Health Intelligence Maximizing the Value of Cannabis-Based Pharmaceuticals - January 2021
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Health
Intelligence
Maximizing the Value of Cannabis-Based
Pharmaceuticals
January 2021
Company case studies presented herein do not represent an endorsement by Shift Health. Copyright © Shift Health 2020
Executive Summary
To date, a lack of robust clinical evidence has impacted the willingness of the medical community, payers and
patients to use medical cannabis, hindering the full potential of this class of medicine.
If companies with the ambition to develop cannabis-based pharmaceuticals want to maximize access and value of their products, it is critical that
evidence is generated in a strategic manner to justify health claims. To effectively orient clinical and commercial programs, leaders must consider
key strategic dimensions while factoring in the nuances of the cannabis industry, specifically:
Increasing the RELEVANCE of cannabis-based pharmaceuticals by focusing on niche segments, accounting for the potential impact of self-
medicating with ‘over the counter’ medical cannabis and considering a personalized medicine approach.
Amplifying RECOGNITION of cannabis-based pharmaceuticals among prescribers, payers and patients through differentiating and
consistent formulations, proven dosing schedules and unique, value-adding delivery technologies.
Getting to market and generating returns with utmost RAPIDITY by exploring the potential for early revenue streams and synthetic
cannabinoid production and engaging early with government agencies that have influence over regulated substances.
To differentiate products, create value and maximize access and benefit with cannabis-based pharmaceuticals,
organizations need product strategies that incorporate a pharma mindset and ultimately instill confidence among
target stakeholders.
Confidential 1
Driven by an increase in research intensity, a growing body of evidence
is more conclusively demonstrating the medical benefits of cannabis.
Anecdotally, medical cannabis has Where does Cannabis Potentially Offer Health Benefits?2
Definition Sidebar
for years delivered health benefits, Chronic Pain (e.g.
muscle, joint)
Cannabis represents a
helping individuals to manage Antiemetic for chemo-
continuum of differing products.
Seizure/
symptoms, improve quality of life induced nausea/vomiting
Epilepsy For the purposes of this report:
and, in some cases, modify the
Medical Cannabis refers to the
course of disease. Anxiety Sleep Conditions anecdotal use of whole,
The legalization of cannabis has unprocessed cannabis plant or its
basic extracts to treat symptoms of
invigorated research efforts, Dermatological illness and other conditions; and,
Depression
quadrupling research publications Conditions
in
Yet, the full potential of cannabis’ therapeutic benefit is not being
realized due to a lack of rigorous clinical studies.
Excerpts from the medical literature from leading healthcare professions
support the need for more validated claims
Lack of validated
claims “…it is still not possible to establish
“A lack of evidence … means that a treatment criterion since the
While clinical studies have physicians remain uncertain as to studies have no standardization
how cannabis can be used to treat regarding the variety and part of
expanded (with over 100
medical conditions.” the plant that is used, route of
initiated trials in 2019)1, the administration and doses.”
level of rigour does not often
meet the expectations of the
medical or regulatory
The American Academy of
community. “We need more robust and well-
Pediatrics… “reaffirmed its
designed clinical studies prior to
opposition to the use of medical
making further recommendations
marijuana outside the regulatory
to our patients on the consumption
process of the US Food and Drug
of these products.”
Administration (FDA).”
1 – Clinicaltrials.gov – search criteria for cannabis. Registered trials have increased from 31 to 101 from 2011 to 2019.
2 – With the exception of GW Pharma’s Epidiolex and Sativex. Confidential 3
This lack of evidence raises critical access and uptake barriers.
A lack of evidence on dosing, administration and use
High prescriber hesitancy parameters results in prescribers hesitant to turn to
cannabis-based pharmaceuticals.
Patients are self-educating and self-medicating based on
Low education and awareness
anecdotal evidence, resulting in sub-optimal experiences.
As a result of low-grade clinical data, many payers have
not1 integrated high-valued cannabis-based
Few reimbursement mechanisms
pharmaceuticals into formularies, forcing out-of-pocket
payments.
For these reasons, there is growing emphasis on the development of pharmaceutical-grade cannabis medicines
that conclusively demonstrates efficacy and safety in specific disease contexts.
1 – With the exception of GW Pharma’s Epidiolex and Sativex.
Confidential 4
Several companies are racing to meet these evidence expectations…
A 2019 Datamonitor report indicates over 60 companies are developing pharma-grade cannabinoid receptor
modulators for over 92 indications. A small, select list of these companies is presented below.
