Opinion Interviews Medipharm Labs: First Canadian LP Licensed...

Medipharm Labs: First Canadian LP Licensed Exclusively for Extraction

Stockhouse Editorial

1 Comment| September 5, 2018

Leading cannabis extraction company MediPharm Labs Inc. (TSX-V: LABS, Forum) strives to be “a connector” in the industry. The Company is a pioneer in Canada, with the distinction of being the first in the country to become a Health Canada-approved Licensed Producer (LP) of cannabis oil without first receiving a cannabis cultivation license. MediPharm’s mandate is to offer extraction services and purified cannabis concentrates to existing cannabis operations, so that that they can focus on their own cultivation.

MediPharm’s business has two distinct revenue models:

Contract Processing – MediPharm assists authorized Licensed Producers by offering tolling services for extraction of pharma-grade, purified oil from cannabis flower.

White Label Services – The company’s unique joint venture model allows MediPharm to formulate, commercialize and distribute advanced cannabis-derivative products to both retail and patient distribution channels. This contract manufacturing can be applied to all regulated cannabis concentrate products.

Its pharma-grade extraction facility in Barrie, Ontario is currently capable of processing more than 100,000 kg / year of dried cannabis into purified oil with future capacity planned for 250,000kg. MediPharm has a vision to be a global leader in extraction and recently began construction of a state-of-the-art extraction southeast of Melbourne, Australia. This cGMP (Good Manufacturing Practices) and ISO standard lab will have a footprint of approximately 1,000 square metres and has been designed to produce the same pharmaceutical grade cannabis oil as its Canadian counterpart.

The Company works with government-approved cultivation partners to produce pharmaceutical-grade cannabis oil and focuses on cannabis concentrates through downstream secondary extraction methodology, distillation and cannabinoid isolation and purification. These purified concentrates can then be formulated, processed and packaged for distribution.

What does that all mean? Stockhouse recently had the chance to catch up with MediPharm President and CEO Pat McCutcheon to help simplify these terms for investors.

1) For investors new to MediPharm, please introduce the Company.

MediPharm Labs Inc. is Canada’s leading cannabis extractor, producing purified, pharma-grade cannabis oil and cannabis concentrates for advanced derivative products.

2) Can you summarize the operations at the medical cannabis extraction facilities in Ontario and Australia?

MediPharm has completed a $7 million build-out of its 70,000 Sq Ft facility in Ontario, Canada designed and built to European GMP standards with ISO rated critical environment clean rooms. The company has assembled an expert production team with deep bio-pharmaceutical experience and has installed advanced cannabis extraction equipment that gives MediPharm the capacity to process 100,000kg of dried cannabis flower into oil annually, the largest extraction footprint in Canada. MediPharm has already received its License to produce cannabis oil and awaits its sales license, anticipated for September 2018. Further equipment has been ordered and expansion plans are in place to build future capacity to extract 250,000 kg of dried cannabis annually.

MediPharm Labs Australia Pty. Ltd. has also completed its application process with the federal Office of Drug Control to extract and import medical cannabis products in Australia. The company is in the process of build out on its site a short distance from Melbourne in Victoria.

3) Securing Licensed Producer clearance from Health Canada is a major achievement, what advantages does this provide MediPharm to position the Company ahead of its peers?

Absolute focus: MediPharm has the distinction of being the first company in Canada to become a licensed producer for cannabis oil production without first receiving a cannabis cultivation license. This absolute focus means we are not distracted by cultivation like other LPs so we can deploy all our resources to become leaders globally in extraction, purification, and isolation of cannabis elements with appropriate investments in technology and expertise in extraction, chromatography, formulation, all within ISO and cGMP critical environments.

Built and Operating: A number of our peers are promoting their funded capacity and future promise, whereas MediPharm is an actual operating business, today: our building is complete, extraction and purification equipment installed, staff hired/trained/working as a team, 3500 kg of flower inventory has been purchased, production license secured, sales license imminent, extraction agreements signed.

Risk and Returns: MediPharm has a unique position of being an agnostic extraction partner to the whole industry of cultivators. In essence, when investing in MediPharm, one isn’t ‘betting on an individual race horse, but rather betting on the whole field’. Our risk is also minimized as we are focused on the high-margin oil/concentrates segment of the industry. The future is in oil and concentrates because of consumer preferences, physician bias against combustible products, and pharmaceutical product requirements of precise dosing.

