The Next Big Cannabis IPO
The Canadian cannabis industry continues to be a top place to invest as medical cannabis is legal at the Federal level and here, you will hear from John Stewart of Emblem Corp and learn about a federally licensed producer of medical cannabis that is going public in November.
Michael Berger: Joining us today is John Stewart, the President of Emblem Pharmaceuticals. How are you doing today, John?
John Stewart: I’m doing well, thanks for asking, Michael, and, more importantly, thank you for the invitation to participate in your show.
Michael Berger: We’re very happy to have you on. Today, we’re going to focus on Emblem Corp, a licensed medical cannabis producer in Canada. John, can you tell us a little bit about Emblem, its three divisions, as well as some of the goals you have for Emblem Pharmaceuticals?
John Stewart: Sure, Michael. Emblem is one of the 30 licensed producers in Canada that are licensed by Health Canada to be able to cultivate various strains of cannabis and sell those strains to patients in Canada in the dosage forms that are currently allowed by Health Canada. Emblem Corp. is organized, as you ask, in three distinct divisions.
The first division is our Cultivation Division and that’s headed by Max Zavet and our chief horticulturist Stephen Dinka. Steve has more than 10-years of experience in the Canadian medical marijuana industry and was the original lead grower for a company called Prairie Plant Systems, which was the first producer licensed by Health Canada to supply the Canadian market.
The goal of the Cultivation Division is to produce the highest quality and consistent strains of cannabis and those strains are the ones that we and others who have conducted research in this area believe are the most important for specific outcomes or specific indications if we were to use a pharmaceutical term.
The second division is the GrowWise Health Division. This is our patient and medical education division. Because of the way the medical marijuana regulations are set up in Canada, there’s not involvement of pharmacy per se so there’s certainly a gap in ability to give patients independent information on the appropriate strains and appropriate dosing so we have a division mostly staffed with registered nurses who interact with the patients on helping them navigate the process of making the most appropriate strain selection, and initiating dosing and doing close follow-up as patients are moving into medical marijuana therapy.
Then, lastly is the Pharmaceutical Division and that’s the one that I head and, briefly, the goal of our division is to extract the cannabinoids from the various strains that we are cultivating and extract them in a way that consistently and very closely parallels the cannabinoid profile in the original plant. We do this to ensure that from each dose and batch contain a consistent cannabinoid profile.
Some of the products that we have under development are hard and soft gelatin capsules. We are also looking at making long-acting or sustained release capsules and I have a lot of experience in that from my previous pharmaceutical company experience. Other formulations such as nasal sprays would be appropriate for patients who need a more rapid onset of action.
Michael Berger: That’s very interesting, John. I mean you have a lot to tell and it’s an amazing story you guys have. Can you tell us about your pharmaceutical background a little bit and how you joined the Emblem team?
John Stewart: Sure. I have a 40-year career within the pharmaceutical industry, all of which was in a company by the name of Purdue Pharma. I joined Purdue Pharma in Toronto back in the mid-70s. I spent some time with them in their marketing and sales groups but I’m a scientist, Microbiology by education, and Purdue was doing some work in the antibiotic and anti-infective area, so I moved over and got involved with their clinical research organization- that’s the group that is associated with doing clinical trials of existing drugs and new drugs primarily for the purpose of bringing additional data on their safety and efficacy and, in some cases, ultimately winding up with a new drug application to either Health Canada or the FDA.
I progressed through Purdue in Canada. I was the head of their R&D Group there, the Vice President of R&D from the early 80s through until 1991, and myself and other members of our team were very closely associated with the development and registration and marketing of a number of long-acting formations of existing drug substances that were really quite therapeutically beneficial. We were active in the respiratory business with Theophylline products by the name of Phyllocontin and, subsequently, Uniphyl. At about the same time, we made our first product and research into opioid analgesics.
In 1991, I became President and CEO of Purdue Canada when my predecessor retired and I ran that organization from 1991 through 2007. We moved the Canadian business from about $20 million back in the early 90s to $330 million. In fact, in 2007, I transferred to Purdue US in Stamford, Connecticut, and I was President and CEO of that organization from 2007 through until the end of 2013 when I retired and moved into what I’m doing right now and that is a private investor in the biopharma space and, also, I sit on a couple of boards of pharmaceutical and pharmaceutical-related companies.
