Shizim launches medical cannabis incubator Cann10

Ofer Spottheim Photo: Eyal Izhar
Ofer Spottheim Photo: Eyal Izhar

The Israeli biomed group's incubator will provide startups with mentoring and consultation, and help them find investors.

Shizim Group, managed by CEO Yossi Bornstein, which comprises more than ten biomed companies, has launched the Cann10 incubator for medical cannabis companies. The incubator will not directly invest in companies, but will provide them with mentoring and consultation, and help them find relevant investors.

Shizim is a multi-disciplinary biomed group, consisting of companies dealing with drug and medical equipment marketing in Israel (including Dolphin Medical Ltd. and Biotis Ltd., the former distributer of Bristol-Myers products in Israel), investments in startup (inter alia, together with a Polish venture capital fund), providing startups with consultation, medical trial consultation and training and the undertaking of clinical trial via GCP Clinical Studies Ltd.. It has begun medical cannabis operations in recent year.

"A monumental change"

"The past few years have seen a monumental change in the field of medicinal cannabis," says the incubator's General Manager Ofer Spottheim, "In the US, 25 out of 50 states already approve the use of medical cannabis, and some of them authorize its use for any purpose. In the state of Colorado, which leads this change, many Israelis are involved in this business, operating farms, greenhouses and the vending machine selling the product. Alongside Israelis, ultra-orthodox Jews are also involved in this business. There is no particular reason why Israelis and Jews are operating in this field - they just saw the opportunity and pursued it."

Despite the legalization revolution, cannabis' legal situation in the US is far from clear. Use and possession are illegal according to federal law. On the state level, some states have legalized cannabis while some only officially decriminalized it. "In the field of medical cannabis, the NIH, the National Institutes of Health, funds related research and registers patents, although this is ostensibly prohibited on the federal level," Spottheim says.

"Due to the federal prohibition, there is no orderly regulatory track for trials and approval of product efficacy for various illnesses, as provided by the FDA, the US Food and Drug Administration, for other drugs and food supplements declared to have a medicinal value."

In Israel, recreational use of cannabis is illegal, but medicinal cannabis is legal with prescription and regulated purchase from eight certified growers, who also sell the product to patients with a prescription. A reform recently approved in Israel is expected to add a third function of licensed distributors who are not growers (probably pharmacies), a situation which will probably raise the end consumer prices, Spottheim says.

"Nowadays, every patient pays about NIS 300 for the quantity they have been prescribed, regardless of the amount. The Ministry of Health is concerned about a product spillover to the private market, and there are indeed such cases." The growers are very much interested in exporting the product, and the Ministry of Health does work to change the relevant legislation, although cautiously, in order to avoid becoming perceived as the world's drug dealer and without attracting criminal elements into this field. "There are states in Europe who are not interested in growing cannabis on their territory, but allow their citizens to use the product," Spottheim says, "the Ministry of Finance and Ministry of Health support exports."

There are about 25,000 patients with medicinal cannabis prescriptions, about a half of them cancer patients, and the rest are chronic pain patients, Crohn's disease patients and patients with several other conditions. "For cancer patients, this is mainly a supporting treatment. The cannabis helps regain appetite, reducing nausea and providing energy." The main obstacle to developments in this field is the accuracy of medical knowhow. Cannabis is known to help with various diseases - but what strain, in what dosage and how should it be consumed to be effective for each condition? And in which cases do the benefits surpass the side effects, which still exist? Spottheim says, "In Israel, in principle, Dr. Mickey Dor from the Ministry of Health Medical Cannabis Unit, examines the research published in professional journals and decides which illnesses can be prescribed with this treatment.

"The decision on what exact strain of cannabis to consume and how to consume it is oral knowledge that is developed between growers and patients. Since this is a plant, its properties change depending on whether you grew it in the summer, the winter, or in this or that soil. Not all strains are good for all patients. There are also variations in its effects depending on the way it is administered - whether inhaled, ingested or rectally administered.

Israeli company Syqe Medical, which recently received a $20 million investment from Philip Morris, has developed a device enabling a metered-dose to be administered in each inhalation. This unique product still does not provide a response to variations in the plant itself.

