“Bigger than Penicillin” … what’s Mengel’s “Molecule of the Century” that “makes medical marijuana up to 80X more powerful?”

by Travis Johnson, Stock Gumshoe | February 15, 2019 9:39 am

This teaser pitch has been around for a few weeks, but I haven’t gotten around to covering it until now… call it marijuana[1] fatigue, just plain laziness, or a surfeit of other hypetastic pitches, but it just didn’t rise to the top.

Questions have rolled in from readers pretty consistently, though, so I’m finally digging in… what’s this “Molecule of the Century” that Jimmy Mengel[2] says could cure arthritis, heart disease, and many cancers… and what’s the company he says could make you 116X wealthier?

Let’s sift through the ad and see what clues he drops… I’m sure the Thinkolator can find our answer in there somewhere.

The basic promise is that this company’s “future of modern medicine” breakthrough can make medical marijuana better… from the ad:

“Among its many superpowers? It can amplify the performance of medicinal marijuana by up to 80 times — making it vastly safer, cheaper, and more effective.”

And apparently this isn’t just an R&D project…

“‘The Molecule of the Century’ already has FDA[3] approval. The company that owns it could have multiple “MoC” therapies in Phase 2 clinical trials this year.

“Unlike most ‘me-too’ medical pot stocks — it’s actually done it before.

“The CEO has taken a drug through Phase 3 clinical trials — raising $300 million in venture capital, and creating $1 billion in investor value.

“If any of its new drugs show promise — we could be looking at a $10 billion stock.”

And, he says, the market cap is currently under $100 million… so that’s a big forecast.

What other clues do we get?

“Up until very recently, this company was privately held. Unless you were an accredited investor with stellar connections, you couldn’t buy the stock at any price.

“It’s not being covered on CNBC or in the Wall Street Journal… yet. Even now it’s so deep ‘under the radar’, very few investors know it exists.”

So what’s the new approach to marijuana here? Apparently this “molecule of the century” helps with formulation and delivery of cannabidiol, helping to get a target dose to the right place with lower side effects. Here’s more from Mengel:

“The stock I’m telling you about isn’t just a medical pot company. It’s a nanotechnology[4] powerhouse, with cutting-edge drug delivery platforms.

“Its breakthrough ‘molecule of the century’ was developed with the University of Alberta[5] over the past eight years at a cost of more than $3.5 million in R&D expenditures….

“With ordinary CBD, only 10% of the drug gets past your liver. Protected by the molecule of the century — nearly all of it sneaks through the firewall into your blood.

“Once it’s inside — it sticks around much more effectively.

“Currently, 90% of pure CBD is “flushed” out of the body within five hours. With their innovation, you could have effective levels of the drug for up to a week.”

And he also says that this “molecule of the century” nanotech delivery system also helps to target areas of inflammation[6], which is good (arguably the most established and least controversial uses of CBD is as an anti-inflammatory).

Then he gets more specific about that market cap:

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“If you can solve CBD’s bioavailability problem — it’s going to revolutionize treatment for millions of people around the world AND create billions in investor value.

“This $51 million company isn’t the next Canopy Growth or GW Pharma…

“It could very well be the next Bayer, Pfizer, or Merck.”

Then, finally, we get a few more details about how we have “three ways to win” with this stock:

“The first and fastest route will allow it to get into cash flow in the first half of 2019 — without ANY FDA approval process whatsoever.

“It gives the company exclusive first-mover advantage in a market poised to grow 700%, all the way to $2.1 billion in annual sales by 2020.

“The second opportunity gives it a chance to become the first new FDA-approved treatment in the $15.35 billion diastolic heart failure market.

“That’s a disease category at least 10x the size of anything its competitors are capable of targeting. This unknown stock could soon own it outright.

“And right now its competitors are valued up to 82 times higher in the market! That’s the upside potential I’m talking about here…

“The third opportunity is the one that could literally change the world.

“It’s a therapy that combines the ‘molecule of the century’ with a kind of anticancer ‘heat-seeking missile.’ It could cure 90% of the most fatal brain cancer[7].”

Which is a long way of saying it has three clinical programs, I guess. Assuming those are all to the stage where they’re at least being tested on human beings.

That first one is apparently not an FDA drug — it’s an over the counter CBD supplement that they’re producing in partnership with Dalton Pharma… apparently their advantages are low cost and high purity synthetic CBD without THC (THC is the psychoactive compound that regulators don’t want to see in supplements[8]).

And this is the more detailed clue about that:

“Its first product will hit stores as early as Q2 2019. The branding and go-to market effort is being led by an ex-VP from Diageo — the world’s largest producer of spirits.

“Unlike most early-stage biotech stocks, it could be in cash flow this year.

