Israeli startup Syqe Medical, which develops and markets inhalers for administering precise dosages of medical cannabis, has raised $50 million, the largest financing round ever by an Israeli cannabis company. Syqe founder and CEO Perry Davidson has confirmed the report. The Tel Aviv-based company's products are marketed in Israel by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA).
The Shavit Capital fund, which usually invests in companies planning an offering on a foreign stock exchange, led the round, indicating where Syqe is probably headed in the coming years. Also participating in the round were previous investor OurCrowd, a pharma industry investor, and the PRM Holdings fund, the investment arm of therapeutic plants company Martin Bauer Group. PRM's investment is consistent with Syqe's strategy of developing its product for additional drugs based on plants and administered by inhaler, in addition to cannabis.
Syqe has raised $83 million to date, including the current round. Previous funding was mainly through the OurCrowd crowdfunding platform and from private investors Barry Shaked and Brian Cooper. It was previously reported that Syqe also received an investment from tobacco company Philip Morris, but the company did not confirm the report.
Syqe's product is an inhaler designed to vaporize specific dosages of medical cannabis and make it possible to inhale them with very accurate control of a fixed dosage. The product includes the option of changing the dosage according to the patient and changing the dosage remotely by the attendant physician. Teva Israel markets the product at hospitals in Israel, as of now in a pilot program, as part of its interest in smart inhalers for conventional drugs.
Davidson said that the new financing round was designed to enable the company to develop the inhaler for other plants besides cannabis, such as opium (not currently in legal use with an inhaler) and valerian. Syqe will also consider development of its inhalers for conventional drugs, in addition to expanding its cannabis activity from a pilot to full commercial activity in Israel and other countries, including the US through the FDA.
Davidson added, "In the medical plant sector, there are now capsules, oils, and creams, but there is no option for inhaling precise dosages. On the other hand, in the pharma industry, dosages changing in real time with real adjustment of the treatment to the patient cannot be administered by inhalation. Furthermore, the response rate to treatment with pharmaceutical inhalers is less than 50%." He says that there is a need for a smart inhaler for both plants and conventional drugs.
Not waiting for export approval
Syqe's Israeli product uses cannabis processes in a plant conforming to the GMP standard, which means that the company can market its products in Israel even after the new cannabis reform takes effect on March 31, 2019. Approval of Syqe's product includes the device through which the cannabis is supplied and the plant compound itself.
Davidson, who formerly worked in high tech, was one of the first employees at cannabis company Tikun Olam. He founded Syqe in 2011.
Syqe is trying to solve the main problem in the cannabis industry: the reproducibility problem - the ability to control the quantity of active ingredient from the plant that reaches the bloodstream with each dosage. Reproducibility is an important condition for acceptance of the product by the medical community.
How does the product actually work? The company's inhaler contains a cartridge with an extract from the whole plant. When someone wants to use the product, this cartridge is closed with an electrical circuit, and it becomes a heating element that operates constantly and uniformly. Every inhalation starts a mechanism that closes the circuit and maintains a constant fixed temperature through heat sensors. The inhaler also includes a mouthpiece that turns according to the force of inhalation, thereby compensating for differences between breaths, for example between a small child with lung disease and a PTSD patient who breathes very heavily. The company conducted a clinical trial of its product, and reports that the same dosage is always administered.
Syqe does not require approval of cannabis exports from Israel, because in principal, it can manufacture the inhaler in Israel and add the active ingredient overseas, or set up a manufacturing plant in Israel. What it exports from Israel is the unique know-how that it has developed in inhalers, just like any high-tech company or medical device company. After years of being the latest shout in the cannabis industry, this financing round begins a test period in which the inhaler will have to prove that is can really expand commercially, and also to new indications beyond cannabis.
Published by Globes, Israel business news - en.globes.co.il - on December 31, 2018
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