Kanabo: how childhood migraines inspired the founder of cannabis firm at centre of share price frenzy
The blockbuster launch of Kanabo paves the way for London to become a financial hub for the fast-growing medical cannabis sector, its founder said today.
Shares in the Israel-based company, which makes a vaping pen to dispense regulated doses of medical-grade cannabis extract for pain and sleep disorders, are up almost 800% since Tuesday’s IPO.
Launching at 6.5p they tripled in value on the first day of trading and closed today at around 40p, taking the market cap of the company from £23.5million to just under £150million.
The Evening Standard spoke to founder and CEO Avihu Tamir, 40, a former staffer for Accenture who launched the firm in 2016, about the IPO, the next steps - and being taught to roll a joint by a nurse.
The City has gone to pot
○ Money raised from the IPO will be invested in clinical trials and marketing before the VapePod’s planned launch later this year.It will operate on a Nespresso-style model, with the majority of revenues coming from sales of cartridges holding the refined cannabis extract.
○ Kanabo is among the first of a flurry of companies expected to come to market in London and the FCA gave the green light for medicinal cannabis groups to list in September.
○ MGC Pharma, which makes a cannabis-based treatment for epilepsy, saw its shares up 40% today having already tripled since launching last week. Cellular Goods, backed by David Beckham, also plans to float in the coming weeks.
○ Eran Zucker of Peterhouse Capital, which handled the launch through a reverse-takeover of a cash shell company, said: “The market is thirsty for opportunities. I think we will see over the next couple of months a rush of cannabis companies who see that valuation and want to come to London.”
○ The global market for legal cannabis is forecast to grow to £50bn in the next five years.
Kanabo shares have gone off like a rocket since launching on Tuesday. Are you surprised?
Anyone who said they were not surprised, I wouldn’t say they were lying, but definitely changing the truth a bit!
We knew there was excitement. We did a Zoom roadshow from Tel Aviv and in London and in seven days of meetings, we had probably had just one meeting that didn’t end up with a cheque being written at the end.
We felt at the end of the roadshow there’s something different in the market now. We were oversubscribed from the 5th day.
What is the background to the company?
I suffered from migraines since I was a kid and in 2012 my physician asked me if I wanted to try medical cannabis.
For some it helped, for some it didn’t help. He said you can try and see if it can be helpful for you.
That was my eureka moment.. there must be a better way to consume this
At that time you had eight licensed producers in Israel growing cannabis and doing patient care.
I found myself sitting with five other patients and a nurse was teaching us - and I’m not joking - how to roll cannabis cigarettes.. joints… and smoke them.
It was odd, a bit amusing. At the end of the course she mentioned that some of the patients are adding a bit of tobacco because it’s burning better.
That was my eureka moment. I thought there must be a better way to consume this plant.
I opened my first cannabis company in Israel, doing importation and distribution of vaporisers for cannabis plants. Patients were grinding the plant and putting it inside and instead of smoking were vaporising it.
By 2016 I understood while the technology was amazing we still had the problem that we are using an agricultural plant and not a proper formulated medicine. So that’s were Kanabo started. It’s my own product to help me and the people that I saw using the plant as a medicine before.
How big is the company now?
We have 10 employees as a core doing research and development. The company is focused on product development and commercialisation.
We are not owning cultivation plants, growing plants, running production facilities. All of the supply chain is conducted in factories around the world.
The plant is extracted and we use our protocols for the distillation processes so the product is being refined and distillated, some twice, another three times. You’re getting a very pure natural extract which is very refined so you actually can control the active ingredients.
That’s one of the main challenges of cannabis, how do you control these active ingredients.
How does the industry in Israel compare with the rest of the world?
Israel is unique and by far the first country in the world for research and development of cannabis.
The first THC molecule was separated and isolated in Israel in the 60s and the CBD as well. A lot of the early research was subsidised by the Israeli and US governments, that’s one of the interesting stories. And because of that, government has always seen cannabis as another growth market for research.
Nevertheless the government and the population was quite sceptical, or conservative, about the use of medical cannabis and actually prescribing it.
But everything changed the minute that the first public companies started to trade on the Tel Aviv stock exchange in the beginning of 2018. Immediately you saw a change in the conversation, the shift of mind was immediate.
Because the stories had moved from the back pages and wellness articles on research to legitimate front-and-centre stories of finance and business.
And then you saw high-profile individuals actually step into the debate.
Ehud Barak, a general in the army and former Prime Minister, became the chair of the biggest cannabis company in Israel [InterCure]. After that you had many other ministers in Israel and ex generals from the army becoming involved.
From the persepective of decision-makers and the Israeli population cannabis was spoken about in the same way as cyber security or any other growth market.
When is the VapePod likely to go on sale in the UK?
It’s on sale in Germany and the wellness CBD line is already in the UK with two distributors as a pilot program. The medical version of the device is going to be launched later this year with a prescription and a medical device certificate from the European CE [kite mark].
And that’s really the game-changer because one of the biggest problems in why we don’t see so many prescriptions of cannabis even though there is demand is because physicians do not feel comfortable prescribing a smokeable medicine.
Several physicians have told us - even the ones that believe cannabis has a lot of medicinal benefits - are saying ‘yeah, but smoking a plant is not a legitimate intake method for a medicine’. That’s the challenge the market has right now.
Why did you choose to list in London?
There is huge potential and opportunity in the UK for the government and the decision makers. There’s a huge opportunity for who is going to lead medical cannabis in Europe.
And while maybe Germany is a bigger consumer market there’s no real activity around the financial market. The business is not really there, yet. It’s going to be a massive market, we know that because we see what’s happening on the other side of the Atlantic.
The most conservative analysis is talking about a 2billion euro market in the next three to four years.. That’s a massive opportunity.
We have almost unlimited capacity to produce the device, using a huge manufacturer in China. Growth will obviously come, some organically, some probably in other strategies. The market itself is a market that is built on a lot of partnerships.
How will you invest the money raised through the IPO?
Building our marketing and sales teams in the UK and Germany, doing clinical studies: one of the key clinical studies will show viability and safety compared to smoking or a tincture, that’s going to be a unique point for the market.
Moving to the US is actually not part of the strategy, we have enough to focus on here to be the leader of the European cannabis industry.
