Canada’s medical marijuana market, $400 million a year currently, could grow to $1.1 billion by 2020. Compare this to the non-cannabis chronic pain pharmaceutical market which rests at over $500 million, dominated by opioids. The ACMPR (Access to Cannabis for Medical Purpose Regulations) is expanding the mechanisms for approval of cannabinoid based medications, and products such as oils have taken the market by storm. Simple oils have grown to around 35% of the market in less than a year. Emblem Corp is a revenue making, licensed producer (LP) about to attain a milestone license to create and monetize cannabis oils. More on them in a moment.
The New Marijuana Scene
The government of Canada wants to take the fast-evolving cannabis industry further out of the underground market by legalising adult-use recreational marijuana. This monumental event is gearing towards a deadline of July 1, 2018. Only cannabis produced and sold by federally-licensed growers will be legal and quality of cannabis sold will be medical level grade, free of microbial contamination, toxins and other illicit substances sometimes found in ‘street’ marijuana, as reported in the National Post in late August.
Marijuana’s Medical Benefits, in Story
Marijuana stopped little Charlotte, a young girl with Dravet Syndrome, from going into one seizure after another, beginning at only 3 months old. It grew worse and worse as her seizures would last 2-4 hours. Her heart stopped a number of times, and she was having “300 grand mal seizures a week.” When her parents finally discovered a product low in THC and high in CBD, administered twice a day via oil in her food, they were amazed at the results. Hours went by, and then days. Charlotte’s seizures decreased to 2-3 a month and mostly happen when asleep.
Let’s take another example, a 13 year old boy named Aaron Evans was diagnosed with brain cancer. Grade three anaplastic astrocytoma— two brain surgeries, a month of radiation and a year of chemo. The cancer went away and then came back. His mother put her mama bear suit on and went to work finding something that might help, and she found cannabis. Something that his neurosurgeon and oncologist agreed Aaron should try. Aaron improved after his mother persevered in locating and administering an extract cannabis oil. It won’t cure cancer, but it helped and he was able to return to school.
Finally, here is a popular, impactful video from a documentary called “Ride with Larry” showing marijuana’s effect on Larry’s Parkinsons. Truly remarkable to see how his body reacts in such a short period of time after ingesting cannabis. It’s stories like the above that make the changing tide of Canadian law so important.
Emblem To Disrupt $60 Billion Opioid Market With Cannabis Based Sustained Release Formulation
Emblem is licensed under the Access to Cannabis for Medical Purposes Regulations (the “ACMPR”) to grow and sell medical cannabis. The market has pulled back after getting super frothy by all things marijuana, but that didn’t stop Emblem Corp (TSX.V: EMC) (OTC: EMMBF) from building a 3-pronged success story, ready to scale. The Company has 71.5 million shares out, $33 million +/- in cash (plus $34 million in in-the-money warrants, some of which is callable). Emblem’s eye is on the prize as below:
- The current medical cannabis market in Canada, valued at $400 million, is searching for better dosage formats. Simple oils have grown to about 35% of the market in less than a year
- Cannabis tends to require re-dosing. A titratable, sustained release formulation would have substantial interest from the chronic neuropathic pain market (Anecdotally, that segment represents a reasonable percentage of the current $400 million medical cannabis market.)
- The Canadian non-cannabis chronic pain pharmaceutical market is over $500 million and dominated by opioids. A cannabinoid based sustained release product has potential to enter that market.
- Margins for simple cannabis oils are north of 80%
- The global opioid market is expected to reach $42 billion by 2021
- Latest licensing announcement, Emblem has a favorable royalty only disclosed as “double digit”
After surging forward with expansion plans that extend from this year into next, Emblem is preparing to scale up fast to supply and service the pending recreational market across Canada. They feel it’s best to build their own facilities from the ground up and use the same team and admin structures rather than buy up and smash together other LP’s.
The amount of analyst coverage on the Company is telling (Canaccord, Echelon, Eight Capital, GMP, PI Financial and even our fave, Jim Dines). This ain’t no huge plans but still waiting on our license to produce type of company. They are going.