Company Name Company Description Example Focus Areas Market Cap (in USD)
World leader in the science, development, and commercialization of cannabinoid
GW Pharma Epilepsy, Spasticity $3.91B
prescription medicine
Zynerba Pharmaceuticals Developing transdermal, cannabis-based treatments for rare diseases Fragile X Syndrome, Autism $101M
Leading global therapeutic medicinal cannabis company with access to the Insomnia, Autism, Opioid
Zelira Therapeutics $93.48M
world’s growing cannabis markets Reduction
Vertically-integrated biopharmaceutical company developing various Dermatology, Neurology, Pain,
Avicanna $24.84M
cannabinoid-based products for the global market place Oncology, Psychiatry
Clinical-stage pharmaceutical company focused on the development of rare
InMed Pharmaceuticals Skin and Ocular Diseases $28.93M
cannabinoids to treat diseases with high unmet medical needs
Pharmaceutical company developing CBD and next-generation cannabinoids, for
Kalytera Graft vs. Host Disease, Pain $10.64M
serious human disease
Commercialization of novel FDA-compliant cannabinoid pharmaceuticals and Convulsive Disorders, Myotonic
Nexium Biopharma $5.86M
drug delivery systems Dystrophy
Others: Cymra Life Sciences, Corbus Pharmaceuticals, Emerald Health Therapeutics, MMJ International Holdings
Confidential 5
Market cap retrieved and current as of: January 11, 2021. Currency were converted to USD, where applicable.
…in an effort to not only improve health outcomes but also unlock an
attractive business opportunity.
A recent report estimates that the global medicinal Total US Cannabis Market 2020-2029
cannabis market will increase on average by 19% 120
percent every year, growing from US$8.28 billion in
100
2017 to around US$28.1 billion within five years. 50
42
Billions of Dollars
80
Importantly, the cannabinoid-based pharmaceuticals 35
30
segment is expected to be of similar size to the 60 25
20
recreational space though fewer players will take the 15 47.5 50
40 45
5 42.5
risk of pursuing these types of medicines (See chart). 2
10
33.7
37.3
40
30.1
20 26.4
23
Furthermore, the legal use of cannabis-based
therapies is expected to cost pharmaceutical 0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
companies >$4B per year according to recent Recreational Cannabis Cannabinoid-Based Pharmaceuticals
reports.
Figure obtained and modified from Ackrell Capital
Confidential 6
In order to maximize the value of and access to cannabis-based
pharmaceuticals, organizations must ask themselves key strategic questions
Is my product truly How can I differentiate
relevant to the needs my product’s attributes
of patients and health RELEVANCE RECOGNITION in a manner that will be
systems both now and recognized by payers,
in the future? Maximized systems and patients?
Access
and Value
What decisive actions
RAPIDITY will get the product to
market in as rapid a
manner as possible?
Confidential 7
Central Premise
While these questions are critical to inform the biopharmaceutical sector’s more ‘traditional’ development and access
efforts, cannabis-based pharmaceuticals bring important and nuanced considerations that warrant close attention.
In the following slides, we explore these considerations in greater detail so that leaders in the cannabis industry can
maximize the relevance of their products, the recognition of their efforts by decision makers and the speed at which they
get to market.
Confidential 8
How do we increase the relevance of our cannabis-based
pharmaceuticals?
Niche domains that address a need not filled by the existing medical cannabis or pharmaceutical markets
are likely to produce assets of greatest relevance.
Focus on underserved areas and Factor in a propensity to self- Leverage potential precision
niche segments medicate with medical cannabis medicine opportunities
Incremental improvements over For disease with less severe forms, Similar to traditional pharmaceuticals,
existing therapies are unlikely to patients may elect to independently cannabis products are not “one-size-
generate returns; indeed, direct explore alternative and less costly fits-all”—emerging genetic markers
competition with “traditional” (and medical cannabis options available are predicting patient responses to
typically more trusted) products through dispensaries. For this reason, cannabinoids and may allow for
should be avoided, where possible, by areas where vulnerable patients and customized treatment in the future as
focusing on non-responsive, drug- prescribers demand a robust body of healthcare paradigms shift in this
resistant patient segments, domains evidence to instill confidence and personalized direction.
that have witnessed a dearth of reliance on a particular product should
innovation, and populations seeking be prioritized.
alternative solutions.
Confidential 9Case Studies: Relevance
Focus on underserved areas and Factor in a propensity to self- Leverage potential precision
niche segments medicate with medical cannabis medicine opportunities
Zynerba Pharmaceuticals has Kalytera is investigating the use of CBD Lobo Genetics has developed a
strategically prioritized rare and near- in Graft vs. Host Disease that can occur personalized test that provides an
rare orphan diseases, such as Fragile X after bone marrow transplantation; given individual with an assessment related to
Syndrome and Developmental and the serious and life-threatening their sensitivity to psychoactive
Epileptic Encephalopathies (DEE), condition (currently treated off-label with properties of THC, propensity to
where no (or very few) FDA approved corticosteroids), Kalytera can drive experience short-term mental health
products exist; the company is carefully health care professionals and patients effects such as anxiety and degree of
characterizing the patient journey to to their specific cannabis products if memory impairment in addition to the
foster improved management and care they were to demonstrate efficacy for length of time an individual will take to
of pediatric populations and build trust in patient populations while medical process and excrete CBD.
its product. cannabis CBD options are likely to be
ignored.
