Insys Therapeutics (INSY) is one of several biotechs developing cannabinoid drugs. Unlike most of these other companies, though, Insys has already won regulatory approval for its first cannabinoid -- Syndros.
While Insys is viewed as a marijuana stock, it doesn't fit the mold of most marijuana stocks. For one thing, Syndros and the company's other cannabinoid drug in development use synthetic versions of chemical ingredients found in marijuana rather than using marijuana plants. But for investors looking for marijuana stocks to buy, Insys could be attractive. Before you take the plunge, though, here are three things you need to know.
1. Why the stock has lost half its value since Jan. 1, 2016
Many marijuana stocks enjoyed huge gains last year. Not Insys Therapeutics. Since Jan. 1, 2016, the company has lost more than half of its market cap. There's one reason behind this huge decline: Subsys.
Subsys was Insys' first product to win regulatory approval, back in 2012. For several years, sales for the opioid breakthrough cancer pain medication were booming. However, the situation has changed dramatically. Concerns over the opioid epidemic in the U.S. have hurt sales for Subsys. Some leading payers limited reimbursement for the drug.
Insys also became embroiled in state and federal investigations into its sales and marketing practices. Several of the company's former executives were charged with bribing doctors to prescribe Subsys. There is still plenty of negative sentiment for Insys stock, with nearly 37% of shares available for trading sold short. Investors considering buying Insys Therapeutics stock definitely need to be aware of these issues.
2. Why the stock is up more than 40% in 2017
That's the bad news, but there's also good news for Insys. So far this year, the stock is up more than 40%. Two factors have helped it rebound.
First, Insys no longer has hurdles to jump in order to market its cannabinoid drug Syndros in treating chemotherapy-induced nausea and vomiting, as well as AIDS patients with anorexia-associated weight loss. In March, the U.S. Drug Enforcement Agency completed its scheduling of Syndros. A couple of months later, the U.S. Food and Drug Administration approved the final product label for the drug.
Second, the company made some major changes in its executive ranks. Saeed Motahari became CEO in April. Since Motahari took the helm, several other key leadership positions have been filled with new people. These changes have helped reinforce the idea that the Insys of today isn't the Insys of the past.
3. What Insys' future could hold
More good news could be in store for the company. Some analysts expect Syndros to generate annual sales of more than $300 million. Insys has been more conservative, projecting that the drug will bring in annual sales of over $200 million.
The company has two sublingual sprays in late-stage development. Buprenorphine is an opioid painkiller, but the drug has a lower potential for misuse compared to other opioids. Naloxone is being evaluated for reversal of opioid depression.
Buprenorphine is also being evaluated in a phase 2 study for reducing opioid dependence. Insys' pipeline includes three other mid-stage programs as well. Probably the most important of these is its development of cannabidiol (CBD) for treating several types of pediatric epilepsy.
With Insys' market cap standing below $1 billion, the combined potential for Syndros and its pipeline candidates, along with continued but lower sales of Subsys, could make the stock one that is attractive to investors. However, considerable risks remain, including the ongoing federal and state investigations and the possibility that Syndros won't be as successful as expected.