Q&A with John Stewart, CEO of Emblem Pharmaceutical Division at Emblem Corp. (EMC.V) (OTCQX:EMMBF)
Cautionary Note on Forward-Looking Statements
Certain statements contained in this interview may be "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. They are generally identified by words such as "believes," "may," "expects," "anticipates," "should" and similar expressions. Readers should not place undue reliance on such forward-looking statements, which are based upon the Company's beliefs and assumptions. The Company's actual results could differ materially due to risk factors and other items described in more detail in the "Risk Factors" section of the Company's Annual Reports and MD&A filed with the United States Securities and Exchange Commission and applicable Canadian securities regulators (copies of which may be obtained at www.sedar.com or www.sec.gov ). Subsequent events and developments may cause these forward-looking statements to change. The Company specifically disclaims any obligation or intention to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Emblem Corp. is licensed under the Access to Cannabis for Medical Purposes Regulations (the "ACMPR") to cultivate and sell medical marijuana. Emblem carries out its principal activities producing marijuana from its facilities in Paris, Ontario pursuant to the provisions of the ACMPR and the Controlled Drugs and Substances Act (Canada) and its regulations.
See also: Emblem April, 2017 Investor Presentation
MicrocapResearch: Congratulations on the successful public launch of Emblem Corp (TSX-V: EMC.V) and (U.S. OTC: EMMBF). Can you give investors an overview of your past experience with Purdue Pharma, and how it has prepared you to function as the President of Emblem's pharmaceutical division?
I was President & CEO of Purdue US from 2017 - 2013, President & CEO of Purdue Canada from 1991 - 2009 and Regional Director for Purdue for Canada, Australia and New Zealand from 2000 to 2009. Among other things, these positions provided me with an in- depth understanding of inter-country differences in healthcare systems, drug regulatory agencies and pharmaceutical reimbursement paradigms - as well as public perceptions of the value of the pharmaceutical industry. These companies were of significantly different sizes in terms of employee numbers, annual revenues and mandates - which certainly impacts daily activities and leadership style - and I was fortunate to be able to lead each through period of multiple new product introductions and significant growth.
Prior to becoming President to Purdue Canada, I served as VP R&D, in which I was responsible for formulation R&D, pre-clinical & clinical development and regulatory affairs. It was in this position that I saw first-hand the significant importance of pharmaceutical dosage forms in terms of improving healthcare outcomes. I could provide numerous examples, but none is more telling than Purdue's development of MS Contin (controlled-release morphine sulphate) - the first long-acting opioid and which was approved for marketing by Health Canada in late 1985. Within two years MS Contin was recognised as one of the most important new analgesics agents for treatment of chronic moderate to severe pain.
It was also during my time as VP of R&D for Purdue that I first became aware of the therapeutic potential of cannabinoids. One of my UK Colleagues headed clinical drug development activities, and he encouraged the company to initiate a cannabinoid research program targeted toward management of pain and movement disorders. Purdue did not pursue the opportunity, and my colleague subsequently started what has become a very successful company in the field.
MicrocapResearch: With dozens of other cannabis companies to choose from, what drew you to Emblem?
The executives at Emblem were familiar with the healthcare industry and already invested in healthcare-related businesses. They agreed with me that the therapeutic benefits of cannabinoids are real, but that they would not be fully achieved if the only way the product could be administered (taken) was by smoking or vaporization. They were immediately supportive of the company establishing a "pharma" division, to research the medical benefits of cannabinoids - and help identify which strains have the greatest evidence for benefit in particular conditions. An equally important component of the divisions activity is the formulation and development of pharmaceutical dosage forms (e.g capsules, inhalers, modified-release tablets) containing specific cannabinoids - which for a variety of reasons will be both more acceptable and effective.
MicrocapResearch: Emblem Corp is divided into three distinct operating divisions: Emblem Cannabis (the production division), the division you head at Emblem Pharmaceutical, and GrowWise Health (marijuana education for patients and physicians). How will the three divisions complement and build on each other's strengths operationally?
The Production Group is in a sense the lead in importance, since their responsibility is to continually and consistently cultivate at the highest quality the cannabis strains we identify as being of the greatest therapeutic impact. They need to ensure that our core strains have the same cannabinoid profile, irrespective of the time of year they are cultivated. Only via this consistency will the pharma division be able to produce advanced formulations that reach pharmaceutical industry levels of potency and purity.
Cultivating cannabis may be seen as simple and straightforward, but in reality it is far, far from that. One of my Cannabis CEO Colleagues made this clear when he said, "This my be a simple process, but it is not at all easy". One need only look at the recalls of cannabis due to excessive microbial levels or the presence of pesticides, to realize that this is a complex process that requires detailed attention and responsible oversight.