“Even with 10% of a $2.1 billion market — its revenue would be four times its current market cap. That represents a valuation floor for the stock, post-IPO[9].”

That’s a bit of a red flag, by the way, the misleading reference to a “low” estimate of market share is often used by copywriters to gloss over the difficulty of entering a market… going from nothing to 10% of any market is a huge deal, and usually expensive in terms of marketing, it should never be a “low” assumption even if it sounds kind of like a low number. You may not realize this, but the “gold[10] rush” in marijuana and CBD has attracted pretty much every entrepreneur in the world… there are thousands of producers of cannabidiol and CBD oil[11] out there angling for leadership in this market and pushing for shelf space in the key retailers (drugstores, grocery stores, supplement stores, etc.).

And the heart disease treatment is apparently close to getting tested…

“Its CBD therapy is expected to enter Phase 1 clinical trials later this year, with a plan to enter Phase 2 in the second quarter of 2019.”

And he thinks they will also be in Phase 2 for glioblastoma[12] by late this year, which sounds extremely aggressive, but, well, we’ll at least try to figure out the name before we judge.

In case you weren’t paying attention, that also tells us this was originally written at some point in 2018 — most likely they took a recommendation that Mengel made to his subscribers and turned it into an ad pitch, though every publisher does things differently. I’m still getting it regularly, so the ad is certainly still in circulation.

The ad is for Mengel’s Marijuana Manifesto[13], by the way — that’s $1,999/year, no refunds.

So what is it they’re using as bait to lure you into a subscription? This is Cardiol Therapeutics (CRDL in Toronto, CRTPF OTC in the US), even though that stock has not quite been as low as a $51 million valuation as a public company.

They are working in the three areas teased by Mengel, though the timeline is not going to be as aggressive as the ad implies — they do have near-term commercial potential this year with their pharmaceutical cannabidiol manufacturing collaboration with Dalton Pharma (started as an R&D supply deal 18 months ago[14]) that they expect to launch into the market in 2019, and they estimate that the medicinal cannabinoid market is $1.2 billion (that’s in Canada[15], in 2018), so that’s in the neighborhood of Mengel’s assessment. They are aiming to introduce a pharmaceutical cannabidiol oil first, then late in the year come out with a “water[16]-like” formulation that can be used in a sublingual spray, with both of these formulations designed to be sold both through pharmacies (under prescription) and through marijuana dispensaries under Health Canada rules. Dalton’s founder is on Cardiol’s Board of Directors, incidentally (as is a former marketing exec for Diageo and Gillette, as teased by Mengel).

Their heart failure program is using their nanotech drug formulation and delivery capsulation to deliver either cannabidiol, methotrexate or cyclosporine — and they do want to move one of those drugs into phase 1 clinical trials this year, but they have not yet decided which is the best candidate.

And the glioblastoma program is a combination of their pharmaceutical cannabidiol with an immunotherapeutic… they also say in their presentation that they will begin clinical trials of that treatment in 2019, but in other places they also say 2020. They do say that they have “a Fast Track eligible orphan indication” for this one, but that still seems like a very aggressive schedule given the several balls in the air for this little company right now.

Cardiol is just getting started, you can see their latest investor presentation here[17] if you want more of an overview. They’ve been around for about two years now and just went public a couple months ago. There’s very little to base an assessment on other than “yes, it sounds impressive if this early-stage stuff turns out to be effective” — though that’s what you can say about pretty much any early-stage biotech.

The wild card, I guess, is this Dalton Pharma partnership for producing pharmaceutical grade cannabidiol — and that’s an extremely competitive market with lots of different producers, particularly now that non-THC formulations and CBD from hemp are such active areas of investment, so you’ll have to be more expert than I if you’re going to assert that Dalton/Cardiol’s version is going to be the one that “wins” and takes share. It looks to me like Dalton is the supplier, and I have no idea how the revenue will be shared if they are indeed able to develop a compelling product that meets rising demand.

The good thing financially is that this is very early stage, and Phase 1 trials tend to be inexpensive, so unless they’re spending a lot on launching the pharmaceutical cannabidiol product this year their costs should be fairly low. We don’t really have any relevant financials, since all of their quarterly reports essentially predate the IPO and the more intensive level of work they’ve presumably been doing over the past four or five months, but the $10 million they raised last Spring and the $20 million or so they raised in their IPO in December might get them pretty far.

There’s also a good tranche of warrants[18] available, issued at the IPO, so if you want leveraged exposure you could look into those — that’s high risk, of course, since they could easily be worth nothing. Each warrant (CRDL.WT in Toronto) gives the holder the right to buy a share at $6.50 until the expiration date, which should be December 20 of 2020 (they can force exercise if the stock trades above $10, just FYI)… and, of course, each warrant will expire worthless if the stock is below $6.50 at expiration. (Just a PSA on warrants, in case you ever decide to speculate on them: Warrants can expire worthless even if they are worth something or “in the money”, so make sure not to let your warrants expire without taking action — you need to proactively sell warrants or exercise them before expiration, there is no automatic process for that at most brokers like there is with standard stock options[19].)

