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 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.
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 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.
"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,
Emerald Health Therapeutics, Emblem Corp 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.
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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 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' employee insurance plan,
Veterans Affairs Canada and insurer Sun Life Financial.
"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, 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.
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."
(Reporting By Nichola Saminather; Editing by Denny Thomas and Brian
Thevenot)
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