The Value of R&D in the Cannabis Industry

The medical community is growing more supportive of cannabis as medicine, and that support is translating into increased R&D in the cannabis industry.

Medical cannabis has been legal in Canada for nearly two decades, and yet much needed clinical research has been hampered by regulatory obstacles to plant access. Now that legal recreational marijuana is on the horizon in 2018, there is much hope that those obstacles will fade into the background as a new era in cannabis research emerges.

Eight Capital analysts estimate that Canada’s medical cannabis market value will reach $3 billion by 2024. In fact, some have suggested that as the largest legal cannabis market, Canada is well-positioned to lead the world in advancing R&D in the cannabis sector. With the spread of legalization, R&D in the cannabis sector can now be fully realized, placing Canada’s cannabis industry in an excellent position to harness the power of clinical data to further the evidence-based case for medical cannabis.

The global medical cannabis market, according to Grand View Research, is projected to reach $55.8 million by 2025. This growing demand for medical cannabis products alongside spreading legalization has led to a surge in R&D investments in the cannabis space. Recognizing the opportunity, Canopy Growth (TSX:WEED,NYSE:CGC) has established an R&D arm, Canopy Health Innovations, to its suite of subsidiaries with the intent of filing new drug applications with the FDA. Outside the industry, life science companies are also taking an interest in cannabis R&D. ThermoFisher Scientific (NYSE:TMO) has a collaborative partnership to develop a “Centre of Excellence in Plant Based Medicine Analytics” with Canadian-based Valens GroWorks (CSE:VGW) for analytical research into cannabis based medicine.

Those cannabis companies with industry leading R&D teams will be in the best position to not only advance our collective understanding of the many therapeutic uses for cannabis, but to design and produce innovative cannabis products that will set them apart from the competition.

What we know about cannabis as medicine

The cannabis plant comes in a wide variety of strains (or cultivars, to be more precise) each with their own chemical composition. The variance in these compositions comes from each cultivars unique blend of cannabinoids (including hundreds more than THC and CBD), terpenes and flavonoids — the active pharmaceutical ingredients in the cannabis plant.

Up until fairly recently, most of our understanding of how these chemical compounds work therapeutically has come from anecdotal evidence in preclinical level studies. With legalization underway, the doors are opening up to further R&D to produce cannabis products that more effectively meet the needs of patients (and recreational users, as well). “The landscape for cannabis is changing in Canada,” said Dr. M-J Milloy, a research scientist with the Vancouver-based BC Centre on Substance Use. “There are more bodies who are willing and able to fund the research necessary to understand cannabis better.”

What the existing research tells us is that cannabis and cannabinoids have a very good safety profile for medical use — without the side effects and risks of dependency associated with opioid medications — and have great potential to be developed into therapeutic products for a number of diseases. Due to their ability to work with the body’s endocannabinoid system, both cannabinoids have the potential to be broad-spectrum therapeutics in a wide range of organ systems.

Both THC and CBD have been found to reduce nausea, suppress seizures, act as anti-psychotics, and possesses anti-cancer, anti-depressant and anti-inflammatory properties. The American Association for Cancer Research found that CBD destroys breast cancer cells through programmed cell death, and CBD has also demonstrated the ability to stop the growth of cancers in the liver, brain, skin and adrenal glands.

On a lighter note, cannabis may also play a role in improving sexual health. Research has linked the main root causes of low libido to high stress, indicating that cannabis’ ability to reduce stress can in turn improve sexual health. A study published in the Journal of Sexual Medicine in 2017 found the endocannabinoid system is also involved in human sexual response and researchers hypothesize this may play a role in the reward process of sexual arousal and orgasm.

New R&D in the cannabis industry

Whether used to alleviate stress and anxiety after a long work day, enhance your sex life, or in more serious cases, to reduce the frequency and intensity of your child’s epileptic seizures or as a harm reduction strategy for the opioid crisis, we need more research into how cannabis works on these conditions, how often and how much to take, and in what form.

The end of cannabis prohibition in Canada marks a pivotal turning point in the often one-step-forward-two-steps-back trajectory of cannabis clinical research progress. While once relegated to university researchers with government approval, an open cannabis market is opening up the field of advanced cannabis R&D to cannabis companies with the technical expertise to develop innovative products for the growing medical cannabis market.

“Cannabis is a source of many potentially valuable products,” says UBC Okanagan biology professor Michael Deyholos. However, decades of prohibition has curbed the development of new cannabis products, he added. Deyholos is a member of a research team known as the Cannabis Bio-products Toolbox, a partnership between UBC Okanagan, Thompson Rivers University and Valens GroWorks aimed at breeding strains enriched with various compound combinations tailored for specific treatments. Discovering the specific medical benefits of the various compounds in the cannabis plant “requires a better understanding of the genes and chemicals already present in different strains of cannabis, and that is what this project is designed to do.”

Valens GroWorks, through its wholly-owned subsidiaries Supra THC Services and Valens Agritech, also has a clinical R&D partnership with the Bill Nelems Pain and Research Centre (BNPRC) which serves as the main referral pain centre for approximately 750,000 patients in British Columbia. “Our doctors have been prescribing medicinal marijuana as an alternative to pharmaceutical drugs such as opioids for the treatment of various conditions, including the reduction of chronic pain and PTSD,” said Dr. Paul Etheridge, BNPRC Medical Director. “It is however challenging to determine the effective combination of CBD and THC and other cannabinoids for treatment of patients and particular conditions. This collaboration provides us access to Valens’ high-level analytical testing capabilities and licensed capability to develop customized medicinal formulations from cannabis plants.”

Looking forward

For cannabis to truly be accepted as medicine, regulatory agencies such as the FDA, Health Canada and the European Medicines Agency will need to see more scientifically validated clinical research into the medical efficacy of the plant as a drug. Prescribing healthcare specialists need clinical data to be assured of the consistency, safety and efficacy of medical cannabis products. Canada’s full legalization of marijuana allows cannabis companies to take the lead in the R&D necessary to bring safe and efficacious medical cannabis products to market.

This article was written according to INN editorial standards to educate investors.