A look at the medicinal cannabis sector: Zelda Therapeutics

Alan Kohler here with today’s CEO, and it’s Dr Richard Hopkins, the CEO of Zelda Therapeutics which is a medicinal cannabis company.  Now, as Graham Witcomb’s excellent piece for InvestSMART today (which is also published here), says there is a huge glut coming for cannabis because so much has been planted; colossal amounts have been planted.  Graham is saying stay away from the sector because there’s going to be a glut.  That may be true, however, Zelda Therapeutics, what it’s doing is creating prescription medicines.  It’s a buyer of the stuff, not a seller of the actual cannabis.  It buys cannabis, so therefore it presumably benefits from there being a glut of it, if there is.

At the moment there’s a shortage because Canada has made it legal recreationally so everyone is smoking the stuff and they can’t get enough of it and they’re planting colossal amounts of land as Graham Witcomb talks about; there’s 21 football fields being planted at the moment of cannabis in Canada and so that’s fine.  There’s 130  companies listed on the Canadian Stock Exchange all doing it and so there’s an absolute bubble taking place, no doubt about it in cannabis.  One of the most interesting things about the interview with Richard Hopkins was that they’ve now got cannabis beer in Canada!  Can you believe it?  You go into a bottle shop and instead of buying alcohol beer you can turn left and buy cannabis beer, so that’s amazing. 

But look, the thing about Zelda and a lot of these companies is that it’s playing in a space that is clearly growing and the other thing I didn’t understand is that there’s such a thing as an unregistered medicine that doctors can prescribe which doesn’t have to go through all the phase 1, 2 and 3 trials.  It’s a very interesting area, it’s growing rapidly, it’s one possibly you should know about.  You should be careful, as Graham Witcomb says, particularly careful about getting involved in companies that grow the stuff because there’s so much going to be grown.  But something like Zelda, which is a prescription medicine business possibly is different.  Here’s Richard Hopkins, the CEO of Zelda Therapeutics.

Listen to the podcast or read the full transcript below:

Richard, before we get into how the business is going and the industry, which I’m really interested to talk to you about, Zelda Therapeutics has been getting into trouble lately with the ASX.  You got a speeding ticket in December and you got ticked off for having a late Change of Directors notice.  I would have thought the thing about medicinal cannabis companies is because there’s so much controversy around them you really have to keep your nose clean, don’t you?

We’re trying!  Look, I think the cool thing ASX in relation to our share price, it’s interesting it always seems to work on the way up, but they never cooled you on the way down.  We’d had a precipitous decline along with the rest of the market, we had a heavy seller come in around December and I think the share price dove from about 5.5 down to 3.5 very quickly.  Then all that happened in the New Year was that we sort of rose back up to the 5.5 levels.  We just happened to do it quite quickly and we got a speeding ticket.  It’s just a bit unfair that no-one cooled it on the way down and we didn’t have a chance to explain why.

Yeah, but there was no announcement, why did the stock go up so fast – bang; in a hurry?  What happened there?  You must know what happened, who bought it?

No, no a lot of the cannabis stocks are the same.  It was very interesting in the market.  It was like some bot was buying into anything cannabis and if you look through, a lot of cannabis companies were actually appreciating at the same time in early January and it just so happened because our base was so low it looked like we were appreciating faster than anyone else.  But all that was happening was equilibrating to normal levels.  But that buying that occurred was right across the sector on the ASX, it wasn’t just us, if you track the trajectory of a lot of the companies.  There was nothing unusual and the timing of the yield was weird, it was early January when no-one is around, you’d think where was that buying coming from, it wasn’t obvious in terms of what was putting it out there.

But one of the sellers in December, according to your late Directors Interest Notice was one of your Directors, Jason Peterson, who seems to have sold 2.5 million shares, now that’s not a good look because that was a low price.

