Insight: Pot Pharm: Booming Canada weed sector plots next-wave medicines

East Side Games

16/02/2018 06:00

By Nichola Saminather 
    TORONTO, Feb 16 (Reuters) - Canopy Growth Corp  WEED.TO , 
one of the world's biggest medical marijuana producers, now 
wants to take on the world's pharmaceutical giants. 
    The Canadian firm launched Canopy Health Innovation in late 
2016 to build a portfolio of patented and federally approved 
cannabinoid-based medicines. The venture is one of a small but 
growing number of companies here aiming to compete with 
established drugs treating diseases ranging from anxiety and 
chronic pain to multiple sclerosis and childhood epilepsy. 
    They're developing research-backed formulations to be sold 
as pills, inhalers, solutions and creams, with the goal of 
convincing doctors and insurers to embrace marijuana as a 
mainstream medicine. 
    "You'll see a lot of companies like Canopy Health starting 
to form, and they're basically going to create medical cannabis 
2.0," Canopy Health Chief Executive Marc Wayne said in an 
interview. "There is a gold rush for cannabis intellectual 
property, and it's accelerating." 
    Canada's relaxed regulations, mature marijuana industry and 
free-flowing capital offer such firms a unique opportunity to 
advance research without the legal and political risks that bog 
down cannabis firms in the United States and elsewhere. 
    While U.S. federal law continues to ban weed in all forms, 
Canada approved medical pot in 2001 and will legalize 
recreational use this year. Its government welcomes and even 
finances the research and clinical trials needed to fully 
legitimize medical cannabis. 
    Canada is also one of only two nations - along with the 
Netherlands - that currently exports marijuana, allowing firms 
here to take immediate advantage of recent medical pot 
legalizations in more than 20 countries. Research firm 
Brightfield Group last year forecast the global medical cannabis 
market would quadruple to $31.4 billion by 2021.  
    Offerings in today's Canada medical marijuana market differ 
little from those used recreationally - the smokable plant and, 
more recently, oil extracts. More than 70 companies have 
licenses from the federal drug regulator, Health Canada, to 
cultivate, produce and sell medical marijuana, with more than 
half those licenses granted in 2017 or 2018. 
    Canopy Health and other firms now aim to craft new 
formulations with varying cannabinoid levels; to find the best 
dosage delivery systems, such as rapid-release or long-acting 
tablets or metered-dose inhalers; or to combine cannabinoids 
with other drugs or supplements to improve effectiveness. 
    Canada opened the door to serious medical research in 2015 
with the approval of cannabinoid extract sales, allowing for the 
isolation of cannabis components that could form the basis of 
more sophisticated medicines. 
    The pace of research - and investment - quickened last year 
after the government introduced legislation to legalize 
recreational use. Equity offerings by Canadian marijuana firms 
tripled to nearly $1 billion in 2017.  urn:newsml:reuters.com:*:nL1N1HL146  urn:newsml:reuters.com:*:nL1N1PD1QA  
    Canopy Health raised C$16 million ($12.77 million) last year 
to finance medical trials alongside other institutions and 
researchers, Wayne said. It has filed 27 patents for treatment 
of insomnia relief and is now working on remedies for anxiety. 
The firm expects to have its first federal approval by about 
2020. 
    Canopy Growth, a publicly listed firm valued at C$5.3 
billion, retains a 46 percent stake in the new private company. 
    Canopy Health's competitors include CanniMed, which last 
month agreed to be acquired by Aurora Cannabis  ACB.TO  to form 
what would be a C$6 billion firm, the world's biggest marijuana 
producer by market value.  
    CanniMed has partnered with universities including McGill 
University in Montreal and the University of Manitoba on 
research into managing symptoms of multiple sclerosis, 
osteoarthritis and pediatric epilepsy.  urn:newsml:reuters.com:*:nL4N1PJ4F5  
    "Canadian companies are taking the lead because we've more 
freedom to operate and can actually afford it now," Chief 
Executive Officer Brent Zettl said in an interview. 
    Other players forging ahead with medical research include 
MedReleaf  LEAF.TO , Emerald Health Therapeutics  EMH.V , Emblem 
Corp  EMC.V  and Tilray, an unlisted company owned by private 
equity firm Privateer Holdings. 
     
