Tilray Pushes Deeper Into Healthcare

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In a bid to demonstrate the efficacy and safety of marijuana as medicine, Tilray (NASDAQ: TLRY) has secured U.S. Drug Enforcement Agency approval to import capsules containing marijuana cannabinoids for a clinical trial in California.

The study will evaluate marijuana's efficacy and safety in patients with essential tremors, a movement disorder that affects between 4.6% and 6.3% of seniors. Read on to learn why Tilray's study is important to investors.

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What's essential tremor?

Essential tremor is a neurological disorder that's characterized by involuntary and rhythmic shaking, usually of the hands, head, or voice.

Typically, essential tremor progresses gradually, beginning on one side of a person's body. The tremors usually worsen with movement (a key difference between it and Parkinson's), and symptoms can be aggravated by things like stress and diet.

About half of essential tremor patients can be tracked to a specific genetic mutation. However, the exact gene responsible remains a mystery. The condition is increasingly common with age, and most cases are diagnosed in patients over 40 years old.

It isn't a life-threatening disease, but essential tremors can negatively affect quality of life. For instance, patients can have difficulty performing basic tasks, such as drinking from a glass without spilling or writing, and some patients can have difficulty speaking.

Investigating marijuana's benefit

In collaboration with the International Essential Tremor Foundation, Tilray will help fund the University of California San Diego Center for Medicinal Cannabis Research study of marijuana's effectiveness in essential tremor patients.

On Tuesday, the DEA granted Tilray a green light to import capsules from Canada containing the marijuana cannabinoids tetrahydrocannabinol, which is responsible for marijuana's euphoric effect, and cannabidiol, the second most common cannabinoid found in cannabis, for use in the study.

If successful, the study, which is expected to begin in 2019, will inform the design of future studies that could provide essential tremor patients with an important new treatment option.

Currently, a variety of medications are used to help treat patient symptoms, including beta blockers, anti-seizure medications, tranquilizers, and Allergan's (NYSE: AGN) blockbuster, Botox, which is most widely known for its use in cosmetic procedures.

However, beta blockers are mainly used to treat high blood pressure, and they don't control tremors in everyone. Anti-seizure medications, which are used to treat epilepsy, usually offer only a temporary benefit, and tranquilizers can help people if their tremors are worsened by anxiety, but they're habit-forming. Botox can be effective for controlling head tremors, but it can cause weakness in fingers when used to treat hand tremors.

An expanding focus

Tilray's essential tremor study is an example of how the company plans to differentiate itself from competitors by demonstrating how its products, including cannabinoid oils, capsules, and edibles, improve patient health.

The company already works with pharmaceutical distributors in a dozen countries to advance marijuana research, and in addition to enjoying sales growth because of Canada's expanding medical marijuana market, it's beginning to reap benefits from participating in Germany's medical marijuana market. Tilray distributes cannabis extracts to pharmacies in Germany through Noweda, one of the country's biggest drug distributors, and earlier this month, it got the OK to import cannabis flower there, too. It's now the only approved importer of both flower and cannabis oils in Germany.

Why it matters

The essential tremor study won't have data available for a while, but there are two reasons I think this news is important.

First, an eventual success in this indication could be a big win for Tilray. The International Essential Tremor Foundation estimates that 10 million Americans suffer from essential tremor, and that figures likely to increase as aging baby boomers cause the over-65 population to swell.

And second, trials like this could position Tilray as the go-to marijuana brand for improving patient health. If so, then Tilray could benefit from winning share in Canada's recreational marketplace when it opens for business next month. Deloitte estimates Canada's adult-use marijuana market could be worth between $1.8 billion and $4.3 billion in Canadian dollars next year, so any efforts that help Tilray's differentiate itself could pay off handsomely for investors.

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Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.