That actually was a quirk, if I may say, so poor old Jason got caught in the middle of that and there was some administration at their end that wasn’t ticked off as tightly as it could have been.  But that was just to do with the dividend distribution and it ended up being put in the hands not of Jason, but other people affiliated with CTS and it washed through that way.  If you look through three months or two months earlier, all of our Directors went into voluntary escrow for another 12 months which is pretty unusual for a company of our position.  They’ve held that, and so that was a quirk to do with CTS which is the firm he works with in dividend distributions, he wasn’t actually selling any stock.

Are you saying he didn’t sell 2.5 million shares as the Directors Notice Appendix 3Y says?  That actually didn’t happen?

I understand it was more a technical issue to do with the dividend distribution that made it look like he was selling stock, but it was a shift in ownership from his holdings via the distribution – now, I don’t know the technicalities of it.

All right.

But no, he wasn’t selling directly, it was more a technical shift to do with the distribution itself.

Right, okay.

As I said they signed a voluntary escrow, and if you know Jason, he wouldn’t budge on that one.

Let’s move along.  You started as Managing Director in July last year and can you just take us through the due diligence you did on Zelda because you’ve been kicking around bio-techs for a while, you’ve run two bio-tech companies so you know what you’re doing.  What attracted you about Zelda?

You’re right I have been in two publicly listed bio-tech companies.  They’ve been relatively early stage and I’ve really enjoyed that experience.  I think what drew me to Zelda was a couple of things.  Firstly, I’d worked with two of the board members, Harry Karelis and Stewart Washer previously.  They’d been part of Phylogica when we launched that company back in, I think, 2003, and we’d always got on very well, we’d always kept in touch.  I’d been an early investor in Zelda and also another company called AusCann, so I always had an eye on the sector.  Aside from the management that was offered that I could have worked with, I think what’s fascinating is the medical cannabis sector as a whole.  I’ve never seen anything like this in 20 years of bio-tech.  It’s breaking virtually every rule we’ve seen in terms of the speed at which it’s getting products to market, it’s changing globally.  The sector, as we keep saying, is moving at warped speed.  I thought this was a once in a lifetime opportunity to be able to translate work that we were doing in the clinic to get this product into the hands of patients in an incredibly compressed time, which is something that anyone working in bio-tech ultimately wants to do.

I think when you looked at the quality of the management, the quality of the way that they’d positioned the company, I think they’d anticipated that the sector at some stage is going to be subject to some degree of consolidation.  We set ourselves up to be highly specialised but also highly differentiated and I thought their strategy of how they were positioning their company was very clever.  You put all those things together and I thought it was very good.

Zelda’s difference is that it focuses on prescription medicine.  Is that what appeals to you because obviously there’s a huge range of cannabis type companies, some growing it, some creating creams, some even creating pet medicines.  Do you think that Zelda’s difference, that is it’s focused on the prescription medicines, is likely to be more successful than the others?

It’s where the sector is going.  If you look at the model that’s been deployed by many, many companies, and I’m not criticising it, I think it’s worked very well today, is one where they’ve endeavoured to become what we call fully integrated.  They’ll do the cultivation, they’ll do the extraction to generate the flowers and the cannabis oils.  They’ll then take that to market, so it’s another skillset if you look at distribution and so on.  Now they’re recognising that in order to differentiate their products in the market they’re having to go through the clinical trials to try and get the clinical evidence to support what their products do.  It’s very difficult for small companies to play across all of those skillsets particularly when you look at a lot of the people who have come into the sector don’t necessarily have traditional bio-tech backgrounds.  I think they’re often stumbling or finding the clinical trial phase of that very challenging.  It’s a specialist skill, it’s really hard to do and so we’re just building up a body of expertise by bringing the best people in the world to come and work with us and ask the really challenging questions about how we validate these claims about the need for cannabis in a clinical context to try and establish the link between the potential benefits of cannabis and the claims once and for all.  That’s a very hard ask.