But anyway, that’s all I’ve got for you — Cardiol has come down a bit off of its initial high, so it’s now at a market cap of about US$110 million (at $4.85). They may end up having some revenue this year, but when a company is starting up the commercialization of a new product it usually takes a lot longer and costs a lot more than expected so I certainly wouldn’t expect anything dramatic on the income statement this year. I assume they’ll get a bit of attention when they choose their first drug for what looks like the real meat of the company, this nanotech delivery technology, and apply to begin clinical trials, which they are telling us will be sometime early this year… but beyond that I can’t tell you what will happen — I’ll just provide the usual skepticism that it’s very early. Think about the risk before you daydream… it’s not going to go up 100X in the next few years even if everything goes perfectly, which it usually doesn’t, so you’ve got time to do your research and make your own judgement.

It’s your money, though, so what do you think? Excited about Cardiol’s potential? Wary of the hype? Let us know with a comment below.

Endnotes:
  1. marijuana: https://www.stockgumshoe.com/tag/marijuana/
  2. Jimmy Mengel: https://www.stockgumshoe.com/tag/jimmy-mengel/
  3. FDA: https://www.stockgumshoe.com/tag/fda/
  4. nanotechnology: https://www.stockgumshoe.com/tag/nanotechnology/
  5. Alberta: https://www.stockgumshoe.com/tag/alberta/
  6. inflammation: https://www.stockgumshoe.com/tag/inflammation/
  7. brain cancer: https://www.stockgumshoe.com/tag/brain-cancer/
  8. supplements: https://www.stockgumshoe.com/tag/supplements/
  9. IPO: https://www.stockgumshoe.com/tag/ipo/
  10. gold: https://www.stockgumshoe.com/tag/gold/
  11. oil: https://www.stockgumshoe.com/tag/oil/
  12. glioblastoma: https://www.stockgumshoe.com/tag/glioblastoma/
  13. Marijuana Manifesto: https://www.stockgumshoe.com/tag/marijuana-manifesto/
  14. started as an R&D supply deal 18 months ago: https://www.cardiolrx.com/cardiol-therapeutics-signs-exclusive-agreement-with-dalton-pharma-services-to-supply-pharmaceutical-cannabidiol/
  15. Canada: https://www.stockgumshoe.com/tag/canada/
  16. water: https://www.stockgumshoe.com/tag/water/
  17. see their latest investor presentation here: https://www.cardiolrx.com/wp-content/uploads/2019/02/Cardiol-Therapeutics-Corporate-Presentation-February-2019-Public-Version.pdf
  18. warrants: https://www.stockgumshoe.com/tag/warrants/
  19. options: https://www.stockgumshoe.com/tag/options/

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62 responses to ““Bigger than Penicillin” … what’s Mengel’s “Molecule of the Century” that “makes medical marijuana up to 80X more powerful?””

  1. kd1966 says:

    My fear is that CBD is just another “snake-oil” cure all that doesn’t or won’t/can’t. I’m already seeing in online retail the naming variants of CBD oil. I even went to a few sites to find out what the differences were in the names, and it seems that hemp oil is not CBD oil, but hemp extract is another name for CBD oil, and so on……….. So just looking online at the CBD/hemp product lines has my spidey senses tingling, not in a good way

  2. invest405 says:

    If you want to learn about CBD, a great place to start and one of the most reliable sources of information may be found at “Project CBD”, a California non-profit established in 2010: https://www.projectcbd.org
    One can find clear explanations and the latest of published scientific findings.

  3. Michele DiCiccio says:

    Cardiol sounds amazing. If they can accomplish what they set out to do what a beautiful outcome for people. Skeptical of the warrant situation tho. It does warrant (no pun) some digging into for specifics.

  4. bitetasty says:

    Your appraisal of the molecule of the century convinced me to subscribe to your ‘musings’ . I have invested where JM has signaled and had more success than expected . Your writings have shown you do know a thing or two and make what I now see as honest opinions , keeping my feet on the floor.
    Please don’t stop.
    Roy

  5. jflynch says:

    Well, I guess time will tell…in terms of pain relief, currently CBD oil would need some THC, otherwise is basically a vitamin type formula. However if medically processed who knows…great if it works.

