November 11, 2018

Khiron Life Sciences (KHRN) President Chris Naprawa on Selling Weed in Mexico

Midas Letter
Midas Letter
Khiron Life Sciences (KHRN) President Chris Naprawa on Selling Weed in Mexico

Khiron Life Sciences (CVE:KHRN) President Chris Naprawa weighs in on the significance of the global cosmetic opportunity as it relates to cannabis.


James West:    Hey, welcome back. My guest in this segment is Chris Naprawa. He is the President of Khiron Life Sciences Corp., trading on the TSX Venture under symbol KHRN. Chris, welcome back.

Chris Naprawa: Thank you, thank you for having us.

James West:    Chris, you put out a fantastic press release today, at least by my estimation, that you have achieved Mexican retail distribution for your Kuida CBD cosmeceutical brand, and that obviously has huge implications given that Mexico had a population of 120 million. Tell me how, what portion of that population is going to have access to this product? What kind of sales do you anticipate?

Chris Naprawa: Yeah, so we launched the Kuida brand about a month ago in Colombia; we’ve been picked up in a couple of different pharmacies, we’ve got good distribution online plus our own branded online portal to purchase Kuida products, and this is an example how, if you have a good base in Latin America, you can extend it to other regions in Latin America. So Farmalisto, which is one of our partners in Colombia, they can just easily pick up the sku and start selling that in Mexico.

So we’re still pending some government approvals, because they just put out the guidelines yesterday, but we were anticipating those; they look just like we thought they might look, and we’re ready to have a product that will fit well within those guidelines.

James West:    Hmm. So then, it’s available from anywhere in Mexico, online?

Chris Naprawa: Correct.

James West:    And what about physical store locations?

Chris Naprawa: Stay tuned.

James West:    Stay tuned, okay!

Chris Naprawa: So Kuida for us right now is just eight skus, and I think as you see us develop, we’ll add more and more skus and beyond just cosmetics, sort of, you know, in the general wellness category. That would include beverages in that line, that would include other things in that line. Kuida, we have a fantastic marketing team with amazing leadership, and we’re going to rapidly expand beyond Colombia and Mexico. You’ll see another region from us shortly.

James West:    Okay. So the current eight skus, what sort of is the product range within those eight skus?

Chris Naprawa: So we call those cosmeceuticals. The active ingredient is called CBDerm, which is our own branded ingredient, and it’s a line of wellness products geared towards women. Latin American women spend an absolute fortune on cosmetics on a per capita basis; Mexico is no exception to that. So we’re focused on a market where there’s already high spending, they’re looking for changing, looking for alternatives. All natural, with the natural attributes that CBD brings as far as hydration, anti-inflammatory, etcetera. So we can make product around that. And that’s our first foray into that business, the general wellness category.

But with CBDerm, we can add that into other categories and other products.

James West:    Hmm. So Khiron has also sort of been at the forefront of clinical research as it pertains to medical cannabis in Colombia, I know. So what is the actual benefits of CBD as it is applied to skin? I’m really interested, both from a capital markets perspective and from a personal use perspective.

Chris Naprawa: I’ll send you some samples so you can try it out.

James West:    Okay, great! I’m not sure they’re legal here.

Chris Naprawa: Well, I’ve got some in my car. So CBD has a monograph in Colombia, which means we can make product claims associated with that. The two main product claims that we can make are around hydration – so it’s about three times more hydrating than Vitamin E, for instance – and its natural anti-inflammatory attributes, and we can talk about that in the product line as well. So things where that is helpful, we can build products and formulate and build that around our brand, which I think we’ve got a very, very solid brand strategy. We’ve got excellent distribution, we’ve got good product support, we’ve got a great group of vendors that are helping us put these products together, package them, and get them on shelves. And we’re on shelves all over the place, now, and the sales are going very, very briskly.

James West:    Excellent. So I mean, from a cosmeceutical standpoint, that’s impressive; there’s obviously a huge market, there. I’m curious as to what is the direction of more clinically-oriented research in terms of, I was just reading something yesterday about Rick Simpson, who, you know, created a CBD concentrated cream and he applied it to some cancerous growths on his arm, and four days later, they disappeared. I mean, that’s anecdotal, but what kind of clinical research is available to support those kind of indications?

Chris Naprawa: Well, when you say the word ‘clinical’, I can’t help but mention our clinics. So we made our first acquisition that’s still pending TSX approval, but we bought ILANS, which is an enormous clinic in Bogota. We have over 100,000 patients; I think we have about 60 licensed physicians now on the payroll at Khiron. That gives us the ability to do clinical trials very, very quickly. We also noticed that we put out a press release about our operations in Chile, where we’re partnering with Fundación Daya. They have 17,000 patients, we have access to all that clinical data, and we can use that back in Colombia and plus run our own clinical trials through that.