Because one of the things that’s going on with cannabis, perhaps the main thing in a way, is the amount of ground that’s being planted with the stuff.  Aurora Cannabis in Canada is building 21 football fields in size according to one of our analysts, under cultivation; huge amounts, both here and in Canada.  I suppose with Zelda you’re a buyer of that stuff rather than a seller of it, is that a correct characterisation?

Correct, and that was another reason we wanted to stay out of the cultivation/extraction game because that sector of the market has been rapidly commoditised and it’s a race to the bottom.  I think establishing where your margins are, beyond that, is a bit beyond the rest of the value chain, it’s really challenging.  Yes, there is a lot of stuff being planted around the world and there’s talk of a glut, although I think what’s happened since Canada went fully legal in terms of recreational use, they’ve had a huge shortage of cannabis in Canada.  Similarly, Germany has had a significant problem trying to source sufficient quantity and quality of cannabis for its market as well.

For the moment, demand is exceeding supply, that may well equilibrate over time and I think what you’re going to see is that the market, as it matures, it fractionates into different sorts of products.  For the recreational market it will be cheaper product, whereas for the medicinal market, it’s going to be really high quality, highly controlled medicine-type cannabis that will be grown and then manufactured to an extract and so on.  That’s the part of the value chain that we’re in which is relatively high margin and it’s always been for pharmaceutical medicines.

Could you explain the relationship between Aunt Zelda’s in America that I think Mara Gordon is behind that, one of the founders of Zelda Therapeutics here.  How does that relationship work?

Yeah.  I think when Harry Karelis and Jason Peterson and Stewart were getting together and looking to launch the concept of Zelda’s, they were talking to a lot of people in the cannabis business and they bumped into Mara Gordon, and you’re right, she was and still is one of the pioneers of medicinal cannabis in California and throughout the United States.  There was a natural synergy there because they had access to finance and the shell to be able to launch this company, what they were looking for was a point of differentiation.  What they got through Mara was access to her database that had been generating patient data for four or five years, where she had been trying to correlate if you like, dosages in some strains of cannabis and linking that to the patient experience.  Those sorts of insights at that time were absolutely valuable and exceptionally rare to have someone who was that well organised.

That was the genesis of Zelda but it was also the genesis of our clinical trials because looking across that database we were able to identify formulations which were completely unique, so we have an IP position which we can protect around the formulations, but also insight into what clinical areas we should target that were likely to produce, or give us success.  As I said, there’s always a high rate of failure in clinical trial and if you can mitigate against risk by drawing on patient information, some of which is quite unique about medicinal cannabis, then I think you’ve fast-tracked to a successful outcome and you hit the market very quickly.  That was the genesis of where Zelda came from.

You mentioned that gives you an IP position, how many patents have you got and what do they cover?  Do the patents come out of the Aunt Zelda data, do they?

They’ve come from a different range of sources.  Again, because we’ve all come from bio-tech backgrounds, we recognise the value of intellectual property.  You’ve got to own something in this space.  The thing is again, you go back to that integrated model that many people deploy, there is no IP for the cultivation step or the extraction step and even the point of distribution into the market.  So you were sort of exposed to players who may own our clinical indication by virtue of the fact that they’ve taken the time to go back and do the research and development and establish the intellectual property position and it is a crowded IP landscape.  So you have to know strategically how to navigate your way around that to be able to establish a foothold and we think that’s another key value proposition that we offer by virtue of the fact we’re just specialising in that clinical space.  We spent a lot of time looking at patents.

Our IP position comes from two sources.  One, is we’ve drawn on that database of Mara’s that she created initially to create unique formulations that no-one else is going to be able to replicate and we’re validating that in a clinical setting, so we’ll be able to support the clinical data which is something the patent examiners will always like.  But the other investment we’ve made is to go right back into the pre-clinical space and start looking at the relationship between medicinal cannabis and cancer and we’ve got an extensive portfolio of patents which are being examined across the world which are covering off on the topics of brain cancer, pancreatic cancer, breast cancer and cognitive decline which is associated with diabetes.

We’ve got two IP assets, one which is currently positioned at the clinic and one which is developing in the pre-clinical space.

