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Disrupting the Cannabinoid Industry with Science and Innovation

Dave Jackson Dave Jackson, Stockhouse
1 Comment| May 10, 2021

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Get to know Toronto-based Avicanna Inc. (AVCN) (TSX.AVCN, OTC: AVCNF, Forum) – a biopharmaceutical company developing and driving biopharmaceutical advancements of plant-derived cannabinoid-based products, and the man at the helm of the company ship.

AVCN manages its own supply chain including cultivation and extraction through its two majority-owned subsidiaries, Sativa Nativa S.A.S. and Santa Marta Golden Hemp S.A.S., both located in Santa Marta, Colombia. It’s currently looking to further its work in the medical community by proving through science that its plant-derived cannabinoid-based products can make a tangible difference.

Stockhouse Media’s Dave Jackson was joined by Avicanna’s CEO Aras Azadian to catch up on the company’s landmark medical cannabis supply deal with Shoppers Drug Mart back in January 2020, the expansion their RHO Phyto medical cannabis products, its recent strategic partnership with former NBA star Al Harrington’s Viola Cares brand, and variety of timely topics investors in the CBD medical cannabis investment space will find intriguing.


SH: To start off with, can you tell us a little bit about yourself and the history of the company?

AA: Yeah, sure. My background has been biotech management consulting and in helping smaller and mid-sized biotech and biopharmaceutical companies in the earlier parts of my career, we started the company. However, in 2015, with two of the co-founders Setu and Kyle. And the idea was to take that very much, the same approach, the biotech and pharmaceutical approach to cannabinoids and cannabinoid- based medicine. You know, we saw the early evidence that cannabinoids can have potential in solving a lot of unmet medical needs. And we saw the lack of standardization, the lack of treating it as an actual medicine, which means controlled dosing, evidence-based, you know, consistent products. And we set out to do that. And, or the past couple of years, we've done some, some incredible things on actually delivering centralized medicine in the form of cannabinoids across different countries. So that's where it really, the company started from.

SH: Can you update our investor audience and your Avicanna shareholders on all the new company developments, especially in the wake of COVID-19?

AA: Yeah, absolutely. I mean, during 2020, during COVID there was also a bit of a cannabis sector meltdown to say it lightly. So the company, while we're a pharmaceutical company and we're focused on our drugs and bringing our drugs through clinical development registration, we started reducing costs to make the company a little bit more efficient and to make the company more sustainable. But we also started commercializing a lot of our products. So we started commercializing our medical products in Canada. We've successfully done. So here with Shoppers Drug Mart, we're now expanding into the adult use segment. We commercialize our products in South America, specifically in Colombia. We started licensing intellectual property. So over the past year, the company has finally commercialized as products across the cosmetic and medical segments while it's still continues as pharmaceutical pathway. So in many ways we decided to become more self-sufficient and less reliant on the markets. Considering the volatility that we have faced in the marketplace.

SH: You’ve just expanded your RHO Phyto medical cannabis products into adult-use channels and major hospital pharmacies through the supply agreement with Sunnybrook Hospital in Toronto. Can you expand on this initiative to supply major Canadian hospitals for our investor audience?

AA: Absolutely. So we initially launched RHO Phyto, which is our medical formulary in Canada with Shoppers Drug Mart, very specifically targeting the medical community, the medical patients, and for that to get access to these products a patient has to get physician authorization, get registered within sharpest drug run and then purchase those products from the shopper's drug Mart portal. We did very well there, which was, I think from a strategic perspective a massive a proof of concept for us. And it's because we were able to launch these standardized products that are accurate, they're dosed properly. They have great taste and smell profiles. They're not inhalation products. They're backed by clinical data there they're backed by preclinical data they're backed by accurate dosing. And it did very well there. And we looked at that and we said, that's fantastic, great proof of concept, but where else can we now expand this early victory of the company.

