbus.