Israeli company Syqe Medical is planning an IPO on the Toronto Stock Exchange. The company develops and markets inhalers for providing precise dosages of medical cannabis. Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) has been marketing Syqe's products since June. Syqe, which has already begun meeting with leading underwriters in the market, plans to hold its offering by the end of the year at a valuation of hundreds of millions of dollars, sources inform "Globes."
The company, founded and managed by CEO Perry Davidson, raised $50 million a year ago, the largest financing round by an Israeli cannabis company to date. The round was led by Shavit Capital, which customarily invests in companies before their IPO. Other participants in the round were a private investor in the drug industry and the PRM Holdings fund, the investment arm of medical herb company Martin Bauer Group.
The investment by a medical herb company matches Syqe's approach of developing its product for additional spheres of administering herbal drugs through inhalation in addition to cannabis, including opium (not legally used through inhalation) and valerian. Syqe also wants to develop inhalers for administering conventional drugs.
Syqe's first financing rounds were mainly from the Ourcrowd fund and private investors Barry Shaked and Brian Cooper, cofounders of the Retalix technology company, sold in a huge exit. It was previously announced that Syqe had received an investment from tobacco company Philip Morris International, but the company did not confirm the report.
The product developed by Syqe is an inhaler designed to vaporize measured doses of medical cannabis and make it possible to inhale them with very precise control over a fixed dosage, including the possibility of changing the dosage according to the user, and remote change of the dosage by the attendant doctor. Teva will soon begin marketing the product to the home market in Israel. The technology was previously used in an earlier version for two years at Rambam Medical Center.
Syqe's Israeli product combines cannabis in the inhaler imported from a plant with GMP certification (meaning that the company's products conform to the new cannabis reform that took effect last April). This product is the first in Israel with combined approval for both a device through which the cannabis is supplied and for the plant compound itself.
Davidson, who formerly worked in the technology industry, later became one of the first employees in the Tikun Olam cannabis growing and marketing company. He founded Syqe in 2011. Davidson previously told "Globes" that he founded Syqe to bring order into the cannabis industry. Syqe is attempting to solve the main problem in the sector - the reproducibility problem - the ability to control the quantity of active ingredient from the plant reaching the bloodstream in each dose. Reproducibility is an important condition for acceptance of the product by the medical community.
How does the product actually work? Syqe's inhaler contains cartridges with the plant. When the product is to be used, an electrical circuit is closed on this cartridge, and it becomes a heating element that operates uniformly over time. Every inhalation ignites a mechanism that closes the electrical circuit and keeps the temperature constant through heat sensors. The inhaler also contains an opening with controlled rotation according to the force of breath, and compensates for differences in breathing, for example between a small child with lung disease and a PTSD patient breathing very strongly. The company conducted a clinical trial of the product, and reports that the user indeed obtains the same dosage.
Syqe is not dependent on approval of cannabis exports from Israel, because in principle, it can manufacture the inhaler in Israel and add the raw material overseas, and can also establish plants overseas. What the company is exporting from Israel is the special know-how developed for inhalers, like any other technology or medical device company.
One company has already tried to hold an IPO in Canada - BOL Pharma, which grows and produces cannabis in the Israeli market. BOL initially tried to hold an offering at a $1 billion valuation, then later reduced the valuation that it was seeking, but was unable to obtain the reduced valuation. BOL and Syqe have little in common other than the fact that they are both in the cannabis sector. BOL deals in agriculture and industry in an existing market full of constraints, while Syqe develops a technological product whose power lies in its added value and uniqueness in the market, but which requires educating the market.
Published by Globes, Israel business news - en.globes.co.il - on September 8, 2019
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