The marijuana industry is one with great promise…and relative uncertainty. Navigating the ever-changing regulatory environment is often fraught with difficulties, making it difficult to do the sort of long-term planning that most businesses rely on.
However, some companies have found a middle-path, one that leverages the medical benefits of marijuana in entirely legal ways, including some that don’t involve any controlled substances, as well as preparing for a potential future where many of the legal restrictions currently in place are lifted.
Abattis Bioceuticals (ATTBF) is one such company. Equities.com got a chance to sit down with new CEO William Flemming, CFO/COO Rene David, and President of BioCell labs Brazos Minshew to talk about how Abattis is preparing for the future and the present.
EQ: So what can you tell us about Abattis’ current status in terms of licensing in Canada?
Rene David: Abattis found some level of success at this time last year when Colorado’s legalization went live. We found that being in the medical marijuana market primarily as applicants for marijuana for MMPR and, in one case, a Controlled Substance License (CSL) license in Canada, showed some traction with investors. Everyone felt that Abattis would soon be a licensed commercial cultivator and seller of dried cannabis in Canada. I want to be able to use this piece to respond to some of the audience out there that is waiting for an approval.
Abattis, in my mind, has three key areas and functions. One, it's seen as being on its way to achieving approval for commercial cultivation and sales in Canada through Health Canada. This has ended up being a one year wait for our applications. Our applications are active and we look forward to working with Health Canada as a future partner in the medicinal cannabis industry. We have not given up that program. We also want to invite the approved license holders to discuss with us in how to build either a partnership or a venture with them.
While we're waiting on these applications, we are out there negotiating near money revenue opportunities and this is why Brazos Minshew is so important to Abattis. This near revenue items through our subsidiary called BioCell Labs, Abattis is going to expand further provide products immediately to the bottom line and provide excitement in the cannabis industry. We wish to have a strategy that deliver this products in the recreational states and into the 50 states and in Canada when the laws have changed.
Brazos Minshew: I’m the President of BioCell Labs, an R&D company. We primarily craft and create the products that are going to go out into the marketplace.
We have decided to contract and co-brand with Empirical Labs. The reason for our relationship is that they hold a patented technology for delivering a higher percentage of the cannabinoids found in cannabis but also in other plant species as well. What we're doing with them is using their delivery system to deliver the phytocannabinoids in our products.
The nature of the product is really dictated by Natural Health Products (NHP) Canada. We’re following the NHP monographs in creating the products and using this delivery system to distinguish our products from others that are somewhat identical on the surface. But when you start looking at even doubling or tripling their absorption, you get a lot more bang for your buck as it were. You’re getting a lot more of the active ingredients into the blood stream. The company Empirical Labs has a patent on this for cannabinoids, and we have exclusive use of that patented technology for the products that we're delivering.
EQ: You have a lot of manufacturing partners that you're pairing up with. How have you built that particular network and what sort of benefit do you think it creates for your company?
Brazos Minshew: One of the things to remember is who is it that you're trying to benefit in the end. At the BioCell Labs we have decided that our mission statement is going to be “People Matter”. What we're looking for is the unmet needs in the marketplace, in the medical field where people might select an herbal product as their preferred mode of addressing their own personal needs. What we're looking for is the unmet needs that are in our populations.
Then we're working backwards from that perspective saying “what are the major unmet needs in the marketplace?” It will be things like pain and inflammation, also anxiety and depression. We’re looking at a number of other fields where NHP has monographs stating that natural health products are actually effective and useful in and then using a grid, a matrix, to cross this up with those needs that are known to be effectively addressed or treated by cannabis products.
You should know that the phytocannabinoids that are found in cannabis are also found in numerous other plants that have known value, and some that are just recreationally important like chocolate. Chocolate has a great deal of phytocannabinoids in it. It’s used in the United States for reducing high blood pressure, although that is not in the Canadian NHP monograph as of yet. But it's just as important to recognize that the phytocannabinoids that are found in cannabis are also found in many other plants that have known medical value. We're combining many of these plants into our final formulas this is meeting the unmet needs in our population.
From there we have to look at who is going to be the best manufacturer for delivery. The technology that we want to use is called Liposome, because using this as a chaperone molecule marrying really the phytocannabinoids with the liposome helps deliver them into the system at two to three times, 100% to 200% the delivery system of the raw herb.