When I was looking for opportunities to invest, I’m still connected with the Toronto area and a mutual friend of mine and the other principals of Emblem said that we should get together and, indeed, I did. That was a couple of years ago now.
Michael Berger: That’s very interesting, John. With your pharmaceutical background, I’m very interested in your perspective on cannabis as a therapeutic agent.
John Stewart: Well, and a very good question, because Purdue was keenly involved in pain management and one of the areas where medical marijuana is used and, in fact, the number one reason that patients report taking medical marijuana, and that’s both in Canada and here in the United States, is for relief of pain.
Now, I always recognized, I and the other scientists at Purdue, always recognized that the cannabinoids were genuine therapeutic agents and if we look back in what some of the pharmaceutical companies have done, there are, in fact, three different cannabinoid products that have been brought through the traditional FDA approach, full drug development approach, and licensed and sold as drugs here in the United States. The first was Cesamet by Lilly. That’s a synthetic TCH product and that was approved and indicated for treatment of chemotherapy induced nausea and vomiting.
Shortly thereafter, Marinol, another synthetic cannabinoid formulation was introduced to the market and it was used for appetite stimulation.
Then, more recently, approved only in Canada now and other European countries, not yet in the United States, is a drug from GW Pharmaceuticals called Sativex. That is a specific extract of strains, of two strains of cannabis, and it is approved for treatment of spasticity and muscular rigidity in patients with multiple sclerosis.
My awareness of cannabinoids as therapeutic agents has been in existence for some time. I also think there is solid evidence and patient reports that support the hypothesis that the complete cannabinoid profile from particular strains is better than synthetic individual cannabinoids. However, within 5 to 10 years, as we learn more about cannabinoids, we will employ a more synthetic approach. Our high quality cultivation with our pharmaceutical development brings not only the right cannabinoid strain and content, to the formulation, but also makes available the formulations best suited for particular therapeutic outcomes.
Michael Berger: That’s very interesting. It’s a very diverse background you have as you work in both the US and Canada. Can you please tell us about some of the major differences between those two markets?
John Stewart: Well, for certain, when it comes to the medical marijuana or cannabinoid space, there are dramatic differences. Here in the United States, the cannabinoids are still, not scheduled by the FDA. In other words, they’re indicated having no therapeutic purpose and, therefore, they’re illegal drugs and, on a federal basis, that creates a lot of difficulty for companies or for research.
Some of those simple issues, or not simple, but issues that come up that are difficult to get past. Companies cannot operate across state lines. You cannot move cannabinoids from one state to another. You cannot do it legally. The way that the individual states that have medical marijuana laws or the few that have recreational marijuana laws as well, they’ve each grown up within their own state so they’re different.
In one state, for example, you’ll have a certain set of indications for which cannabinoids could be prescribed. In another state, you’ll have a different set of indications for which they can be prescribed and the same goes with respect to the types of dosage forms that can be sold in those states.
Now, in Canada, the cannabinoids are regulated by the federal government, by Health Canada, so medical marijuana is legal in all 10 provinces because it’s federally regulated, so what that has created is a much greater ability for companies to come in and operate across all of the provinces without necessarily needing to have a physical grow location in each of those provinces and so much more effectively be able to tie together the research and the medical community and the patient community because the regulations in Ontario, for example, are the same as the regulations in British Columbia or Nova Scotia.
Michael Berger: That’s a lot of very important and major differences between Canada and the United States. Now, I understand that Emblem Corp is set to go public in November. Can you tell us more about this as well as the opportunity for investors?
John Stewart: Well, absolutely, and, so far, we’ve done private fundraisings. We just completed a raise of $5 million that closed early September. We had originally set out to just pick up about $3 million but it was seriously overprescribed and we moved up to $5 million to satisfy some of our investors.
We do have an IPO coming out in November of this year. Our symbol will be EMC. It’s going to trade on the TSX Venture Exchange. We haven’t priced it yet. It’s likely to be somewhere between $1 and $1.25 per share.
I don’t lead the IPO side of this, I’m much more on the science and the product development side, but if anybody wanted any more information on this, they could contact our Director of Investor Relations, a gentleman by the name of Danny Brody, and his phone number, if anyone was interested, is 647-255-8106 and Danny is in our Toronto head business office. His email address is email@example.com
Michael Berger: Thank you very much, John. Again, our guest today is John Stewart, the President of Emblem Pharmaceuticals. Thank you so much for your time today.
John Stewart: Thank you, Michael. Much appreciated.