Israeli co Cannabics Pharmaceuticals to raise $4m

Cannabis

The cannabis-based cancer treatment pharmaceuticals company expects to become profitable in 2017.

Israeli company Cannabics Pharmaceuticals, which develops cannabis-based treatments, is planning a $4 million private placement, sources inform "Globes." The company is currently conducting a roadshow for investors in Israel, the US, and Europe, accompanied by the investment banking division of the Aloni Haft group, which is managed by Ronnie Jaegermann. The offering is slated for closure in the coming month.

Cannabics was founded in 2012 by Israeli scientists doing research in cancer and molecular biology. The company was merged into a US stock exchange shell in 2014, and is currently traded over the counter in the US. The company's share price hit its peak in July 2014 with an $80 million market cap, but like other shares in this field, has since lost ground, and the company's market cap is now only $4.5 million. Turnovers in the share are small, in view of the fact that the founders hold large stakes in the company. The company is led by cofounders chief scientist Dr. Eyal Ballan and CEO Itamar Borochov, and Dr. Sigalit Ariely-Portnoy is senior regulation advisor. Another company advisor is former Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) executive Ika Abravanel.

Cannabics's product is a delayed release pill designed to improve the quality of life of cancer patients at an advanced stage of the disease, which is already being marketed in Colorado in the US. The company is also developing a technological system for evaluating biopsies using the active ingredient in cannabis; this system can help doctors realize the optimal treatment for a patient (personalized medicine).

The private placement is designed to support commercialization of the technology and also finance a clinical trial to prove the product's effectiveness. The trial is taking place among 40 patients at Rambam Medical Center. Medical cannabis products undergo a different regulatory process than for ordinary drugs. The trial is being conducted voluntarily in support of efforts to market the product to doctors.

The company presentation for investors estimates the medical cannabis market potential at $3.6 billion in the US alone, and the company optimistically projects a rise in its sales from $750,000 in 2016 (from the pills only) to $84 million in 2019 (sales of both pills and systems). The company expects to begin making a profit in late 2017. "Within five years, the legal cannabis industry is expected to overtake the US movie industry and the organic food industry," the company states in its presentation.

Published by Globes [online], Israel business news - www.globes-online.com - on February 15, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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