  6. Jay says:

    As a grower and processor of hemp for CBD in Colorado, I can attest to the efficacy of high quality full spectrum CBD for a wide range of medical conditions. The upside of CBD as a nutritional supplement (which is not regulated by the FDA) allows for an expansion of the market at prices that are generally affordable. The downside as an unregulated supplement is that the market is saturated with substandard products making unwarranted claims. A company like Cardiol can come in with the” latest and greatest” with no stringent third party testing.
    Seems the majority of stocks based on the cannabinol market take a quick upsurge based on investor hype, only to loose steam once the dream becomes reality.

  7. Dave says:

    Hi, I think I read the same ad some time ago, but I came up with Nanoshpere Health Sciences, NSHF(I think), read over their stuff and was very impressive and dove in with 7,000 shares, (they were only .25), so much easier to get the gain he was talking about and I think it went public sometime in 2018. Their nanotechnology only makes it maybe 8 time more effective, but they also have transdermal applications(so that’s how I came up with the targeted areas) . Anyway, going to revisit the ad. But a question about warrants, I was reading this newsletter “Let’s Toke Business” and he was writing about Khiron Life Sciences and said he didn’t own any shares, but had 150K warrants($2 stock), but when I looked up it said there weren’t any options available. I did buy some share though, but on an American exchange. So if you buy warrants, you do** .WT?

  8. Andrew says:

    I teased this out when a reader posed the question and SG hadn’t replied but my comment was “waiting moderation” and never came through. I know SG has integrity, but very curious why my correct answer to a reader posted question was never approved and then 2 days later we get the official response.
    One question – why can’t I buy it in Fidelity? I have had an order for over a week and like I said in my comment (that apparently wasn’t approved by the moderator), there are very few shares trading, but many outstanding. Why can’t I buy?
    Why wasn’t my answer approved before your post??
    When I make up the $30k I’m down over the past 8 months, the first thing I’m going to do is become an irregular.

  9. Jason Knight says:

    I would also be looking at NanoSphere Health Sciences as a company that is somewhat like what is being described, just a thought.

  10. erug says:

    Yeah Ok So I have to state the same concerns I see posted here. Its for good reason and appreciated the reality of these products, One, no standardized measured effectiveness across industry. Two, no regulated quality standards and enforcement of safety. I think if CBD has a controlled substance THC, requiring prescription that may be the best investment, trust of product. I think of hemp oil (snake oil) consistent with bath tub gin during Prohibition. So top off this teaser with another Canadian based OTC stock in trails, makes me shutter.

  11. shelonious says:

    I bought Jimmy Mengels newsletter and the stock he reccomends is Sproutly Canada SRUTF.

  12. jane galt says:

    I wanted to add my experience to the CBD oil efficacy comments. I tried two products purchased at a Colorado dispensary, one with THC and one without. I have suffered from rheumatoid arthritis for 30 years and am always eager to try products that have the potential to offer pain relief.

    I did not find either product helpful. I would provide the brand if I had not discarded the remaining product. I am thrilled for those who have found it helpful, it just did nothing for me. I am glad I had the option of obtaining it legally.

  13. Carol Schwab says:

    I got in to Cardiol early by researching on my own the Miracle Molecule. I will be increasing my investment in this company. I also researched Elixinol and invested in that at the initial IPO

  14. Helen Heindel says:

    Thanks for all the info everyone freely shares… helps sort through the minefields of info that comes my way, without paying a subscription price.!!!!

  15. cardano465e says:

    Hello Gum Shoer’s
    I want to Thank Travis and Steve for this service. It could keep you from paying $1999.00 and making Jimmy Mengel richer than he already is. This I don’t understand, if you have ever joined one of these services like “Motley Fool” all involved introduce themselves and go through all the money they have made from start-up businesses and selling them for millions and all the millions they have made from stocks, all the millions they have made from cryptocurrency. Why the hell are they working for someone? and taking orders? They should be sitting on a beach with one of those drinks with a little umbrella in it. I would also like to thank all you Gum Shoer’s who emailed me saying they want me to email them information about Marijuana stocks. I have 30 as of right now that I email. Now you can take this or leave it but 2 Republican Congressman has said the legalization for the U.S. will be June 21, 2019, I guess because there are people that expect it to never happen. Firing up a joint or bong is unthought of in front of your neighbor who is a police officer. I will have 4 stocks that are to explode on the 21st. And if you remember I said I would have one for May 31st. I will post all of that information on “Matt McCalls IPO” here on Gum Shoe. One of my topics will be Agora Finacial who I think are scammers. Ray Blanco, picks are wrong and sometimes late. and all their opportunities of a black box that will tell you which stocks are going to blow up tomorrow. If you want information about Marijuana emailed to you email me @ cardano4.65e@gmail.com
    Thank-You
    FRANK8MORRISS

  16. Ritam108 says:

    Just an update on Nov 26,2020:
    Sproutly is at .035 (SRUTF);
    Cardiol (CRTPF) is at $1.89, down from 9 in March 2019

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