So now we have the technology to blend these things together. Now we have to look at who is going to be doing the manufacturing. Who is going to be bottling this for us? We have now our unmet need. We have our matrix grid to say that phytocannabinoids will help these conditions. We have the proper delivery system. Now we have to look at the bottlers. We have a new agreement with our bottler, and we're using Nature's Formulae in Kelowna. We just signed the deal with them and we’ll have them delivered by February 19.
Now we have to look at the distribution. How do we get these to the people that need them? We have an agreement with Numedica for US distribution to deliver strictly to physicians and in discussion with Abattis distribution channels as well. They have agreed to do a pilot program that is going to really use only one product. I have one product that is going to out with Numedica and will be launched on May 1, followed by other products when the market receives these and sees how successful they are. Currently, we have 10 products in the hopper and this is our first delivery.
We also have further marketing that can take these directly to the people that have the greatest need. Internet, radio, television, print advertisements, however we can help take the products where they are needed the most. This is called direct response marketing, and we have this through a company called J2Response that has a lot of experience with the Canadian markets in taking these products directly to market.
Finally, I think the overarching watchful organization that we have called Ingredient Identity is making certain that everything that we say and do is legal and compliant in all 10 provinces and all 50 states. As we expand, we even have the ability to look at the compliance regulations in Western Europe as well.
EQ: What I think is really interesting about your industry right now is the rapidly changing legal situation involving the legal status both in Canada and the United States. I wonder if you could talk just a little bit about how Abattis prepares for the future given the state of flux things appear to be in right now.
Brazos Minshew: There are no flux when it comes to phytocannabinoids. There are 150 phytocannabinoids that are studied for their medical benefits, only one of them has a restriction. That’s the Delta 9 THC. That leaves us a 149 that have known health benefits that could help people. Why would we wait until the clearance of the one when we could benefit people today?
This is our approach. Natural Health Products Canada has explained in their monographs very well how THC benefits people by affecting a receptor in the brain called a CB1 receptor. The CB1 receptor is in the brain and, to some extent, in the immune system. The CB2 receptor is in every cell in the human body. It’s the CB1 receptor that is affected by THC. The CB2 receptor is affected by all of the other 149 cannabinoids plus THC. Why would we restrict ourselves to just one when we have so many others. This is the reason why our formulas are starting to gain the kind of market acceptance among distributors.
We’re looking at the other 149 cannabinoids while we wait for the regulations to catch up on the one cannabinoid, the THC that is under a restriction. We shouldn’t be thinking of this strictly as medical marijuana. That is a very important part of our market strategy, but that is not the only market strategy. We still have 149 other cannabinoid that we're focused on right now that can deliver health benefits to people today without having to wait for the clearance of THC.
EQ: What should investors be looking out for in the future from Abattis? What, over the next year to five years, should we expect to be seeing from your company?
Rene David: So what are the revenue items that we are targeting? We can disclose the launch of the beverages that Brazos is working with, to start.
The other components of our near- or mid-term revenue areas speak clearly of an area of where Abattis has spent most of the last three to six months on, and that is midterm revenue with respect to CBD provisions. We are actively working in other foreign jurisdictions to set up rights and licenses for those countries to be able to export into North America when that time comes. Right now, CBD is the only extract we’re really allowed to import subject to regulations. That strategy is about being able to provide what the market needs, which is a very high margin product.
Another area of interest over the past six months has been the finalization of the definitive agreement to acquire the asset which once was known as the PureGenesis building and its equipment. That location is the location of our MMPR application with Health Canada. The acquisition includes four products and the official property, which has completed a phase 2a clinical trial.
That purchase and the partnership we have with a Quebec company, has set Abattis up to become a North American company similar to GW Pharmaceuticals (GWPH) , where products are developed. In this case, the product is derived from thylakoid, which is derived from the chlorophyll of the baby organic spinach that they use in that facility. It is our hope that the next step is to confirm the use of the leaf and the waste from the cannabis plant once proper licenses are in place.
William (Bill) Fleming CEO: At the end of the day, from a strategy side, we certainly over the last couple of years have gone out and identified some pedigree technologies and partnerships. Now we're at the stage where we want to start leveraging some of these tools that we've been able to acquire.
We anticipate, over the next couple of years, that we'll be taking more of a presence in Canada, in the United States, and having more a foothold with partners by providing them with products or services or technologies that we've been able to build. We’re very bullish on the fact that we’re a vertically integrated company. We’ll continue to leverage those assets so that that way we're in a position that we can start selling products and services in Canada, into the United States and, if we can replicate our model on an international basis, we'll certainly give that some consideration as well.
For more information on Abattis Bioceuticals, visit www.abattis.com.
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