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Play the Marijuana Rush as First Marijuana-Focused ETF Launches

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The marijuana industry is getting its first exchange traded fund (ETF) this week with Horizons ETFs Management (Canada) Inc. expecting to launch the Horizons Medical Marijuana Life Sciences ETF. The fund, which will trade under the ticker symbol “HMMJ”, is slated to debut on the Toronto Stock Exchange (TSX) on Apr 5, 2017.

Why Marijuana?

The medical marijuana industry has been gaining a lot of importance and attracting interest from investors over the last few quarters. The industry is expected to grow rapidly with legislators allowing or looking to allow more legal uses of marijuana and marijuana-related products, especially in the medical and life sciences industry.

According to a Gallup poll taken last year, support for the use of legal marijuana has gone up significantly in the U.S. which bodes well for the future of this industry.

The Horizons ETF will provide exposure to North American-listed stocks that are involved with medical marijuana bioengineering and production. It will track the North American Medical Marijuana Index which tracks the performance of a basket of North American publicly listed companies with significant business activities in the marijuana industry.

Marijuana Stocks to Consider

With interest in marijuana stocks picking pace, here is a look at four companies that have a presence in this space.

GW Pharmaceuticals plc : First on the list is Cambridge, UK-based GW Pharma. The company commercialized the world's first plant-derived cannabinoid prescription drug, Sativex, which is approved for the treatment of spasticity due to multiple sclerosis. However, the company has been in the news for its lead cannabinoid pipeline candidate, Epidiolex, which is in development for a number of rare childhood-onset epilepsy disorders. GW Pharma had a phenomenal run last year with shares soaring on positive Epidiolex data. The company generated positive data from three late-stage placebo-controlled studies on Epidiolex in the initial target orphan indications of Dravet syndrome and Lennox-Gastaut syndrome. Plans are on to submit a NDA in the U.S. in mid-2017 and a regulatory application in the EU in the second half of the year.

Epidiolex represents blockbuster potential especially if it is approved across all possible indications. According to the company, about 470k children in the U.S. suffer from epilepsy with Dravet syndrome and LGS being two of the most difficult-to-treat epilepsy syndromes. About one third of patients continue to suffer from seizures despite treatment with multiple antiepileptic drugs.

The company is pursuing an active lifecycle management plan for Epidiolex including two new target orphan indications. Apart from Epidiolex, GW Pharma has a deep pipeline of additional cannabinoid candidates for glioma, schizophrenia and epilepsy.

GW Pharma, which has underperformed the Zacks-categorized Medical Products industry year-to-date (YTD), has upside potential with several pipeline catalysts lined up for 2017.  

INSYS Therapeutics, Inc. : Chandler, AZ-based INSYS is a specialty pharmaceutical company that uses its proprietary sublingual spray technology to develop pharmaceutical cannabinoids. Syndros, the company’s cannabinoid, gained FDA approval last year for the treatment of anorexia associated with weight loss in patients with AIDS and nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional antiemetic treatments. However, the drug is yet to be launched as the company was awaiting Drug Enforcement Agency (DEA) scheduling which came through recently. INSYS expects to launch Syndros in the second half of the year. According to the company, Syndros has annual sales potential of more than $200 million.

INSYS has outperformed the Zacks-categorized Medical products industry YTD with shares gaining 17.1% compared to the industry gain of 10.2%.

Corbus Pharmaceuticals Holdings, Inc. (CRBP - Free Report) : Norwood, MA-based Corbus is a clinical stage drug development company targeting rare, chronic, serious inflammatory and fibrotic diseases. Lead pipeline candidate, anabasum, is the first selective cannabinoid receptor type 2 (CB2) agonist to target inflammatory and fibrotic diseases. The company reported positive data on anabasum for systemic sclerosis as well as cystic fibrosis. The candidate is also being evaluated for skin-predominant dermatomyositis while a phase II study in systemic lupus erythematosus is expected to commence in the second quarter of 2017.

Zynerba Pharmaceuticals, Inc. (ZYNE - Free Report) : Devon, PA-based Zynerba is a clinical-stage specialty pharma company dedicated to developing and commercializing innovative transdermal synthetic cannabinoid treatments. Lead pipeline candidate, ZYN002 CBD gel, is in phase II studies for epilepsy, osteoarthritis and Fragile X syndrome. With key catalysts coming up, 2017 could be a transformational year for the company. YTD, Zynerba has outperformed the Zacks-categorized Medical-Generic Drugs industry.

While GW Pharma, Zynerba and INSYS are all Zacks Rank #3 (Hold) stocks, you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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