March 4, 2019

Canntab Therapeutics Ltd (CNSX:PILL) Hemp Supply Deal with FSD Pharma Inc (CNSX:HUGE) and World Class Extractions

Midas Letter
Midas Letter
Canntab Therapeutics Ltd (CNSX:PILL) Hemp Supply Deal with FSD Pharma Inc (CNSX:HUGE) and World Class Extractions

Canntab Therapeutics Ltd (CNSX:PILL) (OTCMKTS:CTABF) (FRA:TBF1) is a research and development company focused on its product line of CBD and THC solid oral dose delivery systems. CFO Richard Goldstein reveals the company is still waiting on Health Canada approval before its immediate release, modified release, and extended release oral dose products can be sold in Canada. Goldstein indicates approval will come with the legalization of edibles in the fall but emphasizes Canntab hopes to have Health Canada’s authorization before that date. Once Canntab gets the green light, it can begin exporting its products to Mexico, where the company has an existing distribution channel. Canntab recently announced a 5-year hemp supply agreement with FSD Pharma Inc (CNSX:HUGE) (OTCMKTS:FSDDF) (FRA:OK9) and World Class Extractions, which ensures Canntab a substantial supply of CBD oil over the course of the deal.


James West:   I’m joined now by Richard Goldstein, CFO of Canntab Therapeutics, trading on the CSE under the symbol PILL. Richard, welcome back.

Richard Goldstein: Thank you.

[stock_chart symbol=”PILL:CNX” align=”left” range=”5D”]

James West:   Richard, I have experimented with some pills – I’m not going to say where I got them from, but I actually have been in the US and experimenting with, you know, edibles and all of these different things.

Richard Goldstein: Sure.

James West:   They’re having an effect on my brain. [laughter] No, but seriously, the world of pills as it pertains to cannabinoids, they’re available currently as medical products?

Richard Goldstein: They’re not available yet, because they haven’t received Health Canada approval. We’re still at a level right now where all you’re getting is bud or oil made from bud, and that oil can be essentially delivered either as a tincture in a jar with a dropper, or in a gel cap or soft capture, soft gel cap, that kind of thing.

James West:   Right.

Richard Goldstein: Pills would be the next generation, we believe.

James West:   Sure. And what’s the timeline for that?

Richard Goldstein:      Well, we’ve got to get Health Canada approval, and so the good news is, we do have a facility, actually two facilities: one that we’re building out long term at FSD, announced a long time ago, and then a short-term space that’s an R&D facility within their current proved facility. And that will allow us to essentially start to create not only capsules for sale for FSD and for ourselves, but more importantly, to finally get our suite of hard-coated tablets, ranging from anywhere from an instant release to an extended release to a flash melt. So, a whole host of varieties of delivery mechanisms, all fundamentally from an oral dose tablet perspective.

James West:   Sure. In the recreational context, would you be able to sell something that does not make health claims, that is in a pill form?

Richard Goldstein:      Well, in places where it’s approved. Again, in Canada, we will be able to sell in a recreational marketplace once the pill itself is approved as an oral dose delivery method. We could certainly be in the United States right now and doing that, but you know, truthfully, the rec market isn’t really our marketplace. 10 milligrams is the maximum amount of THC that you can put into a tablet or into a capsule, set by Health Canada, and the reality is, 10 milligrams is good; it’s a good dose, it’s a medical dose. It’s not a recreational.

James West:   Right. Well, so, I mean, as a recreational person, 10 milligrams makes me very anti-social [laughter]. I’m a lightweight, what can I say!

Richard Goldstein: I can tell you that people, you know, to get really high, if you’re a regular user, you’re probably looking at needing something in the 40 to 50 milligrams. Which you could do, you know, take four or five pills; it might be a little bit expensive, but if, you know, if your budget is big, please, you know, go ahead and buy our tablets when they’re available! But you’re not our marketplace.

James West:   Right. So the pill format is more or less a way to very precisely deliver dosages in a quickly uptake-able manner, assuming that the active ingredients have been sort of bioactivated, and so the target really is a medical audience?

