ZYUS Life Sciences CEO Brent Zettl Provides Update on Licensing, Expansion Plans
ZYUS Life Sciences is a research-focused wellness company focused on developing cannabis-based health solutions. CEO Brent Zettl, a cannabis industry veteran, shares the company’s plans for 2019, which includes expansion and obtaining government licenses. ZYUS Life Sciences is targeting 20 different countries for expansion but will also have a presence in the Canadian space. Zettl hopes the company will have received its Health Canada licenses by the end of Q2 2019, with products available for the Canadian market at the end of that quarter. Zettl addresses some of the advantages and disadvantages of outdoor growing from a research and extraction perspective. ZYUS Life Sciences completed a $25 million financing round in October and is looking to go public in 2019.
James West: Brent, welcome back.
Brent Zettl: Thank you.
James West: So you’re getting ready to do this whole big public company thing again with your new project called ZYUS Life Sciences. Tell us a bit about that, please.
Brent Zettl: Sure. We started the company in about April of 2018 initially, under a different name, and as went through a rebranding exercise and thought that the ZYUS would be the appropriate name given the origins of it are from the zygote, which is the beginnings of life, the cell divisions, and then US, from our creator societal endeavour.
So our ambitions are really to, when we step back and look at it, we’re really trying to advance the science of well-being in order to make life more liveable. And so in doing that, we’re focused in on the phytotherapeutics – it’s a category that we’re talking about as plant-based medicines, essentially, and we’re using cannabinoids as the basis to start that, or cannabinoid-based formulations as a basis.
So to that effect, what we did is, we acquired a ethanol extraction facility that can become a GMP rate facility on scale, it’ll have the ability to produce 35 million bottles f cannabis oil a year, equivalent, and to be able to move into the international markets in this space as we seethe next generation of products coming out in the medical field.
James West: Okay, so starting with off, I guess, primarily, CBD products in extracts?
Brent Zettl: No, I think we’re going to – it’ll be focused on THC and CBD complement products.
James West: Oh, okay, so you’ll be a licensed producer
Brent Zettl: Licensed producer, that’s the intention, in oils, capsules, and in topicals. Focus on those, and then we’re targeting a series of countries, so our footprint is in around 20 companies that we’re already speaking with, and we’re looking at about 1.1 billion people in terms of our reach.
James West: I see. So your background is deeply scientific; you’re the founder of Prairie Plant Systems, the first company in Canada really to be involved in the medical marijuana space, and that evolved into CanniMed, etcetera. So I look at this initial sort of four pager on Ziomed and I think, okay, well, that’s got to be the starting point, I would think, given your depth and breadth of your exposure to the molecular array of all cannabinoids, that is there a plan to evolve sort of FDA and Health Canada approved drugs from cannabinoids?
Brent Zettl: Yeah, exactly. So we’re going to start by basically purchasing product through a series of onboarding systems in a way that we can bring in product to ZYUS, that would be buying a product, de-risking a little bit to the investors, but also making it available to our patients through an onboarding process that sets the standards. And then create the products through the ethanol extractions that would be derivative-based. So it would be oils, capsules and topicals.
And the idea behind that science is that we want to use the formulations to drive what their application could be. So we’re trying to help change the dialogue and the paradigm in medicine a little bit, is what our ambitions are. So when we look at it, we’re trying to re-imagine the potential of medicine. Now, looking at it from a point of view of saying, you know, the phyto-therapation of cannabinoids in particular, when we were working with it, really have an ability to open up that dialogue, because it’s a complex system that requires at least two of the cannabinoids to be effective in this complex natural system that we have, the endocannabinoid system.
So the molecular, the science really has to drive the new chapters of the new opportunities and the new revealing of how these seem to be harnessed in a way that benefits us. Because the suffering is still fairly strong, right? A third of everybody in the United States – a third of all Americans are suffering form chronic pain, or acute pain – a third!
James West: Is that because of the President, there? [laughter]
Brent Zettl: Well, I won’t go there, but the extrapolation, I mean, we have the same thing in this country. So the point is that there still is an unmet need, an unmet need even in that of itself. And with the previous company, what I learned in the process is that there’s 168 conditions that our products were being prescribed for, but it’s a long journey to go from when we were first assigned the project in December of 2000 and then transferred all the way through the plant sciences and the development and the Health Canada years of trying to get the product in the hands of patients and trying to work through all that stuff and trying to convince doctors it was okay, it wasn’t going to kill anybody, etcetera, etcetera.
