The Business of Cannabis –
This is Not Your Parent’s High Times
Many of you have grown up as we did in the 60’s, 70’s, 80’s or even 90’s, when cannabis was commonly referred to as marijuana, maryjane or simply pot. It was associated with Woodstock, Bob Marley, Cheech and Chong, High Times Magazine, and Fast Times at Ridgemont High. Perhaps you may even remember an earlier time in which cannabis was propagandized and demonized, as in the 1936 movie Reefer Madness, a movie in which young teenagers are lured into purchasing marijuana from a couple living in sin and then through a gateway and ultimately down a dark path that leads to addiction, dark crimes, insanity, and even death. Well, as you all know now, the times they are a changin’, and cannabis has now been approved for medical use in over 25 states in the US, and legalized for recreational use in the states of Colorado, Washington, Oregon and Alaska. And it won’t stop there, as proposed legislative changes are taking place nearly every day.
There are a few things that make this industry very fascinating. First of all, of course, is the potential size of the market and industry. Secondly, from a legal perspective, there are unique issues related to the interplay and contradiction between Federal and State law. Thirdly, everywhere we go and whatever financial conferences we attend these days, there seems to be a buzz (pardon the pun) and excitement related to companies associated with this space. And lastly, for now, from a medical use perspective, we have never seen a medical product that is administered without regard to a particular dose, as in “take 2 of these and call me in the morning” or “take 1 every 6 hours for 7 days straight”. It is an anomaly.

Today, there is a burgeoning cannabis industry that some have referred to as “The Green Rush”. It is a growing tide spreading across the US, which in some ways harkens back to the end of prohibition or the way that the legalization of gay marriage has recently swept across many states of our nation. Perhaps more appropriately the issue of whether cannabis-related companies should or can be publicly listed and traded is more akin to the gambling industry, where federal and state laws are not in concert. A recent article published by the Washington Post cites to a report released by Greenwave Advisors, which it refers to as a “comprehensive research and financial analysis for the emerging legalized cannabis industry”. The article goes on to state that “…legal cannabis could be an industry with revenues of $35 billion by 2020 if cannabis is legalized at the federal level”. To put it further in perspective, this $35 billion figure represents more annual revenue than the NFL (currently $10 billion), and is roughly on par with current revenues for the newspaper publishing industry ($38 billion) and the confectionary industry ($34 billion). Thus, we are obviously talking about a potentially very big industry.

The historical uses of cannabis are well documented and many: cannabis has been used for medicine, food, fuel, paper, rope, maps, bricks, oil, paint, furniture and much more. In today’s market, in the states where cannabis has been legalized for recreational use, the primary focus of the market has become threefold, broken down into producers (or growers), processors (or labelers), and retailers. The secondary focus has become the many industries that have developed or are developing around those entities, such as real estate, agriculture, lighting, tourism, technology, research and development, e-commerce, banking and security (to name just a few).

Now once the foundation is set, combine the need and desire of entrepreneurs to raise money to fund their businesses or ideas in this space and you create a perfect storm. It is the interplay of the emerging business, fundraising and regulatory oversight which this Report is concerned. One of our primary focuses will be on companies considering ownership by individuals or entities outside of a small group in the legalized jurisdictions and will range to companies either considering to go public or that may have already crossed the divide and are public, listed and trading on the US capital markets (whether on a national securities exchange on the over-the-counter markets).

We have humbly set out to create a report that is intended to be a central place where readers can gather synthesized information about the regulatory state, development and emerging trends of this growing industry.

DURHAM, N.C., Jan. 26, 2015 (GLOBE NEWSWIRE) — Heat Biologics, Inc. (“Heat”) (HTBX), a clinical stage biopharmaceutical company focused on the development of cancer immunotherapies, today announced positive data demonstrating substantially increased tumor infiltrating lymphocytes following treatment in its Phase 1 clinical trial of HS-410 in non-muscle invasive bladder cancer (NMIBC). The data are being presented today by Taylor Schreiber, MD, PhD, the Company’s Vice President of Research and Development, during the 7th Annual Phacilitate Immunotherapy Forum 2015(1), held in Washington, D.C.