Richard Goldstein: It is. I mean, doctors today are still a little bit hesitant to, you know, to recommend and to prescribe cannabis as a medical solution for people; many of the doctors that we spoke of, really what they want at the end of the day is, they want to be able to titrate. Titrating is how you start in the way of a dose, and how you build up that dose based on individual needs of a particular patient.

So we start off at a 2.5 milligram. I mean, a 2.5 milligram would probably not necessarily even get, you know, a large rodent stoned, but it’s a great starting point. If you’re a senior, 70, 80, 90 years old, many of whom are using cannabis now medically for the first time, you don’t want to get stoned; you want to just understand how this thing works. You start slow, 2.5 milligram, 5 milligram, and then we cap out at 10 milligram on the THC side.

On the CBD side, there is not the same regulations as to how much, and in that case, we do believe more is better from a dosed perspective. So we envisioned, actually, a tablet that has a combination of THC and CBD, both using instant release and extended release capabilities.

James West:   Interesting. The – so Health Canada has said that October 17th, 2019, we’re going to start to see edibles and beverages available. We don’t have any clarity on what exactly that entails, but at the end of the day, for Canntab, what’s the difference between a pill and a candy?

Richard Goldstein: Right. Well, a pill is not a candy that, you know, that’s sweet and tasty and appeals to children and so on and so forth. I mean, a pill is a pill; it’s like an Aspirin – looks the same, just as easy to take, and it is medicine.

But, your point is well taken, because at the end of the day, if people, you know, where we go out and speak on the occasion or we’re asked, you know, well, when’s the day Health Canada gives you the okie dokie? And you know, the reality is, October 17th, there’s no way that they’re going to allow a gummi bear or a chocolate or some form of other edible to be consumed ahead of a Canntab tablet.

So I guess the end date for us, the worst date, is October. But we’d like to see approval come certainly ahead of edibles and get going into the marketplace.

James West:   Yeah. When Health Canada approves your edible tablets, will you then seek certification in the United States and Europe?

Richard Goldstein: Well, in the United States it’s still illegal federally. It’s certainly something that we can submit to FDA. We have filed patents, though, in Canada and the United States, so to the extent that those are awarded, we will be, or at least our intellectual property will be, really safe at that point.

So the United States is a possibility. But I’ll tell you, one of the jurisdictions that’s massive in the world today is Mexico. Mexico is a great marketplace. Many people, you know, think that’s where the weed comes from, right, or used to come from: Acapulco Gold, or whatever. But the reality is, there’s a large medical user base in Mexico, and it’s our understanding that, upon Health Canada approval, we would essentially just have to file with the government and the approval, obviously listing all the contents.

And everything inside this tablet, by the way, is all approved excipients by Health Canada. And with that approval, we should be able to distribute it in Mexico alongside a long-time 20 year business partner of my co-founder, Jeff Renwick, who is also our CEO.

James West:   Oh, okay, so you’ve already got a distribution channel in Mexico?

Richard Goldstein: We have a large distribution channel in Mexico ready to go, but again, we’re going to need Health Canada’s approval on this, because you have to export. We want to make everything out of Cobourg at FSD, and then export internationally. Real estate really isn’t something we need to do; we don’t need to build factories. We could service the world out of one, you know, facility.

James West:   So will you have to do, like, patient trials?

Richard Goldstein: Well, you don’t have to do patient trials yet, because we’re not making any claims. Right now, the government has approved cannabis, as I mentioned, in oil and in bud form, as a methodology or as a medication, if you will, for people, without laying claims. So there’s no reason why you can’t just take a tablet without a clinical trial, and without laying claims.

Having said that, we recently announced a clinical trial that we hope to get approved at the University of British Columbia. A well-known orthopedic surgeon, not just in Canada but internationally, and certainly within North America, Dr. Donald Garbuz, is the lead investigator that we’ve engaged.

We have submitted a whole request to the ethics committee, because you have to get ethics committee; you’re using this on humans, and there hasn’t been approved. But the reality is, this test is going to hopefully demonstrate that we have a formulation that we can lay claim to, along the lines that you say, to basically take people that are gone through post-operative knee replacement surgery, and who were traditionally given essentially 60 Oxycodone prescription to manage their pain over the course of several weeks to several months, depending on how the surgery went and how the individual responded to that surgery.