Then to moving in to now, we’re really starting on the onboarding to saying we’re seeing the rest of the world coming where Canada was in 2003, and you know, we still see the value of this, where the cannabinoid-based formulations are going to really find their place between the analgesics of the world and between the opiates, and that’s what’s going to open up that dimension for us.
James West: The understanding of exactly what conditions the various cannabinoids are indicated for still suffer from what could best be described as an absolute dearth of clinical data in terms of the absence of research as a result of years of prohibition, etcetera. Is it still what you would consider in its infancy, the clinical research phase of cannabinoids in terms of human medicine?
Brent Zettl: Absolutely, it’s in its infancy, because we don’t have the strong data set of any condition yet, to support that. We started with clinicals when we were in with the herbals and slowly moving into oils, but we’re early days in understanding, and it’s not just a single drug for a single condition – it seems to be at least a complement of two cannabinoids working in concert in varying ratios, for the conditions – so it’s more complex layered on top of it.
So the science has to really drive that agenda. The formulation work, we’re just a baby zone for saying what that’s going to be.
So that’s where I think the real opportunity is.
Now, we had to sort of declare side effects of the worst case scenario: what is the first side effect that we had to deal with? That people get a better sleep. So you know, I mean, that’s still considered a side effect. But so we’re still looking at all the science pieces of this; that’s really what gives rise to all the opportunities. Beyond the adult use market, we’re saying, what’s the reason why it was available for human beings and they used it for 4,000 years so far? And it has to do with managing symptoms as we get older. And I think we just have to, you know, reveal that more statistically through clinical trials and through letting science drive the agenda of what we think the formulations will be, and that’s what gives rise to the opportunity and, of course, the need.
And back at ZYUS, I mean, I have the team, a lot of the members from the original CanniMed came across with us, and we have a single0minded purpose and a culture that’s committed to making it patient centric with a patient focus, but with an embracement of science to rive the agenda forward. And we really think that that’s going to be where, patients are going to benefit from this in the future and, you know, from the work, and one of the reasons why I started over again was because the mission wasn’t over: we were just getting started! We’re just moving from the plant based science to how this is now relevant to a human being. We’re just getting started in this process, so I think we’re early days in the scientific side.
James West: Sure. So ZYUS at this point is a private company?
Brent Zettl: It’s a privately held company, privately held, we did a first round of financing for 25 million that we closed in October, an then we’re looking into going into the public markets later in 2019. For what reasons? For basically so that we could have resources available for doing clinical trials, because they’re expensive, and for looking into all the educational components, and for doing CapEx as we make this into a much larger company on a global scale, as we start to reach out to these other markets.
James West: Mm-hmm. Okay, so then, how soon till we see ZYUS products available in Canada?
Brent Zettl: That’s a good question, actually. We have in the plant we have a pilot plant that we’re going to have completed that will allow us to make 500,000 bottles of oil a year, completed by the end of March is our target. And so we’re going to commission in Q2 of ’19, so by the end of Q2 of ’19 we’re hoping to be fully licensed and that getting products into market in Canada. That’s kind of our target. But the caveat, of course, is we have to go to the licensing process, which we’re midway through, and you know, it’s because of a plethora of licensed applicants; it’s a bit more taxing on Health Canada. That’s the only caveat that you have to make sure we’re licensed!
James West: Sure. Sure. Just an interesting question, that I’m sure I’m not the only one thinking this, but what have you learned from your previous incarnation with CanniMed, that you were taking forward into ZYUS that constitutes a different approach to doing things for the betterment of your shareholders?
Brent Zettl: I think the key thing here is on the Board of Directors, actually. Like, our last Board of Directors, first, was too large. And as a consequence, and we had this culture of taking our time opining over things, with too much due diligence, it took too long. Like, not too much due diligence, but take too long to do due diligence, to get comfortable with a situation. I think as a Board it has to move quicker to make decisions with the information to it.
So a smaller board will help with that, number one. Having a Board that’s more proactive in making sure that we get there, that we don’t have, time is not our friend when we’re in a publicly traded company.
