November 21, 2018

InMed Pharmaceuticals (TSE:IN) Commercial-Scale Cannabinoid Manufacturing

Midas Letter
Midas Letter
InMed Pharmaceuticals (TSE:IN) Commercial-Scale Cannabinoid Manufacturing

InMed Pharmaceuticals Inc (TSE:IN) (OTCMKTS:IMLFF) (FRA:MWG2) is using biosynthesized cannabinoids for medical research. While most companies developing synthetic cannabinoids use yeast, InMed Pharmaceuticals is the only company in the world using e coli in its fermentation process. CBO Josh Blacher shares details of the company’s development of a treatment for Epidermolysis bullosa or EB, a serious genetic condition with no current approved treatment. Blacher believes InMed Pharmaceuticals is a year away from Phase I clinical trials for its EB treatment and hopes the treatment will be on the market by 2022. Blacher discusses the advantages and cost savings of synthetic cannabinoids and believes all cannabis derivative products could soon be made from synthetic ingredients.


James West:   Josh, you know, we just covered InMed’s quarter yesterday, and, you know, I’m like – or much like – most of the sector; you’re still in a development phase, so there wasn’t a lot of, well, there’s no profit, obviously. But you were making advances in one of the drugs in particular that caught our interest: INM 750, which was an approach to treating the disease that is probably one of the most horrible things that anybody could go through.

Josh Blacher: Right. Epidermolysis bullosa.

[stock_chart symbol=”IN:TSX” align=”left” range=”5D”]

James West:   Epidermolysis bullosa. What is that?

Josh Blacher: We will call it EB. EB is a malfunction of the glue that holds the two layers of the skin together: the dermis and the epidermis. It’s a genetic condition, unfortunately, so children are born with it. It’s very, very severe, and the particular part of EB that we’re working on is a subset that relates to a certain protein called keratins. So we’re hoping not only to alleviate the symptoms, of which there are several and quite severe, but also to help the skin teach itself to grow again.

James West:   Wow, interesting. So what is the current available treatment that is not cannabinoid-derived?

Josh Blacher: Well, there are none, unfortunately. There are no approved drugs for EB, so EB patients, unfortunately, use a myriad of creams and ointments and bandages. Essentially it’s a children’s disease; most of the children do not advance to more than 20 or 30 years of age, sadly, and they spend most of their time bandaged up from head to toe. And they have a number of ointments and creams that are working on wound healing and itching and pain, inflammation, things like that. So we are hoping to hit this right on the head.

James West:   So InMed’s business model is essentially to isolate cannabinoid molecules and create proprietary drugs from them?

Josh Blacher: Right.

James West:   and you guys, I’ve just sort of cottoned on to the idea that you guys aren’t growing marijuana plants; you’re biosynthesizing your cannabinoids.

Josh Blacher: That’s right.

James West:   And tell me about that process, because I’ve only had a couple of guests in here who can do that, and that scares the bejesus out of all those farmers out there, I can tell you.

Josh Blacher: it certainly does, and by the way, none of them want to be farmers. They all would prefer to just sell products to the marketplace. What we do is, we create a DNA blueprint so to speak of each of the 90 cannabinoids, and through some high technology –

James West:   High technology? [laughter]

Josh Blacher: And high science, we are able to transplant the cannabinoids into a fermentation broth that grows and develops the broth. So at the end of the process, which is very, very short, you get 100 percent, highly pure, pharmaceutical grade cannabinoids.

James West:   Interesting.

Josh Blacher: so it could be very disruptive insofar as, if we can get this right and get the cost structure right, then theoretically we can supplanting the growing, extracting, harvesting market.

James West:   Okay, so is it the case of where you’re actually using genetically modified yeasts enzymes and –

Josh Blacher: Sort of, yes. So most of our competitors, in fact, are using yeast to bioferment; we believe, we actually went into this agnostically. We looked at yeast and bacteria. The bacteria we use is e-coli, and again, we went into this agnostically, and we found much more robust results with the e-coli production methodology, and we have been able to wrap some very serious IP around that, which is not the case with the yeast platform.

James West:   Right. So there’s going to be a positive use for e-coli and bacteria!

Josh Blacher: Absolutely.

James West:   Interesting. All right, so how far off are you to being able to create commercial-scale quantitates of cannabinoids using this process?

Josh Blacher: Right. So we have spent the last three-plus years actually trying to protect which what’s called the plasma or the vector, which is the underlying science, and we’re now moving to a portion of the technology that is working on sort of the scale-up part of it. So we’re able to do a number of these cannabinoids, or produce a number of these cannabinoids, at what’s called a bench top scale, and now we’re working to scale it up to a commercial scale. So we think we’ll be able to get there in about 9 to 12 months.

