Coverage initiated on synthetic cannabinoid bioscience company, an 'exciting, undiscovered story'

Francois Brisebois, an analyst with Laidlaw, wrote in a June 5 report that Therapix's lead product candidate is TJX-TS01, "an orally available pill consisting of FDA approved dronabinol (biosynthetic THC) and palmitoylethanolamide (PEA) for the treatment of symptoms related to Tourette Syndrome (TS). While clinical evidence suggests THC may be effective in reducing tic disorders, concerns with high dose psychoactive side effects have prevented THC from becoming a viable treatment option for TS. To enhance safety and efficacy, TRPX resorted to their proprietary combination with PEA to trigger the "Entourage Effect," which is backed by strong pre-clinical data, in our opinion."

He reported that Therapix has applied to the FDA for orphan drug designation (ODD). "With only a few drugs currently approved with limited efficacy and severe side effects, we see TS as a significant unmet medical need," Brisebois stated.

Therapix is also developing THX-ULD01 for mild cognitive impairment (MCI); the drug uses "approved dronabinol in an ultra-low dose delivery formulation (nasal or sublingual) in order to delay memory loss and progression to early stages of Alzheimer's disease and dementia. With encouraging pre-clinical data, a very large and growing target market, and a short Phase 1 PK trial starting in 3Q17; we see real potential for the ultra-low dose platform at TRPX in the years to come," wrote Brisebois.

Brisebois notes that Therapix's strategy is to "build a leading specialty pharmaceutical company focused around the repurposing, repositioning and improvement of FDA approved cannabinoid molecules for various indications, including TS and MCI. The key benefits of this strategy include a relatively low scientific-technological risk (compared to the risk of developing drugs based on new molecular entities) and with relatively low costs and fast time to market achieved through fast-track regulatory paths."

Brisebois listed five key reasons to own Therapix:

1. Tourette Syndrome "represents a disease with high unmet medical need, orphan drug designation potentially a near-term event. . .there are currently only three drugs approved by the FDA for TS and their efficacy is limited to treating only parts of TS."

2. Encouraging THC for Tourette Syndrome clinical data: "The time has come for entourage effect (THC + PEA) to gain clinical recognition. . .we are very encouraged by the pre-clinical data so far and believe this platform can be expanded to many other indications such as pain and antimicrobial therapies."

3. A market opportunity that is "hard to overstate" for the ultra-low dose THC platform to prevent MCI progression to dementia: "While THX-ULD01 is early in development (start of Phase 1 in 3Q17), the addressable market is huge as ~46.8M people worldwide had dementia in 2015 and growth projections estimate ~74.7M people worldwide by 2030."

4. Potential take-out target: "TRPX's differentiated platforms (entourage effect: THC+PEA and ultralow-dose) and de-risked profile (repurposing already approved dronabinol), in our view, make it a likely take-out candidate."

5. Recent management changes and uplisting to NASDAQ: "renewed focus at TRPX could represent an interesting opportunity. . .after recently uplisting to NASDAQ, TRPX announced the appointment of Josh Blacher as CFO and the stepping down of their CEO Dr. Elran Haber (to be replaced with US-based CEO). These moves attest to the shift in focus to bring awareness to the US capital markets and to monetize assets globally, which we view as a real positive for TRPX."

"As the tides are changing in regards to cannabinoid research and development, we view TRPX as an exciting undiscovered story at these levels and are initiating coverage with a Buy rating and an $18 price target," concluded Brisebois.

Therapix's stock is currently trading at around $6.96 per share.

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Additional disclosures about the sources cited in this article

Disclosures from Laidlaw & Company, Therapix Biosciences, Company Report, June 5, 2017

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