Biopsies were collected at baseline and at the appearance of suspicious lesions from all patients enrolled in the Phase 1 trial. Analysis of tumor-infiltrating lymphocytes in one patient after surgery and induction BCG (bacillus Calmette-Guerin) followed by 6 weeks of HS-410 demonstrated an approximately 70-fold increase in CD8 expression (a marker for CD8+ killer T cells) within the tumor, which was not associated with any increase in CD4 expression (a marker for CD4+ helper T cells). When this patient returned at week 21, the trend continued and an approximate 750-fold increase in CD8 was observed, without any increase in CD4 expression. This high degree of specific immune infiltrate is consistent with Heat’s preclinical findings and the known mechanism of action for its gp96-Ig based vaccines. This patient currently remains disease-free.

The increase in levels of tumor infiltrating lymphocytes appeared to correlate with the clinical response observed with HS-410. In a second patient, a non-specific immune infiltrate was noted on week 7 to be slightly increased as compared to baseline, but which consisted of both CD4+ and CD8+ T cells. This patient returned with recurrent disease at week 13, when the repeat biopsy showed no further increase in the immune infiltrate.

“HS-410 has been engineered to specifically stimulate antigen specific cytotoxic T-cells (CD8+) that have anti-tumor activity,” stated Dr. Schreiber. “Observation of a highly polarized immune response in favor of CD8+ T cells in a patient where residual disease was eliminated is encouraging, supports the mechanism of action of our ImPACT vaccines, and may represent a treatment effect. We are still evaluating many patients from the Phase 1, and in an ongoing Phase 2 study, and are hopeful to see similar responses in many more patients. We look forward to presenting additional data from this trial in the future.”

The Phase 1 trial enrolled patients who have had Ta, T1, or Tis NMIBC (tumor removed). For the open-label Phase 1 trial to assess safety and tolerability, 10 patients received 5-6 weekly doses of BCG before HS-410 administration. After BCG treatment, patients received a low dose of HS-410. Patients were given 12 weekly injections followed by 3 monthly injections. HS-410 was well-tolerated with no serious adverse events, allowing Heat to initiate its current Phase 2 trial. An interim analysis of the 10 patients in Phase 1 is expected in the first half of 2015.

PETACH TIKVA, Israel, Jan. 27, 2015 /PRNewswire/ — Can-Fite BioPharma Ltd. (NYSE MKT: CANF) (CFBI.TA), a biotechnology company with a pipeline of proprietary small molecule drugs that address inflammatory and cancer diseases, today reported it has received positive data regarding its CF602 drug candidate in preclinical studies conducted by a third party.

CF602 was tested in an experimental animal model of diabetic rats, which similar to diabetic patients, suffer from sexual dysfunction. Erectile dysfunction was assessed by monitoring the ratio between intra-cavernosal pressure (ICP) and mean arterial pressure (MAP) as a physiological index of erectile function. The ICP/MAP for the CF602 treated group improved by 118% over the placebo group. This data is similar to that achieved earlier by sildenafil (Viagra) in preclinical studies. In addition, treatment with CF602 reversed smooth muscle and endothelial damage, in a dose dependent manner, leading to the improvement in erectile dysfunction.

CF602 is a novel A3 adenosine receptor allosteric modulator, enhancing the affinity of the natural ligand adenosine to its A3 adenosine receptor.

“Our drugs, based on the A3 adenosine receptor platform, have been administered to over 1,200 patients in clinical studies and shown an excellent safety profile. We believe this has the potential to give us a huge advantage over current drugs in the erectile dysfunction market which are known to have adverse effects, hampering diabetic patients and other populations from using them on a daily basis,” stated Can-Fite CEO Dr. Pnina Fishman.

Based on positive results from this preclinical study, the Company recently announced its plans to initiate a pre-clinical development program for CF602 in order to file an investigational new drug application (IND) with the U.S. Food and Drug Administration to allow human Phase I studies for the indication of sexual dysfunction.

Can-Fite has a strong intellectual property position which includes an issued “composition of matter” patent and other pending patent applications protecting the use for sexual dysfunction. GlobalData estimates the value of the erectile dysfunction therapeutic market to be approximately $2.7 billion with few drugs in the market which include Viagra, Cialis and Levitra.