XPhyto Therapeutics: Where Medical Cannabis Meets Modern Science
July 25th, 2019
App, Exclusive, News, Top Story
It wasn’t long ago that recreational marijuana was legalized in Washington State and Colorado, while speculation about widespread medical marijuana was running rampant across America and then-Canadian Prime Minister candidate Justin Trudeau was making campaign promises for his country to become the second in the world with adult-use marijuana. At that time, so-called “pot stocks” were cropping up everywhere, all touting just how big they were going to be.
It didn’t take long for the industry, investors and regulators to quash all that, separating the wheat from the chaff and leaving weak companies as rubble under the freshly paved cannabis road.
The next evolution is already underway, with cannabis operations utilizing leading technology for efficiency and modern science to create the highest quality products. At the corner of science and cannabis, XPhyto Therapeutics can be found headed for the public domain, making acquisitions and landing important partnerships to become an international player.
It is anticipated that XPhyto will become a public company in the upcoming weeks.
Science Focused (Canada)
From its headquarters in Vancouver and operations in Edmonton, XPhyto is focused on developing a testing, manufacturing and cannabis research business, as well as a research, cultivation, import, manufacturing and distribution business in Germany. Founded less than two years ago, the upstart is executing in a responsible way, as evidenced by regulatory filings with SEDAR showing more assets (~$8.6 million, including $2.2 million in cash) than liabilities (~$1.25 million) as of June 30, 2019.
In Canada, XPhyto has two strategic collaborations with the University of Alberta’s Faculty of Pharmacy and Pharmaceutical Sciences. For minimal cost, the two, exclusive five-year agreements give XPhyto access to world-class infrastructure and talent. This presents the company with certified analytical testing capability, a certified extraction, isolation and formulation facility and, just as importantly, immediate credibility.
To paint a clearer picture of the expertise at the university, consider that it is home to the Alberta Drug Development & Innovation Centre that specializes in biopharmaceuticals, drug delivery quality control and regulatory sciences. The name is bootstrapped to quality and forward-thinking.
The plan is for XPhyto to leverage the collaborations to provide 3rd party analytical testing for licensed producers, wholesalers, distributors and law enforcement. Further, the company intends to produce pharmaceutical grade cannabis-derived compounds in-house, while concocting proprietary formulas and conducting research for major health indications.
That means XPhyto’s access at the University of Alberta will allow it to put its fingerprint on all of the major areas of cannabis science. There is tremendous demand for certified testing facilities throughout Canada and the U.S., a problem that is plaguing the industry because of bottlenecks and flat out testing errors. When it comes to cannabis research for bringing new drugs to market to fill areas of unmet need, the space is still in its infancy with cannabis prohibition blocking basic research for decades. It’s a wide open opportunity for companies with the right facilities, like the university has.
Science Focused (in Germany)
Science is a top priority in Germany too for XPhyto, just in a slightly different operational model. The company has acquired 100% of German cannabis start-up Bunker Pflanzenextrakte GmbH. The prize of the acquisition is Bunker’s scientific cannabis cultivation and extraction licence awarded by the German health authority for cannabis-related research and development, which clears the way for genetic research, cultivation, extraction and more.
During the current quarter, Bunker is expected to be completing submissions to regulators to expand its license portfolio to including cannabis import, storage, distribution and manufacturing.
There’s a good reason for the “Bunker” moniker. The company operates from a decommissioned German Air Force command center and nuclear bunker. Due to its past purpose, the location is quite ideal with optimal proximity to Munich West Commercial Airport and excellent mechanical and security infrastructure conducive to its new cannabis applications.
The long-term lease covers nearly 11,000 square feet with space nearby for expansion if desired.
Two Huge Markets
If you’re going to pick a couple places to start cannabis businesses, Canada and Germany certainly have to be high on the list of choices. Last October, Canada became the first G20 country to allow recreational marijuana and only other country in the world beside Uruguay.
The industry market experts at Arcview Market Research and BDS Analytics project the legal cannabis market in Canada to reach $5.2 billion by 2024, driven largely by about $4.8 billion worth of recreational sales.
Germany is a real hotbed of activity in Europe. The bloc’s biggest economy is projected to have one of the highest growth rates in the world for a cannabis market, accelerating at a whopping 76.8% compound annual growth rate to reach $1.6 billion by 2022, according to Arcview.
Comparatively, Ameri Research forecasts a 21.1% CAGR for the global cannabis market from 2017 to 2024, causing a rise from $14.3 billion to $63.5 billion across those years.
Maybe one day XPhyto will look to the broader global markets, but for now it is doing well to keep growing in the burgeoning Canadian and German markets that certainly need some more companies to step up and handle demand, particularly as it relates to science.
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