Looking for a pharma-based cannabis play? Best to stay away from marijuana crop growers who say they’re doing clinical research on the side and go with Tetra Bio-Pharma (Tetra Bio-Pharma Stock Quote, Chart TSXV:TBP), says analyst Rahul Sarugaser of Paradigm Capital, who thinks the company’s recent Health Canada drug trial approval creates a clear path to near-term catalysts.

Yesterday, Tetra Bio-Pharma announced that it had received a “No Objection Letter” from Health Canada, effectively giving the company the green light for a Phase 1 Clinical Trial to test the vaporized version of its cannabis drug PPP001.

“We are pleased to announce this critical Phase 1 trial focused on the PK and safety of our PPP001 pellet delivered by vaporization,” said Dr. Guy Chamberland, CEO and CSO of Tetra Bio-Pharma, in a press release. “Over the last three months we have analyzed the composition of the vapour. This data combined with the results of this Phase 1 will provide the critical pharmacological information required by physicians to adequately guide future efficacy studies in patients who suffer from a chronic condition such as fibromyalgia where there are limited treatment options and there is a large unmet medical need. It may also provide an alternative mode of delivery for those patients who prefer not to smoke.”

Sarugaser expects the trial will both begin and end this quarter and, once safety is established, that the company plans to investigate vaporized PPP001 in the treatment of fibromyalgia pain, a potential $2 billion global market which would represent an uptick of over $40 million to the analyst’s valuation.

“While many cannabis companies simply announce their intentions to pursue clinical trials, this pursuit has been the foundation of TBP’s operations from day one,” says Sarugaser in a November 1 research note to clients. “TBP’s industry-leading research and deep knowledge of Health Canada’s regulatory apparatus are key drivers putting it at the vanguard of the cannabis biopharmaceutical arena.”

The analyst expects a number of catalysts for upcoming quarters: (1) upon recruitment of about 400 patients for its Phase 3 trial in terminal cancer pain, expected in Q4/18, TBP can apply to Health Canada for approval for PPP001; (2) during the next two quarters, TBP plans to apply for approval of PPP001 to the European Medicines Agency, potentially increasing the company’s addressable market by more than 15 times; (3) during the next two quarters, TBP will complete a pharmacokinetics study of PPP002, its mucoadhesive tablet formulation of THC, and then file for US approval via the FDA’s shortened 505(b)(2) pathway.

Sarugaser says that TBP is in fact the next GW Pharmaceutical.

“Once approved by Health Canada, the EMA, and eventually the FDA (all ~2020), PPP001 will be designated a pharmaceutical drug—just like GW Pharma’s CBD-containing drug Epidiolex, which goes on market on November 1. As such, it will not be restricted according to state by state “medical” access laws, but rather transcend state and national boundaries,” he says.

Sarugaser rates TBP a “Buy” with a 12-month price target of $1.75, representing a projected return of 80 per cent at the time of publication.