Right.  You mentioned before the time to market for cannabis is compressed.  Can you explain why that is because I take it you’ve got to go through three phases of clinical trials as with other medicines, how is compressed with cannabis formulations.

Alan, that was for me, when you asked why it was I came across to Zelda, that was when the light went on about how different this space is.  Actually, you don’t have to go through those three phases for medicinal cannabis, it’s quite unique.  Where the mould has been broken in this whole industry and what’s so exciting is that rather than what we’ve seen with this classic what we call a top-down approach where a pharma company or a bio-tech company will take 10 years developing a medicine, registering and getting it to market.  That’s when they go through the three phases of clinical development and they’ll spend a billion dollars trying to get there and they’ll charge you a very expensive medicine in order to recoup their investment.

It’s 100 per cent different with medicinal cannabis.  It’s come from a bottom up driven approach where it’s recognised as the people’s medicine, where it’s a relatively affordable, safe, cost-effective form of medication that the people have been using for thousands of years.  Because of that, and where there’s some reasonably strong anecdotal evidence that it has a clinical impact, regulators have been forced to change their perception of medicinal cannabis.  What we’ve now got is a market for what we call unregistered pharmaceutical medicines.  The unregistered market means that you can go straight from cultivation and extraction, and take a flower or an oil with no clinical validation because we know it’s very safe, there’s no evidence that you can overdose now on medical cannabis.  You can go straight to market with no clinical data, okay?

When you say ‘to market’, you mean to prescription?

It’s a prescription market but it’s an unregistered medicine.  So you don’t have to go through the hoops that medicines have typically gone through to get that product to market.  So the bottleneck here becomes the clinician in a prescriber’s market where he’s being asked to prescribe medicines for which there’s often virtually no clinical data supporting it.  The key driver here is that because people have been using it for so long and we know it’s very safe, the regulators have got ahead of the game here and they’ve actually opened up a market for what we call unregistered prescription medicines.  That’s what’s exploding around the world; that’s what’s growing so rapidly and why this sector is growing at warp speed and the numbers are really interesting.

But I look at your presentation that was just a couple of months ago, and there’s a slide of ‘Zelda’s Product Pipeline’ and then there’s insomnia, autism, opioid reduction and cancer.  Then insomnia is the furthest along, it’s at phase 2 and then autism is phase 1, opioid reduction – phase 1.  I mean that looks like they’re going through phase 1, 2 and 3 trials.  Are you registering these medicines?

We’ve, again because we come from that bio-tech background we’ve instilled discipline in the company which means we’re going to progress the clinical trials as if we were going to register because we’re not going to go back and do this again.  We’re doing these to a standard that would meet the requirements of the registration pathway which is phase 2, phase 3 and so on.  What we’re doing with the clinical trials is we recognise in the market that a key point of differentiation if you think about the fact that it’s a prescription based market, even though it’s unregistered, the poor clinician that’s sitting there going, ‘alright so you’re asking me to supply medicinal cannabis’.  You’ve got insomnia, you’ve got pain, you’ve got anxiety, let’s have a look at the clinical evidence to support the fact that this drug will benefit you – and there’s nothing there except patient reports.

The doctors are screaming for anything that says this looks like a drug, behaves like a drug and there’s clinical data to support it.  We recognise that as the key point of differentiation and the bar for success here is quite low.  If we can establish what’s called a phase 1 trial, where we put the drug into the body and we figure out where it goes.  Then we do a small scale phase 2 trial which is very cost effective.  We’re only running 25 patients at an insomnia trial, that, if successful gives us a clear point of differentiation in the market.  We can take that clinically validated product straight to market and it’s highly differentiated from our peers who don’t have that evidence.

Are you saying that the doctors are allowed to prescribe your cannabis medicines even though they’re unregistered, but they won’t because they haven’t got enough information, is that what you’re saying?

