Note: Please keep in mind that Kalytera is an early development stage company and still quite speculative. Companies like this should only represent a small portion of your portfolio.

It seems like a no-brainer.There are hardly any states in which the use of marijuana is legal.Over time it seems highly likely (to this investor at least) that many more if not all of the states will eventually come around.

This has to be one of the great investing opportunities of the next couple of decades.

The problem is that finding quality companies to invest in is very difficult.If you make a list of marijuana stocks to go through almost every company on the list is not something many of us would be interested in owning (putting it politely).

When you see one that is a step above the others in terms of management quality and experience it sticks out pretty clearly. Kalytera Therapeutics (TSXV:KALY) is one of those.The company is newly publicly traded having entered the market through a reverse-merger and isn’t on anyone’s radar.

Let this serve as an introduction to this company both for you and for me.

While most companies tied to marijuana have management groups that have not accomplished anything Kalytera’s CEO has a solid background. Here is his bio:

Andrew L. Salzman, M.D., Chief Executive Officer and Chief Medical Officer

Dr. Salzman is a physician, scientist, inventor, and biomedical entrepreneur. Dr. Salzman founded and built Inotek Pharmaceuticals, a 140-person biotech company that raised $92M in venture capital and concluded a $600M license with Genentech. As CEO of Inotek, Dr. Salzman brought numerous new chemical entities from conception to clinical stage testing, including a treatment for glaucoma that demonstrated clinical proof of concept in late Phase 2 clinical trials.

Dr. Salzman has been funded by the U.S. National Institutes of Health (“NIH”), authoring 75 federal grants and receiving $102 million in federal grant funding. In addition to 175 peer-reviewed scientific publications, Dr. Salzman holds 40 patents in the fields of medicine, pharmacology, organic chemistry, and medical devices.

This is a man who is a known commodity, has run a publicly traded company for an extended period of time and has been deemed worth of federal grant funding of more than $100 million.

Having an accomplished CEO differentiates Kalytera from almost all of the other companies on a list a person puts together when looking at the marijuana sector. For me almost every marijuana company is a “no” within five minutes of looking at their financials.

The complication here is that Kalytera isn’t looking to profit from the legalization of marijuana.The company is focused on advancing cannabinoid-based medicine that can provide a solution for a range of unmet medical needs.

That wasn’t exactly the exposure I was looking for.

Cannabidiol Therapeutics (CDB)

I’m very familiar with people who have had a prescription for medicinal marijuana.A few of them are of the “wink-wink” variety. However, I don’t understand how marijuana actually works for the legitimate users.

Here is what I discovered.

Cannabis, also known as marijuana, is the flowering plant recognized for its medicinal and recreational uses. It works by acting on the endocannbinoid system, which is a system of endogenous (basically means internal) receptors that have a role in inflammation, nausea, pain, and other functions.

Cannabis has over 80 chemical constituents, known as “cannabinoids”, which alter neurotransmitter release from the brain.   

Two of the most active and studied constituents of cannabis are tetrahydrocannabinol (THC) and cannabidiol (CBD). THC is the major psychoactive component of cannabis. CBD acts on many of the same receptors as THC, but without the psychoactive side effects.

It is CBD that is being targeted by Kalytera as having potential for the treatment of several issues.Those would be:

1-Bone Fracture Healing      

There are currently limited treatment options available for improving the rate of bone healing and bone fracture repair. Based on preclinical findings, Kalytera is investigating two compounds to assess their potential ability to improve bone fracture healing, including CBD and KAL436/9, a synthetic derivative of CBD that has been structurally modified to enhance solubility in water to improve potency.

2-Osteogenesis Imperfecta    

Osteogenesis imperfecta (OI), also known as brittle bone disease or Lobstein syndrome, affects how the body produces collagen, a protein that helps strengthen bones. Based on preclinical findings, Kalytera is investigating the potential of CBD and KAL 436/9 to strengthen bone in persons with OI.

3-Osteoporosis Program      

Osteoporosis is a chronic condition characterized by a weakening of the bone and an increased risk of fracture. KAL671 is a unique synthetic fatty acid amide and an endocannabinoid-like molecule that may restore bone in persons suffering from osteoporosis. Kalytera has obtained an exclusive license to KAL671 from Yissum Research Development Company, Hebrew University’s technology transfer arm.

This has potential to be a first-in-class treatment for osteoporosis, a large underserved market.KAL671 has demonstrated capacity to restore bone in preclinical animal models, mainly by inhibiting bone resorption.

4-Osteoporosis in PWS

Prader-Willi syndrome (PWS) is a complex orphan genetic disorder with symptoms that commonly include short stature, cognitive disabilities, chronic feelings of hunger, and obesity. Many patients with PWS also are diagnosed with osteoporosis. This additional symptom is often seen in adolescents and adults with PWS. Kalytera researchers are exploring the potential ability for KAL671 to prevent bone loss in mice with genetic mutations designed to mimic aspects of PWS.

Conclusion And Risks

It is very difficult it is to find a good looking young company that can provide exposure to growth in legalized marijuana.I set out to find at least one such company to write about this week and by far the best-looking management team I could find was attached to Kalytera which isn’t even in the business I was looking for exposure to.

I therefore, haven’t found what I’m looking for and will continue my search. On the upside I’ve learned more about the medical side of this business and a new publicly traded company.