The Grow Wise Group is comprised primarily of healthcare practitioners, whose activities directly support prescribers and patients achieve the therapeutic benefits from cannabis therapy. They conduct research and support the research efforts of others, and greatly assist patients in the initial process of selecting and registering with one of the Licensed Producers. In the years ahead, they will have much more in the way of important information to share.
MicrocapResearch: What indications are cannabinoids currently used for, and where do you think we might see expansion in the near future, say 12-24 months?
I have seen survey results indicating that the most common reason cannabinoids are used is for the treatment of pain, which is not surprising since pain is among the most common of reasons why individuals visit physicians. In addition, although there have been meaningful advances in analgesic therapy - there remains substantial room for improvement.
The Canadian Pain Society was among the first of the professional organizations to formally recognize the efficacy of cannabis in pain management. Back in 2014 the published a Consensus Statement on the Management of Neuropathic Pain - which recommended the addition of cannabis therapy to patients who were experiencing inadequate pain relief from a combination of gabapentinoids and opioid analgesics.
Much more recently, the US National Academy of Sciences published an extensive report on the health effects of cannabinoids and concluded that there is substantial evidence of efficacy in chronic pain, as an anti-nauseant and for improving spasticity symptoms in patients with MS. They noted that there is moderate evidence for efficacy for improving sleep outcomes inpatients with sleep disorders and limited evidence for efficacy for improving symptoms of anxiety and increasing appetite/weight gain.
MicrocapResearch: Medical marijuana is typically taken by inhalation by the end user, either through smoking or vaping.
Is this the best delivery method, and is Emblem Pharmaceutical developing other drug delivery options?
From the perspective of reliable and consistent efficacy, it is difficult to imagine a less appropriate method of administration than smoking or vapourization of dried cannabis. With smoking, a person is inhaling combustion byproducts along with the cannabinoids - certainly undesirable and likely in some ways harmful.
With vaporization, there is less in the way of combustion byproducts - but dose to dose consistency is extremely difficult. The amount of cannabinoids that reach the body depends on the depth of the inhalation, how long one hold the inhalation before exhaling - combined with the crop to crop variability in the cannabinoid content of dried cannabis.
Like all other pharmaceutical products, our formulations will contain a known amount of cannabinoids (e.g. THC, CBD) measured in mg and this amount will be consistent from batch-to-batch, and supported by stability data. In addition, we will have bioavailability and pharmacokinetic data to hep prescribers select the optimal dose for each of their patients.
We plan on bringing to market numerous dosage form, designed to optimize performance depending on the intended use. For example, we will have rapid onset formulations for use by patients seeking an immediate effect as well as long-acting formulations designed to provide for once-daily or twice-daily dosing for patients with chronic condition looking for continuous effects.
MicrocapResearch: What are the variables and key drivers for cannabinoid growth in Canada going forward?
The use of cannabinoids for medical purposes has shown exceptional growth since the Licensed Producer regimen was brought forward under the direction of Health Canada, but the number of individuals being treated is very, very low when compared to the number of patients being treated with existing prescription drugs. I believe that the advanced pharmaceutical formulations we are bringing forward will significantly improve patient and healthcare professional acceptance of cannabinoid therapy, and also maximize the therapeutic benefits.
Another significant factor will be the willingness of provincial healthcare benefit plans to cover the cost of cannabinoid therapy. I have seen clinical trial data demonstrating equal, and in some cases improved, efficacy from cannabinoid therapy than traditional pharmaceuticals. However, no provinces currently pay for medical cannabis - leaving patients and their physicians with somewhat of a dilemma. Hopefully this will change, and the provincial healthcare ministries will come to recognize the overall cost-effectiveness of cannabinoids.
MicrocapResearch: What is the current size of the Canadian medical marijuana market, and how big do you believe it will be in 5 years?
Accurate information on the size of the overall MMJ market is not readily available, but on the basis of their being some 130,000 patients registered under the current ACMPR Program, I would estimate that 2016 sales were in the range of $100 million to $200 million.
Looking at the prescription pharmaceutical market for therapies used for the conditions in which cannabinoids are now recognized as being effective, it is entirely reasonable to see the medical marijuana market being between $1 billion and $2 billion in 5 years time - and note that these projections do not include sales in the forthcoming Recreational Use Market.
MicrocapResearch: What developments specifically at Emblem Corp. can investors look forward to over the next 12-24 months?
Too many to cover in the short time of this interview. At a high level we will see a very significant expansion of cultivation capacity and advances in cultivation techniques, dedication of a completely new extraction and formulation development laboratory and impressive additions to the nature of information and services available from the Grow Wise Operation.
Disclosure: I am/we are long EMMBF.