    CONVINCING DOCTORS, INSURERS 
    Although some medical uses for marijuana have been long 
established - to reduce nausea, for instance, or treat glaucoma 
- little research exists to convince the health care 
establishment of its medical value. 
    Patients are typically only prescribed marijuana when they 
ask for it, and it's open secret that "medical" marijuana is 
often used recreationally. 
    "The way the medical cannabis world now works is really 
patient-driven," said Avtar Dhillon, executive chairman of 
Emerald Health Therapeutics  EMH.V  and a medical doctor. "I can 
relate to physicians who want evidence." 
    Emerald will soon start human clinical trials of a cannabis 
formulation to manage pain, he said. 
    Only a few Canadian insurance plans cover medical cannabis, 
including grocery chain Loblaw Cos'  L.TO  employee insurance 
plan, Veterans Affairs Canada and insurer Sun Life Financial 
 SLF.TO . 
    "There's a lot we need to learn about this plant, and the 
research goes a long way to quantify and demonstrate its medical 
benefits," said Jason Zandberg, a research analyst focused on 
small-cap growth companies at PI Financial. 
    Government money is helping the cause. Canada's National 
Research Council awarded C$1.7 million for the study of cannabis 
between 2014 and 2017. Among the recipients were Emerald, 
MedReleaf and Tilray. 
    In January, the Canadian Institute of Health Research 
approved C$1.4 million for studies led by hospitals and 
universities into subjects including the impact of cannabis on 
driving and mental health. 
     
    LITTLE RESEARCH, MUCH DEBATE 
    Debates still rage over the effectiveness and risks of 
prescribing pot. 
    The concerns include addiction from long-term use, impaired 
cognitive function, anxiety, depression and lung cancer, 
according to a 2014 paper posted on the U.S. National Institutes 
for Health website. 
     "Cannabis has not been through Health Canada's rigorous 
pharmaceutical regulatory process," said Canadian Medical 
Association President Laurent Marcoux. "Physicians do not know 
about the appropriate dosage, the potential side effects and how 
it could interact with other medications." 
    CanniMed Therapeutics has financed physician and pharmacist 
training programs developed by professionals in each field and 
accredited by their certification bodies, a company spokeswoman 
said.  
    Emblem Corp  EMC.V , which received Health Canada approval 
to sell medical marijuana in August 2016, is spending C$3.2 
million over the next two years on studies to find the best 
cannabinoid strains to treat pain and reduce dependence on 
opioids. 
    The chief of the firm's pharmaceutical division, John 
Stewart, previously worked as the Canadian and U.S. CEO for 
Purdue Pharma, the creator of OxyContin, a painkiller widely 
seen as a major contributor to North America's opioid crisis. 
 urn:newsml:reuters.com:*:nL4N1N05RX urn:newsml:reuters.com:*:nL2N1N61DK urn:newsml:reuters.com:*:nL1N1O41Q8 
    But the firm needs more data, Stewart said. 
    "We don't know yet how you might initiate cannabis therapy 
in a patient who wanted to discontinue their opioid therapy but 
certainly doesn't want to discontinue their pain control," he 
said. 
    Medical marijuana firms have an unusual advantage in that 
they can continue to sell a legal but largely unregulated 
medicine as they raise money for research into fully regulated 
products that might have "enormous potential" in the 
pharmaceutical market, said MedReleaf CEO Neil Closner.  
    "We're allowed to sell a product that many people view as 
being a possible replacement for many pharmaceutical products," 
he said. "But we're not obligated to take it through the 
traditional Health Canada approval process."  
    ($1 = 1.2525 Canadian dollars) 
 
 (Reporting By Nichola Saminather; Editing by Denny Thomas and 
Brian Thevenot) 
 ((Nichola.Saminather@thomsonreuters.com; +1-416-687-7604;)) 
 
Keywords: CANADA MARIJUANA/INNOVATION