They are because the patients are demanding it, but they’re uncomfortable because the evidence is just not there.  The saving grace on medicinal cannabis is we know it’s not toxic, it’s not going to kill people.  In terms of the maximum doses you can consume it’s relatively safe.  There’s a pretty good industry that’s emerged around medicinal cannabis about how to dose patients even when there is a lack of clinical evidence, you start low and you start moving high.  There’s a strategy in place to be able to protect the interests of the patient and the clinician.  But anyone that can provide this clinical data, and you’ve got to remember right around the world because of the prohibition of cannabis, we just don’t have this data.  It wasn’t because people weren’t interested, we just couldn’t do it.

In the United States, for example, they can’t run a clinical trial as it currently stands at all with what we call full spectrum medicinal cannabis.  That’s created the unique competitive opportunity for Australia because we can run those trials, we can generate that data and we can get that point of differentiation.  That first mover status, if you like, puts you in a very strong position globally.

But if you’re doing all the clinical trials, doesn’t that then lead to putting cannabis in the same boat as other medicines, that they cost so much, you know, it takes 10 years all that stuff, or are you saying that you’re going to be able to get some cash flow while you’re doing the trials?

Yeah absolutely, that’s exactly the commercial model we’re deploying here.  The challenge again, if you follow the conventional model, and there’s some examples we can already point to in terms of how this doesn’t work.  The largest, if you like, bio-tech type company in the world is called GW Pharma.  It’s got a market cap of $4 billion, it’s got revenues of, I think, $15 million.  That’s all.  Part of their challenge has been is that they’ve gone through the process of registering their medicines for treatment of epilepsy, multiple sclerosis and so on.  There’s been a range of indications they’ve obtained approval for.  The problem is that those medicines cost something like $35,000 per year per patient.  They’re trying to step into a market where we’ve now got this space for unregistered prescription medicines where the medicines cost 1/100^th of that to 1/50^th of that and the market’s just not going to pay $35,000 for something that’s otherwise, particularly where you’ve got recreational markets, very cheap to access.

What we’re doing is we’re doing sufficient clinical trial to get some evidence that indicates with insomnia, this drug works, there’s already strong, if you like, anecdotal data to support that.  We then, if successful, with a very small scale phase 2, go straight to market.  We’re expecting the insomnia trials to come off mid-2019.  If successful, we will be looking to take that straight to market this year, towards the end of the year, and we’re putting distribution agreements in place with distributors around the world with very good global access to take that product straight to market.  Conceivably, if successful, we could be generating revenues towards the end of 2019 and that model is quite unique.

Aren’t you likely to face ongoing pricing issues because patients could simply go and get it and smoke a joint, like if they’ve got anxiety or they’ve got insomnia or any of the indications that require them to get some cannabis medicine from the doctor?  If it was too expensive, they’d just go and buy a joint, particularly in places where recreational use is legal?

We’ll be taking that with a couple of different approaches.  One is with formulation.  If you make a formulation which we are in the insomnia trial, it’s very difficult to recreate, then I think you’ve protected yourself with the formulation.  Smoking does not replicate how our formulation works as an oil which has been blended with different components of cannabinoids and so on.  The other is that when you look at the way the prescription market works, when a doctor prescribes a medication it’s linked to the product.  Cannabis is a bit different but in most parts of the world, Australia being one of them, if a doctor sees your clinical data and says, okay, well this looks like a medicine.  I’m comfortable the clinical data supports what we’re trying to achieve, I will prescribe you this product for your indication.  So the prescription is linked to the product.  It becomes very difficult then for the recreational market to break into and compete with your market, depending on what you’re focussing on.

The other strategy for dealing with potential impact from the recreational market, and we are planning for that, is to ring fence your indications so that it’s unlikely that if it didn’t look like a medicine, people wouldn’t consume it.  In the case of anxiety, we’re going after paediatric populations with autism and in the case of pain, we’re looking at opioid reduction.  Again, these are patients who are already addicted to opioids, they’re used to consuming high doses of classical medicines.  It’s going to be very difficult for them to find alternatives to hit that, if you like, clinical outcome unless they’re using our particular product.

