Israeli company Panaxia, selected 18 months ago to set up a plant in New Mexico for producing medical cannabis products, has announced the signing of a new contract for setting up four more plants in the same style in other US states. The first plant began production six months ago.
The new agreement is with Canadian Bioceutical Corporation, listed on the Canadian Securities Exchange at a $70 million market cap. The Canadian company, which is active primarily in the US, will finance the project, provide the cannabis, and market the products in selected states. Panaxia will build and manage the factory, and provide all the elements of the drug other than the cannabis itself.
Panaxia managing partner Advocate Assi Rotbart says, "Last March, we started marketing the products from the New Mexico plant: 28 products, including sublingual tablets, lozenges, an inhaler, oils, etc. We discovered that we had incorrectly assessed the strength of the demand. The plant is now operating at full capacity, producing 10,000 units a month, which are being sold at $10-15 a unit (a sales rate that reflects $2 million in annual revenue, divided between Panaxia and US company Ultra Health, its partner in the factory, G.W.), and we are in the process of expanding it. The factories that will be built under the new agreement will be much larger."
The new plants will be set up in Arizona, Nevada, Maryland, and Massachusetts. The Canadian company is already actively marketing cannabis in Arizona and Nevada, while Panaxia and Canadian Bioceutical will jointly enter Maryland and Massachusetts. The plan is to operate some of the factories under this agreement by the end of the year.
Panaxia founder and chairman Dr. Dadi Segal says, "We're in effect exporting to the US cannabis market, even though it is still illegal to import the cannabis itself to the US. We produce all the materials needed to manufacture the drug here; only the cannabis itself in mixed in the plant in the US."
"Globes": How many Israelis are employed in this activity?
Segal: "As of now, 10-15 just for the first plant in New Mexico."
In the next few months, Panaxis is slated to launch a cannabis products factory in Israel as part of the reform in the local cannabis market. Rotbart explains, "Under the reform, the growers will sell the cannabis to concerns like us, which can produce controlled products with as uniform a composition as possible from it. We're unaware of any other concern in Israel that already has such a plant. We're making cannabis accessible for the first time to patients who want to consume it just like a drug."
Rotbart says that it is important for Panaxia for the product to have the quality of a drug. Segal states, "Today, it's impossible to obtain confirmation from the US Food and Drug Administration (FDA) that the cannabis factory complies with GMP production conditions, i.e. the same production conditions as for a drug. We asked one of the FDA's subcontractors, which tests drug factories for it, to conduct independent supervision of the factory on our behalf, even though the FDA doesn't require it and doesn't confirm it. We hope that this supervision will make a further contribution to promoting the perception of our products as pharmaceutical." In Israel, confirmation of medical quality production is required, and the company hopes to obtain this soon.
Segal says, "One of the things that surprised us in our US business was the great desire on the part of doctors, pharmacists, and university researchers in the local market to connect with us and our activity with cannabis. They wanted to study our information, and asked us to conduct training programs for them on how to use cannabis products, such as those existing in Israel, that do not yet exist in the US."
Panaxia is part of a group of companies headed by Segal, which also includes medical esthetics company Luminera and over-the-counter drug company Tree of Life, which produces and markets 300 products in Israel, and exports them. "The group already has tens of millions of dollars in revenue," Segal confides. "Tree of Life was founded 17 years ago on the basis of activity by a chain of pharmacies founded by my parents 40 years ago. We marked medical cannabis as an interesting field seven years ago, when no one wanted to touch it yet, because they feared that dealing in cannabis would damage a pharmaceutical company's name. It paid off for us. Our innovation is good, and we're successful turning it into leadership in the markets in which we operate."
Published by Globes [online], Israel Business News - www.globes-online.com - on August 29, 2017
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