October 18, 2018

VIDEO: Segra International Corp First Cannabis Tissue Culture Company to Partner with Large-Scale Canadian LPs

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Midas Letter
VIDEO: Segra International Corp First Cannabis Tissue Culture Company to Partner with Large-Scale Canadian LPs
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Segra International Corp is a highly scalable, in vitro, clonal micro-propagation company producing immature plants in the cannabis sector. CEO Todd McMurray indicates that the company is bringing agricultural technology to the cannabis sector and the company’s client list already includes HEXO Corp (TSE:HEXO) (OTCMKTS:HYYDF) (FRA:74H), the Supreme Cannabis Company Inc (CVE:FIRE) (OTCMKTS:SPRWF) (FRA:53S1), and Agripharm Corp. McMurray praises the expertise of the Segra management team and the company’s cannabis molecular biology lab, which provides true-to-type strain fingerprinting. Segra is the first cannabis tissue culture company to partner with large-scale Canadian licensed producers. The company has filed a prospectus and hopes to go public by the end of October or early November.

Transcript

Fraser Toms:  Hey, welcome to Midas Letter Live. I’m here with Todd McMurray, who’s the CEO of Segra International Corp. How are you doing today?

Todd McMurray: Never better, and yourself?

Fraser Toms:  Good. So let’s get right into it: what does Segra do?

Todd McMurray: So Segra is an in vitro, clonal micro-propagation company, which is often referred to as tissue culture. And simplified, that’s essentially the production of baby plants by the tens of millions.

Fraser Toms:  How does it become the tens of millions? How does that work.?

Todd McMurray: Our technology is highly scalable, so essentially, you know, we build up a base stock of plants, say, for example, 100,000 plants. We can turn that into 400,000 to 700,000 plants in 30 days with our technology.

Fraser Toms:  What does that – it’s hard to imagine, so just if you could paint a picture what that actually looks like?

Todd McMurray: Yeah, this is a technology from the ag industry. Like, virtually all of our blueberries, strawberries, raspberries, papayas, bananas, all come from tissue culture. So we’re basically bringing agricultural technology into the cannabis space.

Fraser Toms:  Okay, and speaking of the cannabis space, I can see that very large clients – HEXO Corp., Supreme Cannabis, Agripharm…so how did that, when did those relationships start, and what do they kind of consist of?

Todd McMurray: Ah, good question. So essentially what we’ve done is, we’re setting up mini-labs in these facilities. The process for tissue culture, there’s the initiation process that takes about six months; there’s no short cuts. That’s where we essentially clean up all of the disease and intercellular bacteria from the plants.

So the whole goal with this is, prior to getting our license, we set up these mini-labs in these facilities; then we flip those propagated plants into our facility, and supply those. They become our anchor plants, essentially.

Fraser Toms:  Okay, okay. So what were the initial discussions like with those companies?

Todd McMurray: Well, very interesting, actually. For example, with HEXO, HEXO had already done their homework prior to even meeting Segra. They had already determined that they would save money, they would reduce their risks, by using tissue culture. So for them, it was a very easy sale.

Fraser Toms:  Yeah, it’s what they call a layup, I guess.

Todd McMurray: And I think the key for why these companies have chosen Segra is our team. Beyond a doubt, like for example, Dr. Zobayed, tissue culture specialist – he mentored with Dr. Kozai, who is considered the father of tissue culture. He’s written five different books, 50 different papers. He’s perfected the industrial-scale production of over 500 different plant species, and he’s one of the few industrial scale tissue culture specialists that’s actually worked with cannabis.

Fraser Toms:  Wow. So the, I guess, plant to plant, there’s a learning curve or a way to kind of figure it out before you can get the, kind of, system running. Is that right?

Todd McMurray: Well, it’s actually, there’s four stages to tissue culture. There’s the initiation, there’s the multiplication, there’s the rooting and then there’s the acclimatization. And our business model is Stage 3 plants, which is a plant about this size that’s just taken roots. And so literally, when we work with these plants, we can literally put 10,000 plants in a Styrofoam cooler and ship them all over the world for up to 4 days with no loss.

Fraser Toms:  Wow, okay. So what are your competitors, or is there – what does that landscape look like, in terms of competition?

Todd McMurray: Well, yes, we do have competitors, and what I would say there is, we’re the first cannabis tissue culture company to actually sign up large-scale Canadian licensed producers. And if you were to ask our clients, they all did their homework based on the competitors, and at the end of the day, they chose Segra. And it’s really about our team.

Fraser Toms:  Great, so – go ahead, sorry.

Todd McMurray: We have one pretty significant competitive advantage, and that is we have our cannabis molecular biology lab. So we’re doing what we call strain fingerprinting. So if you’re a cultivator and we’re working with your genetics, we fingerprint the genetics before we come in, and every order that goes out the door is fingerprinted to make sure those orders aren’t getting mixed up. So everything is true-to-type.

Fraser Toms:  Okay, and then, looking forward – because you got these big clients here – what’s the goal for moving into 2019 and beyond?

Todd McMurray: Good question. So right now, we’re retrofitting. We purchased a farm, we’re retrofitting a building. Our ultimate capacity through Phase III buildout will be about 80 million plants per year. We expect to reach that by 2024. The first phase is retrofitting about 4,000 square feet of space; we’ll get that license, concurrently we’re building out 15,000 square feet of space, and then for Phase III we’re building out 50,000 square feet, which will give us the ultimate capacity for 80 million plants per year.

Fraser Toms:  80 million plants per year. That sounds like a very big number to me. We just talked briefly off-camera about the fact that Segra currently, as of right now, is a private company, but you have your eye on a public listing at some point in the near future?

Todd McMurray:      Yes, we’ve filed a prospectus, a preliminary prospectus, and we hope to be listed via RTO in late October, early November.

Fraser Toms:  Great, okay, well that’s a great introduction, Todd, and we’ll follow the Segra story with interest. And hope to have you in after you become a public company.

Todd McMurray: Well, thanks for having us. Appreciate it.

Fraser Toms:  Thank you.

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