You’ve got to think about potential impacts from the recreational market.  There will be some bleed over, but there are strategies we have in place to protect that.

Your presentation forecasts growth in the prescription cannabis market of 18% compound annual growth over the next 10 years to $40-55 billion.  Where does that come from?

My word, it’s really interesting when you look at the numbers.  Again, this is quite unique.  I’ve never seen a sector grow so fast globally.  If you look across Canada and the United States where these markets are relatively mature, we see that anywhere between 1 and 3% off the population go to the effort of registering to be eligible to get prescriptions for medicinal cannabis.  So you have to go through hoops to get yourself on a list in order to get access to the scripts.  Already in Canada, I think we’re talking a population of 30 million, roughly, between 20-30 million, you’ve got some 2-300,000 patients registered for medicinal cannabis.

Extrapolate that to the United States we’re talking about even bigger numbers, you’re talking about patients in the millions and we know from our partners who are distributing in these spaces that the appetite in terms of the growth phase for medicinal cannabis is quite extraordinary.  If you extrapolate that 1-3% around the world you can pretty much guesstimate what each market will look like and from there you can quantitate what the net worth will be.  We haven’t begun to scratch the surface of just how fast and how rapidly these sectors are going to grow.

Very good, is there anything else that we should talk about in relation to Zelda itself?

Yes, I’ll just add that I think that the model we’re deploying here is all about differentiation.  It’s a minimal level of clinical validation to support the claims that this drug works and then it’s about addressing all of the unmet needs along the rest of the value chain to the patient.  With differentiation you can go to a distributor and say, ‘look we’ve got a product here that’s going to look different from the rest of the stuff you’re moving’.  The clinicians are going to be excited, and we know, they’re screaming for any support and any sort of clinical data, there’s going to be a huge appetite to prescribe this particular product.  So we think we’re really well positioned and quite uniquely so, to be translating very, very quickly from clinical validation into the market towards the end of this year.

The other thing that we’ve done which is very, very clever is that we’ve actually announced a manufacturing and supply agreement with a group called HAPA in Germany.  HAPA are very interesting, they’re all ex-pharma people, they’re all Viva and Bayer, which are big companies throughout Europe and the United States.  But these guys have actually established a framework for cultivation and extraction which is, I think, we argue the best in the world.  They’re one of the few companies, in fact, I think they’re the only company in the world that have achieved what’s called EU GMP accreditation for their products.  Germany is a very difficult market.  They set very high standards for their medicinal products and you need to be what’s called GMP certified to bring products to Germany.

Even the big Canadian companies that are pretty well established have not achieved that, they haven’t got accreditation.  The only company that has is HAPA.  We actually have the whole German market strategically at our disposal and there’s no competitors at this point in time, which is pretty interesting.  These guys are also manufacturing our product to EU GMP standards which means we can distribute them once they manufacture them for us at relatively low cost anywhere in the world.  We think that sort of strategic partnership in terms of who we’re working with for our manufacturers and our distributors is really critical and we’ve been looking very strategically across the globe to make sure we’re working with like-minded souls and companies who are very well positioned to give us rapid access to large markets.  I think that’s a key differentiator again.

Are you saying that you’ll think you’ll be making cash in what, the end of this year?

We’ve been quiet on this.  We’ve been pointing to the fact that it’s possible.  The key determinant of how rapidly we’re going to progress the market will be the outcome from the clinical trial.  If the results are strong, the answer is yes, there’s nothing stopping us taking that straight to market.  If the answer from the trial is equivocal and we need to go back and reoptimize it, that’s going to be harder to take to market.  It really depends on the outcome of the trials.

Yeah but you said you could start making cash flow before the trials are finished, aren’t you going to do that?

