When it comes to the markets' fastest growing industries, investors would have a hard time finding a group of stocks growing quicker than marijuana. According to a report from Marijuana Business Daily, the U.S. legal-weed industry is expected to grow by an aggregate of 300% between 2016 and 2021 to approximately $17 billion. That type of growth is tough to ignore, which is why investors have been flocking in droves to marijuana stocks.

Of course, as you're probably well aware, the marijuana industry is a double-edged sword. While it could provide consistent double-digit growth, it's also entirely illegal in the U.S., according to the federal government. And despite progress being made in Canada that could lead to the legalization of recreational weed by next summer, it's still illegal throughout all of North America at this point. This bifurcation between state-level expansion and federal stagnation in the U.S. is what gives marijuana stocks their high levels of volatility.

A physician holding a cannabis leaf between his hands.

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This marijuana stock puts its eggs in one basket

Last week, that volatility was readily apparent in Corbus Pharmaceuticals (NASDAQ:CRBP), a clinical-stage drug developer that rocketed higher by more than 20% mid-week, and ended the week up by a solid 14%.

The culprit for this move was the release of topline results from a midstage study involving its lead (and only) clinical drug, anabasum. You heard that right: while Corbus Pharmaceuticals in examining its endocannabinoid mimetic drug in four separate indications and trials, it's anabasum or bust for this company. Thankfully, the phase 2 results were anything but a bust, according to the data.

The trial, which examined anabasum as a treatment for dermatomyositis, a rare autoimmune disease that leads to rashes and muscle weakness, met its primary endpoint after 16 weeks. The mean improvement in the Cutaneous Dermatomyositis Disease Area and Severity Index activity score was a reduction of 9.3 points, compared to a 3.7-point reduction for the placebo treatment. Just as important, anabasum demonstrated a favorable safety profile, with no study discontinuations or severe side effects observed. Said Corbus' chief medical officer, Barbara White:

These results in this first-in-patient study in 22 subjects are exciting and demonstrate medically and statistically significant improvement in the primary endpoint in skin disease. Improvements in multiple secondary patient-reported outcomes, including a number that achieved statistical significance, reinforce the signal activity of anabasum in DM [dermatomyositis]. These data are consistent with our previously reported positive results from the completed phase 2 systems sclerosis trial. ... We look forward to discussion with regulatory authorities regarding the clinical development path forward."

Surgeons looking at a lung x-ray.

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It's really all about cystic fibrosis

While Corbus does deserve some cheers for its positive midstage results, the company's long-term hopes pretty much rest on whether or not anabasum can deliver for cystic fibrosis (CF) patients. Without success in its CF studies, it's unclear if Corbus can recoup the expenses tied to developing anabasum in its other smaller patient pool indications.

In late March, the company announced what appeared to be positive results from its midstage CF study. The top-line data for the 20 mg dose led to a 75% reduction in the pulmonary exacerbation event rate compared with the placebo. What makes Corbus' lead drug so intriguing is that while current Food and Drug Administration-approved CF drugs target specific mutations, thus limiting their potential patient pool, anabasum could be targeted as a broad-measure anti-inflammatory for CF patients.

But there was a key measure in its data release that has Wall Street worried, and with good reason. The data from its midstage trial showed no improvement in forced expiratory volume within the first second, also known as FEV1. Successful CF drugs usually improve lung function, which is seen with FEV1 improvements, but that's not what was seen here. This certainly casts some doubt over whether anabasum has what it takes to succeed in a large-scale CF study.

A stack of hundred dollar bills bound by chains and a lock.

Image source: Getty Images.

The other concern that investor should be aware of is that Corbus ended the previous quarter approximately $43 million in cash and cash equivalents. Based on its cash burn rate, it probably doesn't have enough of a runway to get much beyond the end of 2018. Cash raises for clinical-stage drug companies often entail share offerings that wind up being dilutive to existing shareholders, which will probably be the case with Corbus as well.

For the time being, investors would probably be best served sticking to the sidelines and waiting for additional CF clinical data. While some folks might complain that you'll miss out on the pop if anabasum is successful in later-stage studies, I'd argue that you're better off because you'll be able to benefit from sales of the drug if it's approved, as well as avoid a possible cratering in the share price if anabasum misses the mark.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.