What we’re hopeful for is that, Canntab has a formulation consisting of actually a combination of immediate release THC, so you get that 15 to 20 minutes, you start to fell the drug kick in, and then an 18-hour release of 50 milligrams of CBD alongside some other terpenes, some flavonoids which are smaller parts of the plant but which have very good benefits when you’re starting to look at an indication.

And we do that in a bi-layer tablet, so it’s a two-layer tablet, half being the THC and the other half being the CBD.

James West:   Right.

Richard Goldstein: According to Dr. Garbuz, any reduction in opioid use with a Canntab tablet, would be considered a very big win.

James West:   Sure. So that leads me to my next question: I mean, the whole idea of tablets to replace, for example, methadone in the treatment of addicts, strikes me as an obvious product pursuit for, you know, the whole cannabis product suite. So how likely is that to happen, and what would be the timeline on that?

Richard Goldstein: Money and time is really all it takes. Anything can be clinically tested; our own tests will probably encompass approximately 200 individuals, and you could do something along the lines with methadone; I’m not a scientist, I’m just the son of a pharmacist, if you will. But Jeff Renwick, obviously, and our lead research guy, Joshi Laxaminarayan, he’s quite the genius, and he would be the one to figure out whether something that we would want to entertain.

But I can also tell you, outside of opioid use and painkiller, we do believe we have formulations both for sleep, we think we have one nailed for irritable bowel syndrome, which is a disaster of a disease: colitis, ileitis, Crohn’s, crippling people, literally, and we think we have something.

So all those are going to take time, and money, but the most important thing for Canntab now is, we want to move from an R&D company. We have a product that’s commercially ready to go subject to approval; let’s go out there, let’s start generating some real revenue, let’s show the marketplace that we are a real company, and then we believe a path to further clinical trials will be laid out for us.

James West:   Right. I haven’t heard of anybody else doing those types of things in Canada. I know there’s a couple in the United States because I’ve sampled some of their products, but are there a lot of companies doing this? Is the competitive landscape crowded, is my point.

Richard Goldstein: I don’t think it’s crowded. When we first started, which was, well, probably over three years ago, it was very limited. People can press tablets just through force in a machine room, so you could actually take just bud that’s been crumbled into such a small particle, and then just squeeze it together hard enough to be able to sell a pill; but that’s not, that’s not real pharma.

We make in a GMP facility, a true pharma product. The instant release, probably easier for somebody else to come into the marketplace with a proper product out there; the extended release, nowhere near as easy. This is a product that lasts 18 hours. It is essentially put through your system and delivered with what’s called a C-Max, the high point, at around the 12-hour period. So this is something that can give you, essentially, all day or all night relief.

James West:   Okay. What are the big major upcoming catalysts in 2019 that investors are going to be looking out for?

Richard Goldstein: Well, in 2019, for sure you can expect revenue from us; at a minimum, our first revenue will be generated out of oil capsules, both THC and CBD, with FSD. By chance, and this is a fluke, and you’ll admit this is a fluke: we did announce today in a press release, FSD did as well, World Class Extractions; the three of us have got together and done a five-year, long term deal for a hemp supply, an organic hemp supply, from a gentleman by the name of Thomas Elcombe and a handful of his friends and family, and they’re growers here in Ontario, have been farmers, essentially, for several generations.

And with their hemp, we will create CBD oil, and from the CBD oil, we’ll create medicine.

James West:   Wow. So FSD is going to source the hemp, World Class Extractions is going to extract it, you’re going to put it into pill form.

Richard Goldstein: And add value adds, exactly. And we’re all going to do it together inside Cobourg facility at FSD’s home.

James West:   Wow. A virtuous circle. All right, Richard, we’ll leave it there for now; we’ll come back to you in due course. Thanks for joining me today.

Richard Goldstein: Thank you so much, James, I appreciate you having me.

James West:   You bet.

Richard Goldstein: All righty.

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