Cardiol Therapeutics (CRDL Quick QuoteCRDL - Free Report) is among the few companies evaluating an investigational cannabidiol (CBD) drug in late-stage development.

This Canada-based company is developing an oral CBD-based solution called CardiolRx, which is also its lead pipeline drug, as a potential treatment for inflammation and fibrosis in heart disease.

Let's take a closer look at CRDL's prospects and challenges from an investor's standpoint.

CardiolRx — CRDL’s Bold Bet on CBD for Heart Disease

CRDL is making encouraging progress with the development of CardiolRx, which recently entered late-stage development. The drug is being evaluated in the pivotal phase III MAVERIC study for the prevention of recurrent pericarditis (RP) in patients at high risk for disease relapse.

RP is a debilitating heart condition marked by chest pain, shortness of breath, fatigue, physical limitations, reduced quality of life and hospitalizations. The MAVERIC study builds upon positive results from the mid-stage MAvERIC-Pilot study, which showed that treatment with CardiolRx led to rapid reductions in pericarditis pain and inflammation. Treatment with the drug also exhibited a substantial decrease in pericarditis episodes per year.

Per Cardiol Therapeutics, cannabidiol inhibits activation of the inflammasome pathway, which is involved in the development and progression of inflammation and fibrosis in the heart. The company believes that the currently available medications are unable to treat the disease satisfactorily, thereby creating a need for better therapies. CardiolRx has been granted orphan drug designation by the FDA for the treatment of pericarditis, which includes RP.

Through CardiolRx, CRDL aims to enter a market currently served by only one approved therapy — Kiniksa Pharmaceuticals’ (KNSA Quick QuoteKNSA - Free Report) Arcalyst. The Kiniksadrug is a non-CBD-based injectable therapy presently approved for multiple indications, including the treatment of RP and the reduction of recurrence risk in adults and adolescents.

Cardiol Therapeutics is also developing CardiolRx in the phase II ARCHER study for the acute myocarditis (AM) indication. Top-line data from this study are expected in the second quarter of 2025. If developed successfully, the study could provide the first clinical evidence supporting cannabidiol-based therapy in myocarditis.

The global medical cannabis market is projected to surpass the $130 billion mark by the end of 2032, primarily driven by the increasing acceptance of cannabis for therapeutic purposes. As one of the few companies developing a CBD-based product for heart diseases, Cardiol Therapeutics is positioning itself within this expanding market.

No Commercial Products Yet: A Major Hurdle for Cardiol

With no approved product in its commercial portfolio, Cardiol lacks a source of regular income. The company has to shoulder significant cash burn due to ongoing clinical studies. To fund its day-to-day operations, the company is forced to raise funds through the issue of new stock or via debt.

Last October, CRDL raised around $13.5 million from a public offering of common stock, which was priced at a discount to the share price at the time. Such equity raises not only impact the stock price but also dilute the existing shareholder base. CRDL’s current cash runway of $30.6 million (as of 2024-end) is projected to fund operations into the third quarter of 2026.

A Shallow Pipeline Amplifies the Risk

Cardiol Therapeutics has no other pipeline drug in active clinical development besides its lead drug. Any development/regulatory setback to CardiolRx can significantly impact the stock’s prospects.

Though CRDL is progressing with pre-clinical activities for a novel subcutaneously administered drug formulation of CBD (called CRD-38), it is still at least a year away from entering the clinic.

CRDL Stock Hit by Financial Pressure and Bleak Estimates

Shares of Cardiol Therapeutics have plunged 45% in the past year compared with the industry’s 1% decline, as seen in the chart below. The fall in share price likely stems from the company's financial challenges, including a lack of a stable revenue stream.

Image Source: Zacks Investment Research

Estimates for CRDL’s loss per share for 2025 and 2026 have widened significantly in the last 60 days.

Image Source: Zacks Investment Research

Wait for Data Before Taking a Position

Cardiol Therapeutics has made commendable strides with its investigational CBD-based therapy, CardiolRx, particularly in targeting unmet needs in heart disease. However, the absence of any approved products, combined with a limited pipeline and ongoing cash burn, poses considerable investment risk. Until the company delivers more definitive clinical results, particularly from the upcoming ARCHER study, investors may be better served by adopting a wait-and-see approach.

Cardiol Therapeutics currently holds a Zacks Rank #4 (Sell).

For those seeking exposure to the medical cannabis sector with a more established track record, Jazz Pharma (JAZZ Quick QuoteJAZZ - Free Report) offers a compelling alternative. JAZZ markets Epidiolex, which is the only FDA-approved drug containing a purified drug substance derived from marijuana. We expect Jazz Pharma’s Epidiolex to achieve blockbuster status in 2025. This Zacks Rank #2 (Buy) stock offers a compelling mix of stability and growth potential. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.