Emblem’s Three Businesses
There are three businesses under the Emblem Corp umbrella, covering the full spectrum: Emblem Cannabis, their cannabis growing and selling business; Emblem Pharmaceutical, their pharma unit, revolutionizing the way patients ingest their medicine; and finally, 50%-owned GrowWise Health, a revenue-maker that provides valuable cannabis education to patients, physicians and other LP’s. This comprehensive tackling of all things cannabis, covers off growing, selling, educating, and creating new forms of cannabinoid-based medication in standardized dosages.
Let’s take a look.
Emblem Cannabis has 2154 active patients, and some really innovative products (both dry flower and accessories), such as their Magic Butter Maker retailing at $229. They sell dried flower with a clear outline of the CBD (non-get-ya-high) to the THC (yes-get-ya-high) strains. You can tick the box to see just the sativa’s, hybrids, indica’s or just CBD+.
“We grow it. We get it.” This team of pro meets grow are “fiercely committed to the pursuit of the perfect flower,” exactly what you want from a grower. It looks like the process to become a patient is fairly easy as well. Three steps:
“Simply (1) register online, (2) download the Medical Document to be completed and faxed by your doctor, (3) wait for medical verification from our Client Care team. Once that’s done you’re ready to shop online or order by phone with one of our Cannabis Counsellors.”
Emblem expects to continue its production capacity expansion plans based on two additional 100,000-square-foot production modules. When the first one is complete, future facilities will have a higher percentage of space dedicated to cultivation. On this basis, the company anticipates that its total production capacity should reach about 70,000 kilograms per year, once a total of 300,000 square feet of new production space becomes operational.
Onto their other business unit, Emblem Pharmaceutical. This business is pushing the envelope of cannabinoid strains, cultivating those with the greatest evidence that they can target specific conditions. The therapeutic value of those medical grade strains are matched with advanced dosage forms to provide patients with accurate, consistent and high quality formulations.
There is substantial evidence already that cannabinoids are effective for the treatment of a number of conditions such as chronic pain, nausea, anxiety and sleep disorders, and spasticity in patients with multiple sclerosis, so imagine what companies such as this with achieve innovation-wise, in the future.
And GrowWise, the third business, is their complementary to the public education arm, linking patients and the medical community with more knowledge on strains, dosage, safety concerns and side effects. They have an exclusive hotline where they will help provide information, guidance, allowing patients simple access to cannabis-based medication through their registration process, hand-holding until the patient reaches the stage of placing their order with a licensed producer such as Emblem.
For physicians, GrowWise has a series of links and information, including assessment forms and protocols, as per CPSO (College of Physicians and Surgeons of Ontario) and CFPC (College of Family Physicians of Canada) guidelines. They send care package follow-ups and a best practice checklist as well. This thought-leading approach engrains the Emblem brand within the communities of patients and medical professionals who are all trying to keep up with the latest and most accurate medical cannabis information. Great lead generator as well.
Now let’s take a look at the public company, and all it has accomplished over the past year, including their recent news release that caused the stock to halt Oct 3. Emblem reached $4.60 in January this year, and now rests at $1.96.
Emblem recently invested $7.7 million in purchasing 80 acres of industrially zoned land close to their current facilities in Paris, Ontario. The company’s facilities in Paris include a 23,500 ft2 production building, 2,400 ft2 of mothering and vegetation rooms and 3,200 ft2 in two flowering rooms. There are currently drying, packaging & fulfillment areas, vault area and administration. The existing facility also has an additional four growing rooms comprising approximately 6,800 ft2, deemed the “Phase 2 Grow Rooms”. First harvest from their new grow rooms should result in November. This quarter, their average cost per gram came in at $7.39 and the total grams sold amounted to 58,895 grams.
But Emblem is on a path from around 60,000 grams to 70,000 kilograms a year in production.
