Khiron Life Sciences (CVE:KHRN) begins trading today on the TSX Venture, and this is a historic event, in that a) this is the first Colombian company that is not a resource company to be publicly traded in Canada, and b) This is the first Colombian licensed cannabis producer from Colombia to be listed in Canada.
Watch our interview with Khiron CEO Alvaro Torres from Midas Letter LIVE studios!
James West: Hey, welcome back to Midas Letter Live. My guest this segment is Alvaro Torres. He’s the CEO of Khiron Life Sciences, trading on the TSX Venture under the symbol KHRN. Alvaro, thanks for joining me today.
Alvaro Torres: Thank you James, it’s always a pleasure to be here with you.
James West: Alvaro, you are the CEO of the first Columbian company listed on the Toronto stock exchange that’s not a mining company.
Alvaro Torres: Yes we are.
James West: That’s incredible. So this is the first cannabis company listed in Canada?
Alvaro Torres: The first cannabis out of Columbia company to be on the Toronto Stock exchange.
James West: Yeah, that’s amazing.
Alvaro Torres: It’s quite an achievement.
James West: When did you get started and how long has it taken you to get this far?
Alvaro Torres: So, we closed our last round of financing on January 12 and from that point on we’ve been talking to the exchange about going public and doing all the transactions, all the financial accounting systems, getting our RTO transaction approved. We got the conditional a couple weeks ago and last week we got the final approval to go public this week.
James West: Very cool. So right now in Columbia is it legal for recreational? medical?
Alvaro Torres: It’s only for medical and it’s only extracts, so no flower which I think that was very smart for the government because that way they can separate these recreational legal activities from what’s really going to be a medical, pharmaceutical type of industry. I think it was a very smart move.
James West: Are the doctors in Columbia prepared to prescribe cannabis extract for various conditions?
Alvaro Torres: We’re preparing them James. (Laughter)
James West: Okay! I remember. I was there during the conference you guys put on.
Alvaro Torres: Yes you were, you were.
James West: That was really exciting.
Alvaro Torres: Well we’ve had two conferences so far of over twelve hundred doctors combined. we had one in Bogota and Medaillen. The idea is to start educating them about medical cannabis so by the time we’re ready to go out with the product by the end of this year, all these doctors ad patients have already been educated on how to use it.
We’ve already started and this month at the end we’re starting the same process in Mexico. So we’re hosting with the former president to start having the same conversation in Mexico which is 120 million people population.
James West: Sure, you’ll have to ask them about Donald Trump.
Alvaro Torres: I don’t think I’ll make that question public.
James West: Okay, so how much cannabis are you going to start growing?
Alvaro Torres: Our first phase is 7500 sq. meters that can yield around 8 tonnes of dried flower so say 800 kilos of extracts. Our entire phase one facility can yield up to 15 000 sq. meters so that’d be tones of product. That will give us all the way to 120 000 patients in the domestic market. But we have the ability to expand as you saw when you guys went to see, to grow all the way another 20 hectares of land. There’s plenty of capacity there and I think the issue now with Khiron from the beginning is not to grow it but how do we get the patients? Khiron’s all about patient acquisition and doctor engagement and that’s what we’re working on.
James West: Sure, what about the economics of selling and growing marijuana in Columbia? I mean obviously, it’s going to be cheaper than it is in Canada
Alvaro Torres: It is, it is.
James West: But can you get the same sort of prices as you can in Canada?
Alvaro Torres: Well, the prices are going to be a little bit lower of course because the purchase priority that Columbians and Latin Americans have but when you talk about growing something that you can grow from 10 cents to 30 cents on the flower and you’re selling at $4.00 or equivalent that’s tremendous profits. Now, we’re using all those profits to start acquiring patients.
What we’re going to be doing the next two years is strategy of acquiring patients so we can actually build a strong database. The economics are very, very beneficial; the fact that we’re just starting this business, it’s going to create tremendous value for shareholders.
James West: Yeah and I heard that you had an international strategy already in development?
Alvaro Torres: Yes, so of course Columbia for us is just the platform to Latin American market. Latin America is 620 million people. There are 68 million potential patients in the region and everybody’s looking for an alternative to opioid based medication or taking pills of ibuprofen a day. if we can with this very high quality product that’s domestically made at very affordable prices in a market that no bodies really looking at right now. Everybody’s focused on Canada North America, Europe but Latin America by itself is a tremendous market. If that’s all we can focus on then I’d say that’s a tremendous market for us to be leading.
James West: Sure. Then what sort of the build out phases that you have planned? You have phase one; is there a phase two and phase three already?
Alvaro Torres: Yes so right now we’re focused on phase one. We’re looking at trying to get onto phase 3 in the next three years as we start to look how to export to markets like Mexico, Argentina, Brazil and Chile. Hopefully all our phases will be up there and running in 3 to 4 years. That’s 20 hectares of land that gives us 170 tons of dried flower capacity. So I said now the issue for us which is from the beginning, how to acquire those patients and that’s what the company is really all about.
James West: How many patients are there potentially in Columbia?
Alvaro Torres: Six million patients in Columbia alone. Those are diagnosed and treated patients with chronic pain, epilepsy, anxiety and depression. We’re working with all the medical associations on those conditions to start doing all these conferences that you attended so that we can start spreading the word around.
In the end when you’re getting, educating all these doctors and all they hear is Khiron, that’s the idea of embedding a brand into the hearts and minds of the patients and of the doctors.
James West: Sure, how many growers of medical cannabis are there right now actively growing in Columbia?
Alvaro Torres: Well I believe there’s around 15 to 20 licenses being awarded in Columbia. Some people are looking at growing cannabis to be selling to the international markets at a lower cost extract. That’s not our strategy. Our strategy is more to focus on the domestic markets of Columbia and Latin America.
James West: Are any of those ones currently supplying the medical market?
Alvaro Torres: Right now, no because we’re one of the first companies to get all the cultivation and extraction licenses, so I’d say Khiron’s at the tip of the spear on this. Of course there will be many more companies to evolve with this. That’s not a bad thing James because in the end you cannot build a successful restaurant on an empty street district.
James West: That’s true.
Alvaro Torres: We need to develop a market. We need to develop an industry and the fact that Khiron’s now the first company from Columbia to go public on the TSX, that’s going to open the doors to many more companies. I think we welcome that because it helps us to spread the message around.
James West: Sure, would you consider Khiron to be employing a sort of best-in-class approach to medical cannabis much like Canopy Growth is?
Alvaro Torres: We are. All the genetics that we started our facility with are Israeli procured as well as the SOPs. We’re bringing GMP compliance extraction facilities, good agriculture practices because in the end for us this is not a commodity product. For us this is a product patients need to take and doctors need to feel safe about. The more quality you add to that the more value you can subscribe from the product. We’re not in the model of making as cheap as possible because we believe that’s a race to zero that’s not going to benefit our patients but the more we focus on them and the quality, high quality, that means we’re going to talking on the same level as companies like Canopy.
James West: Very good. Alright Alvaro, let’s leave it there. We’ll come back to you in a quarters time to see how you’re doing. Thanks for coming in today.
Alvaro Torres: Thank you James. Always nice to be here. Thank you so much.
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