So stay tuned on that – we’ll be announcing something probably this year, that we’re entering clinical studies on a whole bunch of different levels. Dr. Maria Fernanda, who is in our Mexico City office, she’s done a number of trials as well; expect her to continue on with that work.

James West:    Sure. We had an interview with her here recently, it was great.

Chris Naprawa: She’s excellent.

James West:    Yeah. Okay, so now you’re talking about beverages and other consumer packaged goods. What is the status of legalization across Latin America? I mean, is it as fractured as the States in the United States, or is it more broad-based? Obviously, Latin America does not have a Federal sort of management or government, but what is the status of all of that?

Chris Naprawa: Well, what I see that, James, is that the cannabis phenomenon is now truly global. It’s not a California thing or a BC or a Canada thing, this is a global phenomenon, and markets are regulating and de-regulating at a pace that is absolutely astounding. We have a full regulatory team on board, and for us it’s very hard to keep track.

Governments realize that adults want to make their own choices, medical professionals want to make their own choices, and it’s not the business of the governments to be standing in the way of that; so things are happening very, very quickly.

Now, within our region, Latin America, which is kind of everything from the Texas border south, every region is different. People might be surprised to know they even speak different languages in different parts of Latin America. So each region is very, very different; we’re in touch with all the regulators, and consult with them on a regular basis. So you know, just as yesterday, you know, Mexico opens up their guidelines, we announce product the next day. You know, expect that to happen in other regions; just as soon as they open up the markets, we will be there the following day, ready to go.

James West:    Interesting. So has any of this materialized on the company’s balance sheet at this point? Will it show up next quarter, are there sales in any substantial quantity?

Chris Naprawa: Yes. So we’ve already announced that we’re in commercial sales of our Kuida product; obviously, ILANS is a commercial business, so starting this quarter, which is calendar Q4 quarter, when we announce that, we’ll have revenues associated with it. Which puts us in a very unique category amongst our peers, and it’s growing. We have an analyst covering the stock now, and she has some numbers associated with revenue for this year and the year after, and it’s our goal to meet or beat those numbers.

James West:    Wow, fantastic. What is the outlook in terms of sales just within your Colombian market? I mean, have you issued any guidance in terms of finance?

Chris Naprawa: No, we don’t issue any guidance. We’ll turn to the analysts and let them do that for us, and we’ll put out our numbers in due course. But obviously the market is massive; you know, Colombia alone is 50 million people, they have an enormous spend in the billions of dollars for cosmetics. You know, with our clinic business, we’ve already announced what kind of revenues are associated with that, and when we talk about those hundred thousand patients, it’s really, really critical for people to understand what the model is, here. You know, those 100,000 patients are currently being treated primarily by opioids; they want an alternative to that. So if we can convert those people in whole or part, that’s where we can derive a lot of revenue.

For instance, on that model, if we can take 10 percent of those 100,000 patients and convert them in whole or part to some cannabis products that we’re going to be selling, that’s 20 million in revenue and 10 million EBITDA. If we do 30 percent conversion, that’s 50 million in revenue and 30 million in EBITDA for next year.

So – and that’s just two clinics in Bogota. That model can be repeated throughout Latin America. I can walk you up to some very, very impressive numbers.

So whatever lowers our cost of getting towards patients, lowers our execution risk, increases our ability to drive revenues very, vey quickly and provides leverage in the business, we’re going to do it.

James West:    Okay, so the largest LPs in Canada – Canopy Growth, Aurora, Aphria – they’ve all announced acquisitions in Colombia and footholds in the Latin American market. To what extent do you feel threatened by the existence of these much larger companies in the market that you guys are essentially first to?

Chris Naprawa: Yeah, not much. I think everyone needs to be there, and like I said before, this is a global phenomenon. You cannot be in the cannabis business without being in Colombia; that is impossible. This is the best place on the planet, beyond a doubt, not only just because of climate, but access to people, to infrastructure. This is an agricultural export country; all the regulations are set up for it, and there’s a reason, like I said before, we don’t grow coffee and bananas in warehouses in Mississauga. It doesn’t make any sense. This is where you need to be for that.

So again, most of our competitors are focused on that low-cost export business, and we’re focused on low costs as well, but primarily for high-value branded products in our own region. And it’s a massive market, and there’s plenty of room, and you know, one day we may have a partner in Colombia, but for now, we’re doing very, very well on our own as an independent company.

James West:    All right. Well, Chris, that’s fantastic. Exciting, as usual. Full disclosure: I am a shareholder of the company and plan to continue doing so. Thank you very much for your time today.

Chris Naprawa: Thank you, James.