Recent News– October 3, 2017
Emblem entered into a collaboration and licensing agreement with Canntab Therapeutics Ltd of Toronto. Canntab has developed a patent-pending, oral sustained-release formulation for cannabinoids. Emblem and Canntab think two heads are better than one— they will collaborate on the preclinical formulation, clinical development, regulatory approval, manufacturing and with finally brining a sustained-release product to market.
The agreement grants to Emblem the exclusive right in Canada to Canntab’s patents and know-how for the purpose of developing, commercializing, using, selling and offering the sustained-release product for sale under the Emblem brand.
John Stewart, head of Emblem’s pharmaceutical division, commented:
“There are numerous examples of drug products where the utilization of advanced dosage forms such as sustained- and/or modified-release dosage forms significantly improved the efficacy and clinical utility of the active drug substance. We believe that cannabinoid therapy will be advanced via the development of such dosage forms and the associated pharmacokinetic and clinical research. Sustained-release formulations of pharmaceutical ingredients that are otherwise short acting (such as cannabinoids) have more convenient dosage schedules, a longer duration of action, and tend to be much more accepted by patients and health care professionals. Emblem expects that the introduction of easily titratable, sustained-release formulations of cannabinoids will materially increase the market for cannabinoid-based medications, particularly for treatment of conditions such as chronic neuropathic pain.“
The sustained-release product is designed to release the cannabinoid content over a period of at least 12 hours. Sustained-release formulations of pharmaceutical products are particularly valuable in the treatment of chronic conditions, such as chronic pain, where patients often need around-the-clock relief. There is also a lot of evidence that cannabis is effective for the treatment of neuropathic pain, estimated to affect over two million Canadians. The pharmaceutical market addressing the needs of those patients was estimated around $500 million in 2016.
The Leadership Team
The Company is a vertically integrated marijuana producer led by a team of former Healthcare and Pharma executives. Key members of this incredible team have successfully run multi-billion dollar companies in the past. In a very short timeframe they have accomplished quite a lot.
Gordon Fox is the CEO and a former partner at Goodman & Carr LLP, where from 1979 to 1995 he practiced securities law. Mr. Fox is a Co-Founder of White Cedar Pharmacy, serving over 2,600 patients in Ontario. He also founded Lytton Capital—a Limited Market Dealer—in 1995.
Co-founder & former CEO of Dynacare (1988 – 2002) Harvey Shapiro is the CEO of GrowWise Health. Dynacare was a TSX-listed medical diagnostic services company acquired by Laboratory Corp. of America in 2002. Mr. Shapiro also practiced Securities Law at Goodman & Carr LLP from 1973 to 1987. He is closely connected within the Canadian pharmacy community.
John Stewart, CEO Pharmaceutical Division, is the former President and CEO of Purdue Pharma Canada (1991-2006) and Purdue Pharma USA (2007-2013), one of the largest privately-held pharmaceutical companies in the world. Mr. Stewart launched 11 new products, including Ms Contin, OxyContin and Biphentin. He has extensive experience in formulation development, clinical trials and medical communications.
Last but not least, as founding partner of Levy Zavet PC, Maxim Zavet carries extensive experience within the medical marijuana industry, making him a perfect fit for President of Emblem Cannabis. From his knowledge of the ACMPR in Canada and his in-depth knowledge of medical marijuana to his vast, world-wide network of contacts, Maxim holds a first-rate comprehension of genetics, cultivation and he understands just about every aspect of the industry’s current and future needs.
Emblem could be significant player, and in more ways than one, already is as a medical cannabis play. Just wait until the oil license and then doors of recreational are opened to them. Emblem has the intention to go off the grid as they tackle head on and cashed up the blue sky of the cannabis industry in Canada. Do your own DD please.
This is not in any way investment advice nor any sort of stock recommendation. Please do your own due diligence and talk to a qualified investment advisor.
The contents of this article are for informational purposes only. Nothing in this article, in any way whatsoever, should be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. Note the inherent risks when investing in microcap stocks. Prior to making any investment decision, we recommend that you seek outside advice from a qualified and registered investment advisor.
Emblem Corp is not a client nor an advertiser. The owners of the Stock Syndicate do not own shares in Emblem Corp at this time.