4) This is also a major leap forward for Canada’s medical cannabis industry, how will this change the state of the industry moving ahead?

With the development of companies like MediPharm that use secondary downstream extraction methodologies and purification techniques, individual cannabis elements (cannabinoids, terpenes and flavonoids) can be isolated and metered. This opens the possibility of true clinical research being completed to understand and harness the potential of cannabis as a pharmaceutical and health/wellness product.

5) What are some differences between Australia’s legal / regulatory system around cannabis with respect to MediPharm’s operations.

The 2016 amendments to the Narcotic Drugs Act allows for cannabis to be legally grown for medical and scientific purposes in Australia and has enabled pharmacies to sell products sourced from about a dozen federally licensed medical suppliers.

MediPharm Labs is in a great position to capitalize on this market, with the Australian government enabling the international import into the country. As Australia focuses on the medical and scientific uses of cannabis, MediPharm Labs is excited for the opportunity to support the development of patient-focused cannabis solutions to support the Australian market.

6) MediPharm took cutting-edge advancements in plant material extraction to create its own technique. What sets this technique apart from others in this space?

At MediPharm Labs we are always innovating. Our big differentiator is purifying cannabinoids. Many other cannabis concentrate producers extract oil to a point where they can formulate to meet the basic standard set by Health Canada. At MediPharm Labs we use custom equipment and techniques to purify cannabinoids to a 95+% purity. This allows us to create specialty end products with little-to-no variability. We have leveraged best-in-class extraction technologies and expertise from various industries to develop custom methodologies to further enhance our position as a leader in the development of isolated cannabinoids.

7) The Company will go public on the TSX Venture Exchange in September with its RTO of POCML 4 Inc., what advantages does this provide to the business?

Going public provides the advantage of access to capital to execute on our business strategies. Funds will be invested in: hiring expertise to provide competitive industry leadership and to staff up to match capacity needs of deal flow; investing in equipment to scale up to our anticipated future commercial volumes; and, investing in research and development to prepare for the future dynamics of this quickly evolving industry.

8) Who are some notable cultivators that MediPharm is working with?

To date we have a Cannabis Concentrate Program Agreements with two Licensed Producer clients and a number of similar additional agreements are expected to be signed in coming weeks. Each Agreement represents a commercial arrangement whereby the Licensed Cultivators will provide MediPharm with dried cannabis to use for the purposes of creating cannabis oil. MediPharm may provide the cannabis oil to its Licensed Producer client or to other licensed producers of medical cannabis at the direction of its Licensed Producer client. Alternatively, the Licensed Producer client may release the cannabis extract for use by MediPharm.

We have also purchased cannabis from numerous other Licensed Producers for the purpose of creating cannabis oil for sale by MediPharm and for our use in derivative products.

9) In a recent blog post on your site, MediPharm predicted that cannabis companies will follow big pharma’s steps towards outsourced or offshore production of active pharmaceutical ingredients. Many companies seem to be embracing a “home grown” focus in trying to produce everything under one roof, is this separation healthy for business?

MediPharm’s business model is predicated on the belief that outsourcing extraction is ideal for cultivators as using a third-party extractor:

provides access to extraction best practices and innovation;
allows cultivators to expand their growing space;
mitigates solvent and pressure vessel use at main growing site;
reduces skilled labour recruitment, management and retention;
dramatically decreases production timelines due to use of large volume automated equipment.

10) Will MediPharm be participating in the adult-use sector as well as the medical cannabis sector?

MediPharm Labs is first and foremost a medical company. We create and distribute high quality medical products that can be exported to the substantial global cannabis market. There are 40+ jurisdictions world-wide where cannabis consumption is legal, and the vast majority of those jurisdictions are for medical products only. Our pharma-grade purified cannabis concentrates will also be attractive to adult-use consumers who want pure, safe and consistent products with precise dosing. MediPharm is excited to take part in the wellness and recreational cannabis market through our partnerships with existing high-performing consumer brands, as new permitted product categories become legal. These JV partners who are experts in their own fields of production be it manufacturing of beverages, baked goods, confectionary, or other products, will work with MediPharm as an ingredient supplier, for product formulation, processing and assistance with licensing.

11) What is on the horizon for MediPharm?

We have a busy fall, spreading the word about MediPharm’s leadership in purity and extraction. You can find us at these industry events: