TM Editors Note: This article discusses a penny stock and/or microcap. Such stocks can be easily manipulated; do your own careful due diligence.

When we last covered RespireRx Pharmaceuticals Inc. (RSPI) back in June, shares were trading above $2 per share and the company had a market capitalization of over $5 million. Fast forward to today (September 19th), and shares of RSPI closed the market at $1.25 per share giving the company a market cap. of just over $2.8 million. If you're reading this, you're probably asking what happened!? Since the coverage on June 12th, there have been a handful of noteworthy developments at the company as well as updates on some of the same nascent opportunities that put this company on our radar in the first place. 

A few days after our coverage of RSPI on June 12th, James S. Manuso, Ph.D., the CEO of RespireRx made a presentation at the Marcum MicroCap Conference in Midtown Manhattan. Talking points included the company's Phase-3 ready dronabinol (synthetic Delta-9-THC) medicine for the treatment of obstructive sleep apnea, and more. This may not seem significant, however it is for a small cap. company like RespireRx. With attendees ranging from institutional investors to buy and sell side analysts, the increased interest garnered at conferences like Marcum's can really move the needle. Following the company's June 16th presentation, RSPI traded up to $2.50 per share and hovered around there throughout much of the rest of June.

Shares of RSPI started to take a hit when on July 7th, RespireRx filed an 8-K with the SEC to announce an amendment to the employment agreement of Jeff Eliot Margolis, the company’s Vice President, Secretary and Treasurer which essentially consisted of an increase of annual compensation from $195,000 to $300,000. While this announcement probably rubbed some investors the wrong way, the 8-K that the company filed just days later on July 11th reminded us of why RespireRx was so fascinating in the first place. 

RepireRx announced that the company had "prepared a platform summary and an executive summary with respect to each of its two development platforms, Ampakines and Cannabinoids." Since we're The Daily Marijuana Observer, you probably could've guessed that we were most interested in what the company is up to in the cannabinoid space, especially since that's RespireRx's pipeline treatment that is furthest along in the process.

For those who are unfamiliar with the company's cannabinoid-related pipeline, RespireRx's dronabinol-based treatment for obstructive sleep apnea (a.k.a. "OSA") is nearing Phase 3 clinical trials. Dronabinol, a.k.a. synthetic Delta-9-tetrahydrocannabinol, is a lab-produced replica of the cannabinoid that is naturally occurring in marijuana. Dronabinol however does not come from a marijuana plant. According to the company's 1-pager, Dronabinol "has been shown to act at CB1 & CB2 receptors on neurons to stabilize respiratory patterns and augment upper airway muscles." What this essentially means is that this synthetic cannabinoid has been shown to help regulate the upper airway muscles that causes breathing to repeatedly stop and start for patients with OSA. 

RespireRx intends for its treatment to compete with only approved treatment method for obstructive sleep apnea called the constant positive airway pressure (a.k.a. CPAP) mask - a difficult device that is often criticized for its inconvenience and more. According to RespireRx's cannabinoid platform summary, an estimated 5.9 million patients are diagnosed with OSA and another 23.5 million undiagnosed, offering up a $7.5 billion treatment device market ripe for disruption. If a $7.5 billion market opportunity wasn't large enough, Global Market Insights estimates that "the sleep apnea devices market size is projected to exceed $8.7 billion by 2023."

As of RespireRx's August 14th 10-Q quarterly report with an announcement to follow, "The Company has advanced its discussions with potential strategic partners with respect to both its cannabinoid and its ampakine programs." This is good news because as soon as the company engages a partner to assist with Phase 3 clinical trials, RespireRx's OSA treatment becomes one step closer to a marketable reality. While the company incurred net losses of $1,584,066 for the quarter ending June 30th, that is extremely common for a developmental-stage biotechnology/pharmaceutical company. RSPI mentioned that "The Company expects to continue to incur net losses and negative operating cash flows for the next few years," but also that "The Company is continuing its efforts to raise additional capital in order to be able to pay its liabilities and fund its business activities on a going forward basis."

This recently announced private placement offering of securities gives us confidence that the company will be well capitalized and able to move forward with the development and trials of its cannabinoid-based treatment and more. Also, since the CEO just presented at another investment conference on September 12th, we're excited to see the investor follow-through from the increased awareness. 

Conclusion

As it currently stands under federal law, dronabinol is a Schedule III drug, while cannabis is a Schedule 1 drug. Since insurance does not cover medical marijuana, RespireRX and other pharmaceutical companies that get approval for dronabinol-based treatments seemingly have market protection for quite some time, as medical marijuana is not yet legal in many states. Given the potential market size as well as RespireRX’s substantial clinical progress thus far, we believe that RespireRX is undervalued at its current market cap. of just over $2.8 million.