Medical marijuana hits stock market
April 05, 2006
Madhavi Acharya and Tom Yew, Toronto StarIt's not every company that heralds its public debut with Moses Znaimer, the co-founder of CityTV, on one side and a bag of marijuana from the Canadian government on the other.
But that's exactly how Cannasat Therapeutics Inc. did it yesterday.
Cannasat bills itself as one of a handful of companies in the world that is researching and developing medicines derived from cannabis plants.
Executives acknowledged at a media conference that the fledgling firm faces an uphill battle on many fronts — from the enormous cost and risk involved in developing new drugs to fighting a social stigma that conjures up images of police officers on pot busts pulling up rows of tall green plants and stoned teenagers getting "the munchies."
"Does it give you a buzz?" a reporter asked at one point.
"This is not about fun. It's about function," said a stern Znaimer, who serves as chairman of Cannasat's board of directors. "This is not marijuana that people come to because they're looking for a good time."
Shares of Cannasat, whose symbol is "CTH", closed at 40 cents on the TSX Toronto Venture Exchange yesterday, up 15 cents from the day before. The stock has been trading on the junior exchange for about a week.
Today marks the kickoff of a promotional campaign by Cannasat that's meant to raise awareness about Health Canada's Marihuana Medical Access Regulations or MMAR. The three-year-old program allows people who suffer from cancer, HIV or AIDS, multiple sclerosis and spinal cord injuries, among other conditions, to purchase cannabis from the government.
Users say the drug — possession of which is technically illegal — works wonders in alleviating pain, insomnia, loss of appetite, often more effectively than doctor-prescribed pharmaceuticals, and with fewer side effects.
About 1,100 people have registered for the government program to date, but that's believed to be a tiny fraction of medical marijuana users.
Cannasat holds a stake in Prairie Plant Systems, the country's only legal medical marijuana grower and distributor, which operates under Health Canada's regulations.
The company has raised about $6.5 million through private financing in the last two years. About half of that has since been spent on research and development at its laboratory in Edmonton. The focus of its work is coming up with effective drug-delivery systems. Aside from being smoked, marijuana can be absorbed through the skin, swallowed or inhaled in a nasal spray.
Company officials were tight-lipped about the content of their patents and where they have been filed.
"It's becoming a very competitive arena," chief executive David Hill said. Its rivals include U.K.-based GW Pharmaceuticals, makers of Sativex, an oral spray approved in Canada for treatment of MS-related pain.
Cannasat is still about 18 months away from clinical trials on people, and five years or so away from bringing products to the market, said Umar Syed, vice-president scientific and strategic affairs. "Realistically we would probably need another $10 million to $15 million in the next two to three years to get us there."
It hopes to eventually find a partner in a big pharmaceutical company that could handle marketing and distribution.
"We're still just used to thinking of marijuana as an illicit drug. It's been really robbed of its medical benefits," said Sara Lee Irwin, Cannasat's director of public relations.
She's also a licensed MMAR user. Irwin was just 32 years old when she was diagnosed with cancer in her pelvis and hip. For many of the 17 years since, she used powerful painkillers Percodan and Tylene 3, as well as Vioxx, the arthritis drug recently pulled off the market after reports that it can increase the risk of heart attack.
The drugs upset her stomach and she worried about long-term effects. She turned to marijuana about two-and-a-half years ago.
Irwin now gets a monthly supply delivered to her home in a gold bag for $5 a gram, a cost that she can claim as a medical expense on her income tax return.
"Pain sort of sits right here and it erodes everything in your life," Lee said in an interview, holding her hands directly in front of her face.
"(The marijuana) just moves it off-centre. It's not a big gnawing, raw sore in the middle of your face. It's good to have just an awareness of it there, and it doesn't overwhelm you."
Znaimer, considered a television pioneer, takes credit for planting the seeds for the company.
For years, he watched friends who struggled with inflammatory bowel disease find relief using marijuana that they didn't get from their prescribed medications.
He had also heard about new research that suggested cannabis plants may one day form a whole new class of pharmaceutical drugs.
"I mentioned it to some other guys I know who are in the venture capital business. They're always saying, `Hey Mose, what's the next new thing?'" Znaimer said in an interview. "One thing leads to another."
Canada is one of the few countries in the world where researchers can access legally grown marijuana for research purposes, Znaimer pointed out.