VIDEO: Khiron Life Sciences Corp (CVE:KHRN) CEO on Latin American Expansion

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Khiron Life Sciences Corp (CVE:KHRN) (OTCMKTS:KHRNF) CEO Alvaro Torres discusses securing multiple medical cannabis endorsements from the two largest medical associations in Colombia. The approval allows Khiron to educate Columbian doctors on the medicinal benefits of the marijuana plant, which will permit the prescription of CBD and THC to patients as an alternative form of medicine. Alvaro also elaborates on Khiron’s Latin-American, international and domestic strategies starting with generating new products for patients across Colombia and moving into the Mexican medical cannabis market.

TRANSCRIPT:

James West:    Hey, welcome back to Midas Letter Live. My guest in this segment is Alvaro Torres; he’s the CEO of Khiron Life Sciences Corp., trading on the CVE under the symbol KHRN. Alvaro, thanks for joining me again.

Alvaro Torres: Thank you, James. Always a pleasure.

James West:    Alvaro, you’ve been trading for almost three weeks now; stock’s been holding in very nicely. You’re making a lot of announcements, and it’s almost head-spinning the rate of development that we’re seeing just in the press releases. Most recently, today you announced that you secured endorsements from two of the largest medical associations in Colombia, and what, really, is the significance of that for the company?

Alvaro Torres: Well, you know, Khiron is all about, how do we acquire patients? To acquire patients, you need to get doctors, they are the gatekeepers to believe in medical cannabis. Before we can actually get to do that, we need to make sure that we have the top associations talking about medical cannabis. What this announcement does for us is that now we have 3,000 doctors who are going to be in a network educated by Khiron for the next year, talking about benefits of medical cannabis, and with that conversation, Khiron is educating these doctors. So it’s pretty significant, because now what that drives for us is that anybody talking about medical cannabis in Colombia is going to be talking about Khiron, and that’s exactly the point that we try to do with these associations.

James West:    Perfect. Does that imply that the medical associations broadly endorse cannabis as an alternative form of medicine?

Alvaro Torres: Well that’s a very interesting point, because that’s exactly what it does. What it does is, now people are no longer afraid of talking about medical cannabis as an alternative, and that’s what now these associations are saying to their doctors: It’s okay to talk about cannabis, it’s okay to be educated, and of course, now it’s okay being educated by Khiron. So it works both ways.

James West:    That’s interesting. So in Colombia, the two largest medical associations are in agreement and unanimously endorse cannabis as a medicine, whereas in Canada, we have various levels of colleges of physicians and whatnot who can’t seem to agree on whether or not it’s medicine! We’ll leave it at that. But, so that’s great. So, how do patients get a medical cannabis prescription in Colombia now?

Alvaro Torres: Well, right now there’s no legal way to actually get a prescription because there’s only a few companies that have already got licenses, Khiron being one of the first ones to get all the licenses. So we hope by the end of this year to be able to actually make our product, have it all fully gone through all the authorizations, start to sell it. But we cannot build a market if the doctors are not educated; that’s why we are starting so far ahead, to make sure that doctors can all request themselves So they understand the needs, the benefits, so by the time we’re ready to be out with product – and Khiron being at the forefront of that – they’ll be educated and they’ll be ready to prescribe.

James West:    Right. And you’ve also announced that you’re going to be moving into the Mexican medical cannabis space?

Alvaro Torres: Yes. So our Khiron strategy is a multi-Latin-American and domestic strategy, so Colombia is just the first step into what we believe is going to be the medical market of Latin America. But all these countries like Mexico, Argentina, Brazil, have already legalized medical cannabis. They are just in the process of regulations. We see Mexico as a tremendous opportunity, with 120 million people, and so what we did, we started this education program by hosting and sponsoring CannaMexico, with the Fox Foundation, which is run by former president Vicente Fox, we had about two weeks ago. And in these countries, we’re starting the first seeds – no pun intended – on how to actually create a medical cannabis community. Because when Mexico goes online at the end of this year and they approve medical cannabis, it’s twice the market of Colombia. Colombia is already big enough with 50 million.

James West:    Right.

Alvaro Torres: So intelligent expansion means a lot for Khiron, and we’re in the business of generating new products for patients across the region. So Mexico is a natural first step into internationalization of our company.

James West:    Right. So will Colombia adopt a sort of similar system to Canada, where you’re prescribed it by a doctor, you then go online and buy it and it’s shipped to you in the mail? Or, will it be available at pharmacies, or how will Colombians actually get their hands on the products?