And then also making sure that the people that we select for there do not have a separate agenda. We had fund separate agendas, individuals with directors from other funds, and they had a separate agenda, clearly, than thinking of the overall benefit for the company going forward. And so we want to make sure that we have people who are aligned with our values that goes with everting else that goes with that culture and developing to really create the value where it could properly be achieved and when it’s fully manifested in its full regalia. That’s where we want to be.
James West: Do you see ZYUS evolving into becoming an actual cannabis grower and producer, or do you think that there’s sufficient supply in the system now that you’ll be able to access the ingredients you need to create the compounds you’re targeting?
Brent Zettl: Our target, our goal, is really to set the specifications and then to buy the product from the licensed producers. There’s three times amount of product available in this country, or going to be, in terms of capacity, once they figure out all the different systems, so there’s going to be a glut of supply. Everybody knows it’s coming. And so it doesn’t make sense for us to build production capacity inside of a greenhouse – it just doesn’t make physical sense. It makes more sense for us to onboard licensed producers and train them for what we know.
It took us 10 years to get good, but we can transfer that knowledge to our owners and make sure that they’re actually providing products to us that meet the standards that we need in order to put it through the pipeline. So that’s the first thing.
Second is, I think on a global competitive basis, the field model is coming. You know, we’ve seen evidences around the world where they’re moving products to field, and you know that, plants, and all that, legislatively speaking, we can go to the field model. I think we’re going to start to see more pricing pressure to move to a field model, which would e interesting, because we’ll then have to think about how we still set and maintain those same standards that protect against pesticides and protect against molds and so forth as we push this through the, get them through the plant to the normal process.
So I think that’s’ going to change the landscape as well. I think from a de-risking, from an investor standpoint, we’re not going to be the growers. We’ll be the research to help them, but we’re going to mostly buy from our growers and make sure we try to help them get there.
James West: Sure. The first wave of LPs that spent tens of millions, if not hundreds of millions, on what is categorized as ultra-high-tech greenhouse, purpose-built indoor rowing facilities or a variation on that theme, the stipulation was that you’re never going to be able to row outdoors what they can grow indoors in terms of what they can grow indoors in terms of quality and yield. And now that message seems to be sort of being pushed to the background as everybody rushes to embrace this idea of growing outdoors.
So what is the reality there? Is there is a difference between what can be achieved outdoors versus indoors, or is the difference not substantial?
Brent Zettl: Well, you know, it’s an interesting question, because on a herbal basis, if you’re just using dried herbal product, the answer is, the indoor material definitely has a higher octane or a higher THC content than compared to outdoors, and the reason behind that is, when you’re growing in an outdoor environment, there’s all kinds of environmental stressors. There’s more so than in a greenhouse or contained designed build.
So the stressors cause a plant to shift its energy and resources to maintaining its own homeostasis and everything else. So it pulls away from its ability to produce cannabinoids. That’s one of the reasons, a little-known fact, when we got started: the national average in 2003, when we were asked to start supplying patients in 2004 after the Hitsing case in Ontario serving court decision, and all of a sudden, we were thrust into making product available for patients.
We learned, there was a report that was done and came back from the Federal government saying that the national average was 9 percent THC across the board. This was actually done by the RCMP collecting data from successful convictions, when they were still testing for the concentrations.
Well, the highest concentration was in Quebec, which had the mostly hydroponic, indoor growers. The lowest, believe it or not, was BC, which had only 7 percent average in a province which speaks wot the fact that they were growing outside.
So when you grow outside, the herbal material, by itself, is going to have a lower cannabinoid profile; lower THC, particularly. However, when you’re making derivatives and oil-based products, it’s less of a concern because you’re getting out the oils and you’re extracting it and you have to still bulk it up to a certain degree with olive oil or whatever you’re mixing it with to bring it in line with concentration.
So you can leverage he field-growing material through an extraction facility a lot better. So for the people who still prefer to vape it or smoke it, the connoisseurs are going to appreciate having indoor-grown material. The people who are doing it for derivatives, it’s not as critical that it come from an indoor grow. It can be come from an outdoor grow.
James West: Okay. Great, well, Brent, that’s fascinating. I’m excited for you and ZYUS, and I can’t wait to see what you guys come up with. We’ll leave it there for now and come back to you in due course; thanks for joining me today .
Brent Zettl: My pleasure.
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