"Growers are gradually becoming the greatest experts in this field. Cultivation is carried out in greenhouses which are factories in every aspect of word, in terms of light intensity, water quantities and fertilizer composition. The grower already knows that he always gets a plant with a similar effect from the same greenhouse, and is thereby capable of telling the patient, 'Oh, you have Crohn's disease, take some from that corner.'"

BreedIT Corporation (BRDT), traded at a market cap of only $2.6 million in the US, attracted much interest when it announced that its software, which uses advanced algorithms to study the relation between plant growth methods and their medicinal properties, could also been applicable for the field of cannabis. "Regulating this knowledge is nowadays the highlight in this field," Spottheim says.

"Recreational use"

There are some elements concerned about an institutionalization of research in this field, and about the possibility that the plant will be discovered as not beneficial for various conditions it prescribed for today, or that not every cannabis plant has medicinal qualities?

"There are people, most of whom come from the world of recreational cannabis use, who believe that it should be freely available like a food supplement and that any person should be able to decide for himself whether it is useful. We do not think so. It is not good for any condition, or dosage or age - for example, it remains unclear whether with children the advantages outweigh concerns regarding addiction."

Most of companies are afraid to operate in this field due to legal and reputation aspects. As mentioned, tobacco giant Philip Morris invested in Israeli startup Syqe, and continues searching for activities, among other things in this field, probably as part of its preparations for a world in which regular smoking is plummeting or is actually ostracized in terms of image. " Israeli company Dubek Ltd. also has limited activity in this field, with rolling papers also suitable for cannabis," Spottheim says.

Another company with operations in this field is One World Cannabis (OWC), which provides cannabis-related research and consultation services. OWC was established in the US but is mainly active in Israel, primarily due to US legislation making it difficult to carry out research there. The company's research director is Dr. Yehuda Baruch, who was head of the Ministry of Health’s medical marijuana program until 2013. This company is also traded, but with only limited success, with a $1.6 million market cap. Israeli-US company Izun Pharmaceuticals Ltd., which develops various medicinal products - from medicinal oral rinses to diabetic foot treatments - has also recently launched a cannabis research department. Therapix Biosciences (TASE: THXBY) led by Chairman Dr. Ascher Shmulewitz, also has relevant operations.

Like any agricultural industry, the cannabis industry is also interested in crop enhancement solutions, in improving the ratio between investment and irrigation and produce, extermination of pests and diseases. "For example, Agam Energy Systems Ltd., which has a dehumidifier for greenhouses, also entered this field. If you smoke a plant, it cannot have fungi. Nowadays the Minister of Health disqualifies corps afflicted with pests."

Due to this activity and the unique needs of this field, this incubator had established, and has already started searching for companies. "We will provide mentoring and IP [Israeli patent - G.W.] registration; we will not invest ourselves but we have contacts with investors in these fields." Another partner in the accelerator is Seach Ltd., one of Israel's largest growers.

"This market has actually emerged from the bottom up, due to pressure from patients, growers and researchers. We seeks to provide them with the top-down look, as a company proficient in the field of drugs, which works according to regulation and can predict where this field will be in 10-15 years - probably working in a much more organized manner," Spottheim says.

The accelerator's activity has already included an eight-meeting course carried out in cooperation with the Technion ("This is not obvious, because there is still a taboo on this issue,"Spottheim says), in which doctors, pharmacists, researchers and growers ("but not any person who smokes") had studied the principles of the drug, the device or the program relevant for the field. "We are studying the plant on the botanical and genetic level, as well as in the commercial, legal and medical field." The course also led to the idea for the conference that will be held next week, on September 11. "We wish to form a network of connections between all people involved in this industry which will put Israel on the map," Spottheim says. One of the conference's participants will be Prof. Raphael Mechoulam, who discovered THC, the cannabis' active and psychoactive molecule, and became one of the fathers of research in this field.

Published by Globes [online], Israel business news - - on September 5, 2016

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

Ofer Spottheim Photo: Eyal Izhar
Ofer Spottheim Photo: Eyal Izhar
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