Alvaro Torres: Well, James, it’s going to be a two-step. So for the first year, year and a half, it’s going to be prescribed by doctors, and patients can pick it up at their doctors’ offices because you cannot really sell directly to the patient if you have high THC, because that’s a controlled substance. And what companies like Khiron have to do is develop their own trials and studies on their own products so that we can get it approved by the local FDA, and once that happens, then we can ship it and sell it in pharmacies. But it’s going to take at least two and a half years to get that done. In the meantime, what we need to work on is educating and making sure that patients start taking their own prescriptions. So they actually start learning the benefits, and that’s what the market is going to be in the next two and a half years, especially prescriptions that doctors give to their patients.

James West:    Right, right. So you’ve also sort of intimated that you’re going to explore global partnerships much larger than just in Latin America, as well?

Alvaro Torres: Well yes, we are, because in the end, medical cannabis is a global phenomenon, I would say. Of course our biggest focus is to Latin America because we’re talking about 620 million people, and we’re not seeing many plays, really, with the capability to understand those markets. But it’s difficult not to forget that because we have cost advantages, and because Colombia is such a well-known regulation when it comes to medical practices, that many other countries will want to work with us on how to sell the products to abroad. So that’s in the pipeline, but we also have to remember that the markets are not there today to export, so we’ll be looking at that in a year and a half or so. In the meantime, we’ll develop a strong domestic base, and that will allow us to generate more goodwill of the brand and generate more patients.

James West:    Sure, sure. So, will you seek opportunities in Europe and in the United States as they come online?

Alvaro Torres: If they come online, and they want to talk about high-quality, branded type of product, yes, we will look at it. What we are not really focusing on is to sell cheap cannabis extracts to other LPs so that they can sell it at retail; what we’re mostly focusing on is how can we drive that brand to the patient, wherever that patient is. So if it’s Europe or the United States, how can we leverage the expertise that we have on branding in a country of 50 million people, to be able to get to that value added? That, we’re very interested in.

James West:    Sure, yeah. When I was down there, you used a really interesting analogy, reference to, you know, here we grow coffee, we export it, we get $0.10 a pound for it and then we pay $3.50 a cup for it from Starbucks.

Alvaro Torres: Yes.

James West:    And that’s the lesson of that sort of whole experience is that, you know, there’s no reason to do that; you’re basically offloading all of the upside into somebody else’s brand. And so that intrigues me that you’re so cognizant of that at this point, and you know, that’s going to be a challenge. But, so is there, at this point it strikes me that there’s no other big players in Latin America anywhere.

Alvaro Torres: Well, I think the big name companies are looking at Latin America, I would say, cautiously, but some of the biggest names are already making some forays into the market. I think that’s actually good news for Khiron and for Latin America as we start getting more news flow out of Colombia, out of Brazil, out of Chile. But of course, us being actually from that part of the world and trying to move up, those type of companies coming over, that only helps our story. But most of the companies are looking at it as a low-cost jurisdiction, as you said to the point that we always talk about coffee and bananas and, we don’t want to do it that way. We want to develop domestic markets with high brand value. We’re not just interested in selling this cheap.

But the market is so big, and there’s so many opportunities, and I don’t think there will be many more than six or ten companies competing in this market in the long-term, whereas in Canada you have 100 companies competing for the same 350,000 patients. So it’s a very good opportunity, and the more these big companies want to get into Latin America, the better for us. The only difference is that we are actually from there, so we understand the culture and we understand what it takes to do business in this region.

James West:    You speak the language.

Alvaro Torres: We speak both languages. English and Spanish, so that works.

James West:    [laughter] Exactly. Okay, so tell me about how it’s going at your actual grow site and everything. How’s the buildout of the facility coming?

Alvaro Torres: Well, it’s going great since the last time you saw that. We just finished the construction of our greenhouse, the first phase, which is 7,500 square metres. Right now we commissioned the lab, it’s going to be GNP compliant and ISO 17025 lab. We’re cultivating our mother plants and going into the cuttings, and right now we’re going through the process with the government of certifying our seed source, which is imperative before they allow you to do cultivation for commercial purposes. And Khiron is, right now, at the forefront of that.

So we are building patient database, we’re building doctor database, and we are continuing to build our facility. We’re growing mother plants; it’s going according to plan.

James West:    Oh, right. Alvaro, let’s lave it there for now. We’ll come back to you again in another quarter, see how it’s going. Thanks for joining me again.

Alvaro Torres: Thank you, Jim. Always a pleasure.

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