James West:   Sure. So the National Research Council of Canada is involved in this; are they just funders?

Josh Blacher: No. they are strategic partners with us, they are going to be side by side with us in this biofermentation process. They have great facilities, and we’re hoping that they remain very good partners to us going forward.

James West:   Okay, so they’re providing scientific verification, participation…

Josh Blacher: Exactly. A lot of know-how, some money, resources, things of that nature.

James West:   Wow, very interesting. Okay, so you filed a patent application for treatment of pain with cannabinoids back in September, and is that sort of the value proposition for the company to investors is that you’re going to create patented medicines that will arguably, theoretically, potentially become mainstream one day, and blockbuster drugs in and of their own?

Josh Blacher: Absolutely. So we’re working, you can really think of our company as twofold: the first one is what we call a disruptive platform technology, where we’re able to manufacture any cannabinoid at a commercial scale and at pharmaceutical grade, right? So that can be good for us, that will be good for us; we also think that that will be applicable to pharmaceutical companies. So for example, if the Pfizers, Mercks, Lillys of the world say Hey, InMed, can you manufacture for us cannabinoid number 72 and 21 for the treatment of COPD or lung cancer, psoriasis, you name it, we will be the address. So that’s business number one; that’s, I think, the golden egg.

Business number two is a really interesting R&D platform. So we’re working on this rare skin condition called EB, and we’re also working on glaucoma and trigeminal pain, which is pain that emanates from the trigeminal nerve right here.

James West:   Yeah, the essence of migraines, I guess.

Josh Blacher: Yeah, it’s actually called the suicide pain, or the suicide migraine.

James West:   Because it’s so bad, you just want to kill yourself?

Josh Blacher: And unfortunately, there are several cases where that has happened.

James West:   Wow.

Josh Blacher: They liken it to somebody being struck with alighting bolt.

James West:   Wow, that’s incredible. So then, I mean, what is the rate at which these drugs have the potential to be developed and launched into commercial use or to – I mean, is there an FDA process that needs to occur, or a Health Canada process in Canada?

Josh Blacher: Yes, absolutely. So the EB program is our most advanced program; we think we are under a year from getting into the clinic. We will be talking to the regulators, both Canadian and US regulators, within the next several months to give us some guidance on the Phase I, and then we’ll be in the clinic.

Now, with an orphan indication such as EB – that means there are no approved drugs, and there are very few companies in the market working on that, and even fewer, you know, patients that can be served by that, hopefully we’ll be able to speed through the clinical trials and get onto the market hopefully by 2021, 2022.

James West:   Wow. Okay, then what is the patient coterie size of EB sufferers globally?

Josh Blacher: Yeah, it’s actually very difficult to get epidemiology data on EB, but we think it’s between 10 and 50,000 patients worldwide. Again, it’s difficult to get the numbers, but our base case we assume is 10,000, and we can easily get, we can justify a commercial case of a billion-dollar drug for that.

James West:   Mm-hmm. So in terms of the biosynthesis of cannabinoids, how many competitors do you have that you’re aware of globally, and what is the sort of – where do you sort of stack up against those competitors?

Josh Blacher: Okay, so there are probably a small handful of companies that are doing it with a yeast-based production system. Again, ours is e-coli; we are not aware of any other companies that are working on e-coli, so we stand alone doing that.

Ultimately, the end users, again, are going to be the pharmaceutical companies that are looking for pharmaceutical-grade cannabinoids for medical needs, and potentially the recreational market. If we can get to a scale and a cost structure that is competitive with, you know, the growing, harvesting, extracting model – and I think we will be able to do that – then this potentially could supplant that industry altogether.

James West:   So you think there’s a real chance that the majority of cannabinoids that we find in consumer packaged goods – I mean, obviously, you’re never going to compete with the premium dried flower market from biosynthetic sources, at least, unless there’s a replicator out there, but so, all of the consumer packaged goods, topical creams, cosmeceuticals, beverages, foods, candies, could all be basically fueled by biosynthetically derived cannabinoids?

Josh Blacher: That’s correct. And I would say, even the flower market, more and more, you do have your hardcore sort of folks that are interested in partaking in cannabis use via flower, but a growing number of those folks are looking for more purified, consistent strains through oils and extractions, and there, if we choose to go down this path, yes, we will be the address.

James West:   Okay, interesting. Well that’s great, Josh. We’re going to keep watching; we’ll come back to you in a quarter’s time, see how you’re doing. Thanks for joining me today.

Josh Blacher: Thank you.

James West:   We’ll be right back; we’re going to talk to Hamed Shahbazi, who is the CEO of a new company, and if you don’t remember the name Hamed Shahbazi, that’s probably because you don’t remember TIO Networks. TIO Networks was a great success, and Hamed has now got a new company, Well Health Technologies.

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