No, no we need the clinical data to support the fact that we can take these to market.  So we’re waiting for the mid-2019 endpoint for the insomnia trial to determine how rapidly we can take these things to market.  We’re putting in place agreements with distributors around the world and you’ll see more announcements from the company over the next six months confirming that we’ve got access to global markets with high quality distributors.  At that point we’ll be poised to take the outcome from the insomnia trial and put that straight to market.  The key will be the insomnia trial has to work.  We’re confident it will but until you have the data you don’t know.

One thing just occurred to me, I probably should have asked this before, but with an unregistered medicine which is what yours is going to be even though you’re going through the trials, do these unregistered have to be prescribed by a doctor or can they be sold over the counter?

No, they can’t.  In the medicinal cannabis market right around the globe, it’s prescription based.  You have to get the script first.  The key bottleneck in the chain are the prescribers – that’s the doctors.  That’s why you have to focus on addressing their unmet needs.  You do that, there is a massive appetite to be able to prescribe your product.

Is there a pre-existing category of medicines that are unregistered that have to go on prescription even though they’re unregistered.  Is that a pre-existing category or has it just been created now?

That’s such a great question.  I didn’t appreciate just how that market worked.  The TGA for example, has always had the capacity, I understand, where there’s critical areas of unmet need to be able to facilitate the path to market for patients for unregistered medicines.  It’s always had that capability and in some cases, if there’s a huge need, and the medical condition is untreatable with anything else, they’ve done that previously where they typically look for very strong clinical evidence.  The key to that is saying, ‘what’s the potential harm to the patient’.  If you can establish it’s safe, then you can accelerate that trajectory in the unregistered market.

Cannabis isn’t the first, what’s unique is the fact that it’s very low cost and the scale of the markets which are developing these unregistered spaces are simply unprecedented around the globe and we’re still only scratching the surface of this.  We’ve only seen the first phase.  If you look at the financing, and the way it’s gone, right now in Canada you’ve got 130 companies which are listed on the Toronto Exchange.  A lot of American money has gone over there because it can’t invest – no American money can invest in medicinal cannabis, at least in the public exchanges in the United States. 

We’ve got 130 companies, many of them quite small, all sort of grouped together but very similar business models in Canada.  People have seen that as a bubble.  There will be constructive consolidation as that sector shakes itself out, but Canada is a relatively small market.  What we’re now seeing is the Europeans and particularly in the United Kingdom, a lot of capital has started being deployed in those markets with the next iteration and the next round of financing for cannabis companies.  And so a lot of listings now are moving over to the UK and Europe as we go through what I call phase 2.  Phase 3, will really unlock the beast and that’s when the United States lifts its prohibition on medicinal cannabis.  It’s just lifted CBD, the next phase will be THC and I can see that happening in the next 18 months.

You watch then as the third wave of really significant capital comes to bear to really mature the sector, it’s amazing.  In Canada you can go and get calorie free, alcohol free, cannabis beer and all the alcohols that go with it.  When you go into the bottle store you turn left at the cannabis stuff, you turn right for the – that’s in the recreational market – for the alcohol.

Wow I didn’t know that!  Cannabis beer!

Yeah absolutely Constellation, one of the biggest drink companies in the world just put $5 billion on market into one of the biggest cannabis companies called Canopy.  On market  - $5 billion.  We’ve seen all the big brewers and so on start to move into this space, which again, it’s legitimising the sector.  It’s quite exciting.

I wish there had been cannabis beer when I was in my 20s in the 70s!

Don’t we all, it would have been fantastic!  You would have completely come out of the closet.  You’ve not seen anything like this.  You know, there’s a dispensary run by Med Men, it’s opened up on Fifth Avenue, in New York, right next to Sax, around that section and you walk in and it’s like an Apple store.  So all this stuff that’s gone on in the past, it’s all bollocks, you walk in, it’s a wellness type concept, it’s empowering people.  This idea of the people’s medicine and people having control over their medication is unprecedented.  The genie is out of the bottle now and that’s why this sector is going to continue to grow at warp speed.

Great to talk to you Richard, thank you.

Pleasure.

That was Richard Hopkins the CEO of Zelda Therapeutics.