Notice for Forward-Looking Information

Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such forward-looking information includes that Khiron Life Sciences Corp will be a big, successful company in the cannabis sector; that cannabis use and sales will grow and KHIRON’s sales along with it; KHIRON’s intended acquisition of various foreign companies and expansion into the European and South and North American markets; that cosmeceuticals is and will continue to be a fast growing and profitable sector of the cannabis industry; and that it will be able to carry out its business plans.


Readers are cautioned to not place undue reliance on forward-looking information. Forward looking information is subject to a number of risks and uncertainties that may cause actual results or events to differ materially from those contemplated in the forward-looking information, and even if such actual results or events are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on KHIRON. Such risks and uncertainties include, among other things: that a regulatory approval that may be required for the intended acquisitions and subsequent sales are not obtained or are obtained subject to conditions that are not anticipated; growing competition for intended acquisitions in the cannabis industry; potential future competition in the markets KHIRON operates for sales; competitors may quickly enter the industry; general economic conditions in the US, Canada and globally; the inability to secure financing necessary to carry out its business plans; competition for, among other things, capital and skilled personnel; the possibility that government policies or laws may not permit legal cannabis sales or growth or that favorable laws in place may change; KHIRON not adequately protecting its intellectual property; interruption or failure of information technology systems; the cannabis market may not grow as expected; KHIRON’s technology may not achieve the expected results and its accomplishments may be limited; even if it is granted patents, it may not have success at licensing its technologies or sell its products at the rate expected; planned acquisitions and partnerships may not materialize because of inability to agree on terms with prospective partners or targets; KHIRON’s business plan also carries risk, including its ability to comply with all applicable governmental regulations in a highly regulated business; incubator risk investing in target companies or projects which have limited or no operating history and are engaged in activities currently considered illegal under US federal and foreign laws; and other regulatory risks relating to KHIRON’s business, financings and strategic acquisitions, including securities laws, trade rules, and foreign country regulation that is not the same as Canadian or US regulations.



PAID ADVERTISEMENT. This communication is a paid advertisement and is not a recommendation to buy or sell securities. James West, Global Financial Network Ltd. and Midas Letter Media Corp. and their owners, managers, employees, and assigns (collectively “the Company”) has been paid by the profiled company or a third party to disseminate this communication. In this case the Company has been paid by KHIRON $100,000 per month for one year as of May 15, 2019 for a newsletter campaign and certain banner ads, of which a portion is spent to produce multi-media content and a portion to the advertising budget targeting investor. In addition, the Company owns 150,000 Restricted Share Units (RSU’s) of KHIRON, and will benefit from its price appreciation. This compensation and our rights ownership in KHIRON is a major conflict with our ability to be unbiased, more specifically:

This communication is for entertainment purposes only. Never invest purely based on our communication. Gains mentioned in our newsletter and on our website may be based on end-of- day or intraday data. We have been compensated by KHIRON to conduct investor awareness advertising and marketing for KHIRON. Therefore, this communication should be viewed as a commercial advertisement only. We have not investigated the background of the profiled company. The profiled company or its affiliates may liquidate shares of the profiled company at or near the time you receive this communication, which has the potential to hurt share prices. Frequently companies profiled in our newsletters experience a large increase in volume and share price during the course of investor awareness marketing, which often end as soon as the investor awareness marketing ceases. The investor awareness marketing may be as brief as one day, after which a large decrease in volume and share price is likely to occur.

We do not guarantee the timeliness, accuracy, or completeness of the information on our site or in our newsletters. The information in our communications and on our website is believed to be accurate and correct, but has not been independently verified and is not guaranteed to be correct. The information is collected from public and non-public sources but is not researched or verified in any way whatsoever to ensure the information is correct.

SHARE OWNERSHIP. The Company, which includes the owner and publisher of the Midas Letter owns Restricted Share Units of this featured company and therefore has an additional incentive to see the featured company’s stock perform well. The Company will not notify the market when it decides to buy or sell shares of this profiled company in the market. The Company may be buying and selling additional shares of the featured company for its own profit. This is why we stress that you conduct extensive due diligence as well as seek the advice of your financial advisor or a registered broker-dealer before investing in any securities.

NOT AN INVESTMENT ADVISOR. The Company and its affiliates are not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

INDEMNIFICATION/RELEASE OF LIABILITY. By reading this communication, you agree to the terms of this disclaimer, including, but not limited to: releasing the Company, its affiliates, assigns and successors from any and all liability, damages, and injury from the information contained in this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.

RISK OF INVESTING. Investing is inherently risky. While a potential for rewards exists, by investing, you are putting yourself at risk. You must be aware of the risks and be willing to accept them in order to invest in any type of security. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell securities.

Midas Letter
Midas Letter
Khiron Life Sciences (KHRN) President Chris Naprawa on Selling Weed in Mexico

[stock_chart symbol=KHRN:TSV]


Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.