And we decided to expand it into two other areas. One in which Sunnybrook Hospital and Sunnybrook Cancer Center sets, a very good example is to supply these major medical institutions directly. And the recent regulations that allows us to do that in Sunnybrook hospital, specifically Cancer Center Watts, standardized medicine, the form of cannabis. They don't want their oncology patients to necessarily bring their own cannabis products. They want again, products that they can rely on dosing and titration regimens that they can provide. And our products have been chosen for that, which is another massive validation on the other side of the spectrum is the adult use market in which the consumer can walk into a dispensary or go onto the, for example, Ontario cannabis store and purchase products. The products that are available within those channels are predominantly THC focused recreational products, you know, where we would, or not necessarily wellness and medical products, which is where again, the real fight or product is positioned.

So we looked into that channel and we realized actually, there's a lot of people that are buying products, medical, cannabis products, or cannabis products for medical and wellness purposes through those channels. They don't want to necessarily go through the medical documentation of authorization or worried about telling their physicians. They're worried about their employers finding out, but yet there isn't this level of standardized qualified medical products available to them. And therefore we decided to launch a role there as well. So this is a very big quarter for us, Q2, you know, we saw, obviously we're seeing sales grow within the medical channels, but we've also added these new two new channels, which is institutional medical. And then there's the adult use for the same brand.

SH: You’ve also recently announced entering into a strategic partnership with NBA great Al Harrington’s Viola and Replay brands. This may be news to many investors. Can you unpack the benefits of this alliance?

AA: Absolutely. So with Replay and Al Harrington and the group there, they've launched a line that's focused on sports athletes, the athlete in all of us. And it's a topical line that is treating inflammation, muscle, and joint pain, et cetera. And we've developed that formulation, actually the group of formulations for them that we did in a collaboration with their expertise about what professional athletes would need, medical doctors that are part of professional sports teams might need with our formulation and pharmaceutical development expertise. And the line that I think is a fantastic line of products that are going to address a lot of those needs. The line will be commercialized in the U.S. by them. We are the intellectual property behind it and in Canada, by us where it is their brand.

So it's a very good collaboration. It would, the light will be launched in Canada, United States and Q2. We're very excited to see how, how it forms on the Viola side. Viola is, you know, a ten-year-old brand Al Harrington has developed a vision of creating a socially equitable brand that actually does include minorities. And they've done extremely well in the United States. We're helping them by just bringing it into Canada and leveraging off of our infrastructure and our existing partnership with them to support his initiative and his vision of bringing a brand that I think a lot of the multicultural society, you know, specifically Toronto that we have will benefit from. And one resident I think will resonate very well.

SH: Back in January 2020, Avicanna signed a major medical cannabis supply deal with Shoppers Drug Mart. Can you update us on any new developments here and how the relationship has grown?

AA: I think the relationship has been a very positive collaboration because I think they have established a strong patient support program. We have established a very strong medical education for physicians and patients. We have obviously delivered a group of products that, that has done very well with their audience. So the combination of the thing that 3M has done well in Canada, but we're also taking those learnings and we're implementing them in other markets. So medical cannabis by shoppers is still a small division because, you know, they're not allowed to sell them in their actual brick and mortar pharmacies at this stage. And it's great to be one of the leading brands within that platform now and we've done well. We look forward to the future where potentially our products would be available in the 1300 pharmacies. And I think that's going to make a big impact, but again, the learnings, the collaboration has been incredible. We're taking a lot of that outside of Canada now, but also working with Shoppers on the supplying of the major institutions where Sunnybrook Hospital was an example. So it's a multi-level partnership very happy with the results.

SH: Avicanna looks set for strong growth moving forward. How are you placed to expand operations to meet this demand?

