How pot stock Zelda Therapeutics Ltd just SMOKED the ASX

After a reasonably subdued start to life as a listed company Zelda Therapeutics Ltd (ASX: ZLD) certainly grabbed the attention of the market this morning.

The medicinal cannabis company’s shares are on fire today and are higher by a whopping 48% to 3.4 cents.

Today’s gain comes following the announcement of positive results from its proof of concept study into the anti-cancer effects of its tetrahydrocannabinol-rich medical cannabis formulation.

According to the release the research by world leading cannabis cancer researchers at Madrid’s Complutense University shows that the formulation is significantly more potent at reducing tumour growth than pure tetrahydrocannabinol.

Furthermore, the formulation is equally as potent as Lapatanib in reducing tumour growth. Chemotherapy drug Lapatanib is a tyrosine-kinase inhibitor of HER2 and EGFR. Both of these receptors are known to play an important role in breast cancer.

The research study was carried out in immune-deficient mice hosting tissue grafts of human breast cancer, HER2+ adenocarcinoma. The treatment was delivered orally to the mice and tumour volume was measured daily.

Whilst this is an exciting breakthrough, it is worth remembering that it will be some time before human trials commence. So it might be a little early to get over excited.

But overall I think medicinal cannabis has enormous potential and the high quality companies with strong management teams have a great chance of success. Whilst my preference is for the soon-to-be listed AusCann, there is room for both companies in this huge market in my opinion.

Not only do both AusCann and Zelda have close ties and shared expertise, but they are targeting different areas of the market as I explained recently.

Not all pot stocks are investable though. Fellow industry peers MMJ Phytotech Ltd (ASX: MMJ) and Creso Pharma Ltd (ASX: CPH) lack any real substance in my view. For this reason I would suggest investors avoid them, or else that investment could go up in smoke.

Next year could be a big year for Zelda and AusCann. But they are not the only ones. The smart money is on these three hot stocks being big winners in 2017. Is yours on them yet?

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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