Most of the medical companies that have entered the cannabis industry have been those whose business in conventional medical areas was stagnating. Now Micromedic Technologies Ltd. (TASE:MCTC), an active cancer testing company with revenue, is announcing its intention to take up the cannabis cudgel.
Micromedic's share price rose by 10% following the announcement, pushing its market cap up to NIS 13 million. The increase in its share price is modest, compared with other companies with similar market caps that announced their entry into the cannabis market. Micromedic's biggest shareholder is BioLight Life Sciences (TASE: BOLT), controlled by an investment group headed by former Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Israel Makov.
Micromedic has no specific experience in cannabis, but CEO Guy Lerner says that the knowledge acquired by the company in plant extraction during the development of its test could also be relevant in the cannabis field. "Our CellDetect test is based on extraction of the Ficus plant," he explains. "This material, which is specifically attracted to cancer cells, makes it possible to color them with a special shade."
The basic assumption is that since the company deals in plant extracts, and cannabis also requires high-quality extracts, Micromedic will have a relative advantage in the sector. The company, however, has not yet said in exactly which part of the sector it wants to operate.
Lerner explains, "We may want to cooperate with a medical device in order to create an extract suitable for that device. Alternatively, we can be a laboratory for testing the material's quality. We also have marketing channels in various countries. Although those channels deal with conventional drugs, not cannabis, they may want to work in this area, especially if the cannabis is classed as medical."
Under the new cannabis reform due to take exclusive effect on March 31, 2019, commercial extraction of cannabis can be conducted only in a plant having GMP certification and security approval for it. "I'm in no hurry to say that I want to set up a plant, but we can make plant extractions amounting to hundreds of liters in our laboratory," Lerner says.
The company has meanwhile had a number of preliminary meetings with medical cannabis companies.
Micromedic has revenue amounting to several hundred thousand shekels a year from CellDetect, the test it developed. Lerner asserts that the possible entry into the cannabis field does not necessarily mean the end of its current cancer testing business, despite the small scale of its revenue and the fall in its share price in recent years, when the company relied on this sector. Micromedic had NIS 1.1 million in cash as of the end of the third quarter of 2018. "Our activity is progressing slower than we expected," Lerner admits. "The lack of resources is harming us. We anticipate an increase in the fourth quarter."
"Globes": Will you take advantage of your entry into the cannabis field to raise capital?
Lerner: "We don't know yet."
Published by Globes, Israel business news - en.globes.co.il - on December 19, 2018
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