AA: I think this year, you're going to see a lot of that. And we've been preparing years and years for this because we are an intellectual property company. So majority of what we do is formulation development, optimization, clinical work. And the fact that the products have been commercialized now in Canada, in South America, for us to duplicate those efforts is rather easy because we're just expanding so we can manufacture more products. We can expand to more markets. I think the hard work was the formulation development, the brand development, the strategy, the educational content, the training content. And now we're in a place where it has worked. You know, it has worked in South America, it's worked in North America. So for us to expand that within the medical side, I think is going to be an enjoyable process as we scale up and on the other end, it's the pharmaceutical drugs that we have taken through registration and clinical development. They're getting closer and closer to actual registration. And that's it we'll prove that the company is actually a fire pharmaceutical company. So I believe we're getting much closer now to, to a lot of that. And it's because of the years of development that has already gone into it, that allows us to scale those up.

SH: For company shareholders and potential investors, what kind of future development and progress can we expect for Avicanna?

AA: I think that the pipeline of the products will continue we're innovators or researchers. You know we've established a skincare line. That is the only one with clinical results. And that's now launching in a couple of markets. We have a medical line that is now commercial in a couple of markets. We have pharmaceutical drugs that are designed to treat, you know, neurological disorders and skincare diseases and a lot of different clinical pathology. So I think you will continue to see progress. And I think you will continue to see the pipeline developments come into commercialization. We have already commercialized probably somewhere around 30 different SKU or products that we have taken from the lab developed optimized, commercialized, and market it. So when we say we're going to develop something and commercialize it, I think now we can back that up. And our pipeline or our scientific platform is not going anywhere. We will continue to innovate, and we'll continue to put more and more and more and more industry leading products out of the market. And we're just getting into the commercialization stage. So I think the market is just starting to see that, that the iceberg as to the kind of products we will bring into the market as well.

SH: It looks like the cannabis sector has rebounded with retail and institutional investment back in play. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good buy right now?

AA: Yeah, I mean we are trading roughly a $40 million market cap, which I think is less money than the company has invested in just in the past few years and the research, the clinical I think relative to any of our peers, whether it's biopharmaceutical companies or South American verdict integrated enterprises were substantially discounted, which doesn't make a lot of logical sense from my perspective because of what we built. We're, we've, we've attached scientific know-how commercialization channels in North America with South American vertical integration. And I think it's designed to be a one plus one equals three. I think the market has rebounded because cannabis from a medicine perspective and from adult use perspective is a very real industry. What I believe we will see over the next couple of years is further segmentation and separation between the two, you know, there's going to be medical companies and there's going to be your adult use companies.

And we're predominantly focused on the medical side. And I think we're scientific leaders on that front, but that also means that the route to market for a company like us is as longer, you know, it's taken us years to bring products into the market because we had to spend time in developing them and optimizing them developing strategies and branding and education. So we're now there. And I think that the market has not seen yet the end result of, of all the work that we've done. So I think when that does actually reach fruition, that will have a positive impact on the stock price and the recovery of the stock price.

SH: And finally, Aras, if there's anything that I've overlooked, please feel free to elaborate the floor is all yours.

AA: No, I think we covered it all. Again, my position is that we're just getting started on the medical side. I think we've all acknowledged that from an adult's perspective, there's always been an underground market. There's always been demand, but we're just getting started on what cannabinoids can do from anywhere from skincare to medical, to pharmaceutical, whether it's treating co-morbidities or actual clinical pathologies. And there's very few companies that have the scientific capabilities to actually take that pathway. We've done it just getting started. And from a global market perspective, I think that demand is generally going to be more focused on medical use. So I think the market opportunity is quite large. And I think the investment community needs to understand that there's going to be a segmentation and then you cannot treat a medical, a biopharma company with cannabinoids with the same perimeters and the same expectations. And you can have with a recreational company, our pathway is different, but we have better entry barriers and intellectual property protection and brand establishment. So that's the general notion. And I think we've been one of the pioneers on the strictly medical side, and we're very, very proud of what we've accomplished in the past few years.

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FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.

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