A Fresh Look at Cannabis Science Inc (OTCMKTS:CBIS)

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Cannabis Science Inc (OTCMKTS:CBIS) has been in corrective mode, along with many other players in the cannabis space. CBIS has declined about 60% over the past few weeks after testing multiyear resistance around the $0.14/share level. We have been both hot and cold on this stock, though we do slant toward “cold” with this one in general given its prior record of massive shareholder dilution and a lack of any appreciable revenuesdespite many years as a publicly traded company.

In terms of recent catalyst, the company just announced that it has entered into an expanded 5-year, $1.8 million Research Collaboration Agreement with Dana Farber Cancer Institute, Inc., encompassing operating procedures and related communication activities. According to the company’s most recent release, “the work will be focused on essentially the same clinical targets with expanded work parameters based on current laboratory success.”

Cannabis Science Inc (OTCMKTS:CBIS) defines itself according to the narrative of a leading-edge researcher and designer of cannabinoid solutions to health problems.

The company has been a world-class dilution machine over many years, and any serious larger time-frame bullish thesis must ultimately square off with that dynamic. Over the past 18 years, the real value of a $54,000 investment here has fallen to less than a dime. This is simply due to tactics such as reverse splits, convertible debt, and share creation.

The company has never really made any money, and consistently uses communications tactics to latch onto whatever new theme is tickling the palate of microcap investors, such as its latest attempt to latch onto the cryptocurrency theme. We think there is virtually no chance that this idea will ever amount to anything. They create shares and sell them with messaging and pay themselves. There are many “real companies” in the micro-cap space. As far as we have seen over the years, this is not one of them. Be sure to keep that in mind.

CBIS claims to be involved in developing medicines for autism, blood pressure, cancer and cancer side effects, as well as for other illnesses comprising for general health maintenance, though no sales have ever materialized from any of these pursuits.

It also claims to be developing CS-TATI-1 for newly diagnosed and treatment-experienced patients with drug-resistant HIV strains, as well as those intolerant of available therapies; CS-S/BCC-1 to treat basal and squamous cell carcinomas; and a proprietary cannabis-based therapy for neurological conditions.

In addition, CBIS offers an online video-based medical cannabis education system, including courses, such as medical cannabis law, medical marijuana, cooking, horticulture, and bud tending; and manufactures and distributes specialty horse and pet grooming and topical applications. It has a license agreement with Apothecary Genetics Investments LLC to produce various brand formulations for California medical cannabis market.

“Currently our funded research focuses on the clinical applications of cannabinoids in cancer treatment and pain management, but we will expand our portfolio in the following significant directions: (a) we will investigate the effectiveness of cannabinoid treatment in an increasing array of cancers, especially difficult to treat cancers and those with high fatality rates, (b) we will develop novel targeted delivery methods in the use of cannabinoids, and (c) we will, with advances in bioinformatics, computer science, and pharmacology, explore the mechanisms of action of cannabinoids in the management of disease,” stated Dr. Allen A. Herman, CBIS’ Chief Medical Officer (CMO).

Recent action has seen 9% tacked on to share pricing for the name in the past week, but that move comes in the context of a larger bearish trend. However, CBIS has a history of dramatic rallies. Furthermore, the stock has witnessed a pop in interest, as transaction volume levels have recently pushed 9% above its longer-run average levels.

Currently trading at a market capitalization of $195M, CBIShas virtually no cash on the books, which stands against about $2.3M in total current liabilities. CBIS is pulling in trailing 12-month revenues of $7K. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -15.2%. You can bet we will update this one again as new information comes into view.

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