Maxim Group raised its price target for Artelo Biosciences (NASDAQ:ARTL) to $5 from $3, citing rising valuations across the cannabinoid and cannabis space, and as Artelo begins to map out its path forward as a cancer therapeutics company. The stock was changing hands at $2.70 at midday on Feb. 17.
Analyst Jason McCarthy, Ph.D., writes that that “it’s important to understand the difference between cannabinoid and cannabis companies and Artelo, which is neither; it is a therapeutics company targeting cancer and cancer-related indications.”
Artelo’s lead drug candidate, ART27.13, is a peripherally restricted cannabinoid receptor agonist, which acts in the gut to improve appetite in patients with cancer-related anorexia. “It’s not CBD, it’s not a cannabinoid, it’s not THC; it’s a small molecule drug like any other small molecule-based drug candidate in biotech/pharma; it’s just that it is targeting endocannabinoid receptors,” Dr. McCarthy said.
The ART27.13 program is moving into Phase 1/2 in coming weeks, and is likely funded through initial efficacy and safety data in the second half of 2021 and potentially complete enrollment in the first half of 2022, he added.
“Bottom line is Artelo is an oncology company and in our view, while it does have a CBD-based asset, the focus should be on the two oncology programs: ART27.13 and the FABP5 portfolio,” Dr. McCarthy said.
The rising awareness and valuations in the cannabinoid space have benefited Artelo as well, and “from our perspective highlight the opportunity in targeting endocannabinoid signal pathways,” he said, adding that he has lowered the risk adjustment in his model to 60% from 70%, reflecting the higher price target.