Our Intec Pharma Stock Prediction in 2019 (Buy or Sell?)
The stock market boasts a broadening array of small-cap, biotechnology firms engaged in clinical trials with cannabis-related therapies. Think of the phenomenon as the “green rush.”
Some of these companies will go on to glory and riches. Early investors will reap a windfall. But most of these marijuana biotechs will go bust, leaving hopeful investors holding the bag.
We now turn the spotlight on Intec Pharma (NSDQ: NTEC), a $288.7 million market cap clinical-stage biotech based in Israel.
As with most clinical-stage companies, Intec has no products on the market and is entirely dependent on drugs in clinical testing phases. Yep, that’s right: Intec has zero revenue or earnings. Yet investors are fascinated with the company’s prospects, as it develops what could be blockbuster drugs.
Our Intec prediction will examine the pros and cons of the company and see what may be in store for its stock in the coming year.
What Is Intec Pharma?
With 70 employees and based in Jerusalem, Intec is a clinical-stage biotech that develops drugs along what it calls its “Accordion Pill platform technology.”
The Accordian Pill is an oral drug delivery system that uses existing drugs, but boosts their efficacy and safety by utilizing a proprietary gastric retention and release mechanism.
Intec’s Accordion Pill Carbidopa/Levodopa (AP-CDLD) drug is the furthest along, in a Phase III trial for Parkinson’s disease symptoms in advanced patients. The Accordion Pill Zaleplon (AP-ZP) also is a Phase III drug to treat insomnia, designed to induce and enhance sleep.
The company has a drug that finished a Phase I trial to prevent and treat gastroduodenal and small bowel ulcers.
Finally, Intec has Cannabidiol and 9-Tetrahydrocannabinol (AP-CBD/THC) in Phase I that may treat several ailments, such as low back pain.
The biotech industry is littered with small-cap clinical-stage companies trying to apply cannabis to drug development.
How Has Intec Stock Performed?
What is Intec’s Stock History?
- Over the past 12 months, Intec shares have gained 11.3% whereas the S&P 500 has gained 1.4%.
- Over the past two years, Intec shares have gained 41.5% whereas the S&P 500 has gained 17.9%.
- Over the past five years, Intec shares have gained 101.9% whereas the S&P 500 has gained 48.4%.
How Has Intec Performed in 2017/2018?
- In 2017, Intec shares lost 7% whereas the S&P 500 gained 19.3%.
- In 2018, Intec shares lost 1.9% whereas the S&P 500 lost 7.5%.
Who Are Intec’s Rivals?
Merck (NYSE: MRK)
Merck is a $200.6 billion market cap blue-chip and one of the top Parkinson’s competitors, with its drug Sinemet.
Sinemet is a combination of carbidopa and levodopa. To understand how Intec is using this drug, you first must understand Merck’s version.
Levodopa is absorbed rapidly from the small intestine. The upside is that symptoms improve in about 30 minutes. The downside is the benefit only lasts 3-5 hours.
Importantly, the benefit duration could be up to a day, or even as short as an hour. Much depends on how levodopa gets absorbed into the body. Patients that eat protein-rich diets will see an absorption delay by the small intestine.
Food slows down the drug, so patients are told to take levodopa 30-45 minutes before meals or 2 hours after meals to maximize the benefit.
Merck’s pill has a standard and controlled-release dosage. Controlled release means it takes longer to be absorbed, but it usually means only 75% or so of the drug actually gets absorbed.
Intec’s approach is to use biodegradable polymeric films. These films combine and load drugs. They are then folded into an undulated shape and put inside a capsule. As a result, drugs are released slowly in the stomach over several hours, allowing the body to absorb them more consistently.
Merck also offers a major insomnia drug called Belsomra. Until Belsomra, the go-to for insomnia was some kind of tranquilizer. The problem is that those drugs can be addictive and if taken with alcohol, it can kill the patient.
Belsomra actually inhibits orexin, which is a neuropeptide that regulates sleep. If you know people with narcolepsy, it’s caused by a lack of orexin in the brain because the cells that produce it get destroyed.
Belsomra regulates orexin and significantly helps people fall asleep and stay asleep. Only about 7% reported an adverse reaction of feeling sleepy during the day.
How good is Belsomra? It’s expected to out-sell Ambien by 2021.
Cronos Group (CSE: CRON, NSDQ: CRON)
Cronos Group 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.
Aurora Cannabis (NYSE: ACB, TSX: ACB)
Aurora Cannabis is a licensed producer and retailer of medical marijuana in Canada, with 16,400 active registered patients.
Aurora Cannabis recently acquired a 40,000 square foot facility, which pumps out about 4,000 kg of cannabis. It’s also got an 800,000 square foot facility that will eventually ramp up to 100,000 kg of cannabis.
Will Intec Go Up in 2019 (Should You Buy?)
The success of Intec literally rests in the hands of the clinical trials. The ever-present risk with clinical-stage drug stocks is simple: the trials could fail. There is only one path to success, but many ways to fail.
It’s common for drugs to survive Phase II but die in Phase III because of some horrible adverse effect, or patients don’t see any relief relative to the placebo.
Intec has no revenue or earnings, so will it even be able to stay in operation during the trials?
And yet, it’s possible that Intec is undervalued. The reason is that, if any one of its drugs are successful and gets approved, the company stands to reap big money. One blockbuster drug could send the company’s stock skyrocketing higher.
Here’s a fascinating tutorial on how the Accordian Pill works.
Will Intec Go Down in 2019 (Should You Sell?)
There’s significant risk to Intec and it’s why the stock is probably overvalued. To reiterate, the risk is that the clinical trials could go bust.
It’s great that Intec has promising drugs in clinical trials, but there’s no guarantee they will work out. If all of the company’s drugs fail to produce results, NTEC stock will likely fall to zero. Moreover, the market is giving the company a $288.7 million valuation when it has no revenue. So you are buying a company with a value literally based on nothing but speculation.
That’s about as expensive and overpriced as a stock can get.
Meanwhile, it may take many years for Intec to gain traction with its drugs, and by then, it may run out of capital.
Overall Intec Forecast and Prediction for 2019
For Intec, so much is riding on clinical trials and other factors that trying to peg what a stock like this will do in a single year is difficult and unwise.
For those readers who enjoy trading marijuana biotech stocks, there are plenty of far better alternatives. For starters, stick to companies that are actually generating revenue and profits.
Our NTEC stock prediction is that it will move slightly higher this year, only because of general enthusiasm for marijuana stocks. This move won’t have anything to do with company fundamentals; it will be purely speculative.
Even aggressive investors should avoid this stock.