Confidential 10How do we increase recognition for our cannabis-based
pharmaceuticals?
Cannabis-based pharmaceuticals often share a similar “Active Pharmaceutical Ingredient”; beyond the clear need
to demonstrate beneficial health outcomes, products could differentiate themselves further in areas such as
formulation and dosing to increase recognition.
With over 100 cannabinoids and Efficacy/Beneficial Outcomes
Recognizing known quality
complex terpene profiles associated issues with cannabis obtained
with health benefits, innovators must Applicable through dispensaries,
Acceptable
Formulation
carefully select the cannabinoid Safety Profile innovators can build trust
profile that will deliver the best health among stakeholders through
Dimensions of
outcomes for a target population. Value-based Relevant Patient rigorous manufacturing
Recognized
Pricing Populations conditions and evidence-
Product Profiles based dosage schedules
Proprietary delivery technologies
tailored to a patient’s day-to-
can be attractive approaches to Useful Tailored
Dosage
day reality.
creating unique IP but must be Technology
considered in the context of the Combos
“…artisanal and other
disease management paradigm Reliable Manufacturing
commercially available products
and value to patients. and Convenient Storage
are currently not well controlled.” -
- Bruria Ben-Zeev, M.D.
Confidential 11Case Studies: Recognition
Emerald Biosciences has chemically
modified THC with more water soluble Efficacy/Beneficial Outcomes
Given that evidence indicates
entities in order to reduce viscosity and
CBD dose-response curves
increase penetration into the eye in an Applicable
Acceptable can be bell-shaped, GW
effort to lower intraocular pressure for Formulation
Safety Profile Pharma delineates an
patients with glaucoma.
evidence-based titration
Dimensions of
Value-based Relevant Patient schedule with its high-quality
Recognized
Pricing Populations Epidiolex, which garnered
Product Profiles trust among stakeholders
Botanix has licensed a novel leading to an inaugural launch
Useful Tailored
transdermal drug delivery technology Dosage
year with $296M in sales and
Technology
(Permetrex) which was acquired to payer coverage for 97% of
Combos
deliver cannabinoids more effectively insured US patients.
Reliable Manufacturing and
through the skin for patients with
Convenient Storage
dermatological conditions.
Confidential 12What decisive actions will get the product to market in as rapid a
manner as possible?
The unique cannabis market offers innovators creative business options that derisk development and accelerate
time to revenue, though unique requirements must also be tackled as early as possible to avoid delays.
Manufacturing Scale-Up
Pre-clinical Phase I Phase II Phase III Registration Launch
Early Revenue Streams: Characterized Safety Synthetic Cannabinoid Cross-Agency Alignment:
The existence of the more Profile: While not universal, Options: Despite potential Like other Schedule I drugs,
traditional medical cannabis the long history of cannabis trade-offs related to the innovators will have to
markets allows innovators to use allows innovators to entourage effect, synthetic engage agencies such as
launch products and gather confidently proceed through cannabinoid manufacturing the DEA in order to
real-world data in parallel to Phase I trials, particularly for (e.g. in yeast) offers rapid accelerate approval and
the longer-term, clinical non-psychoactive scale-up at lower cost. launch success.
research efforts. cannabinoids.
The ‘entourage effect’ is an hypothesis purporting the “whole is greater than the sum of the parts in that greater medicinal efficacy results from the delivery of a
combination of the cannabinoids and terpenoids” vs. single, purified chemicals. Confidential 13Case Studies: Rapidity
Manufacturing Scale-Up
Pre-clinical Phase I Phase II Phase III Registration Launch
Zelira Therapeutics is Academic investigators at InMed Pharmaceuticals The FDA mandates that
executing a ‘Launch, Learn McMaster’s Centre for has developed a protocols to conduct clinical
and Develop’ Medicinal Cannabis Research proprietary e. coli based research with cannabis
commercialization model conducted a review of CBD’s platform that produces a extracts (i.e. controlled
where the company sells safety profile and deemed rare cannabinoid (CBN) at substances) require site-
products through medical that low doses had minimal a fraction of the costs of specific DEA investigator
dispensaries and gathers safety risk and even high plant extraction, allowing registration that may limit
patient data to inform its doses were associated with for rapid scale up of clinical participation of individuals
clinical programs. only minor adverse events. grade materials. or institutions in trials.
Confidential 14Conclusion
By applying a pharma mindset that increases the relevance and recognition of efforts as well as speed to market,
innovators can maximize the value of cannabis-based pharmaceuticals for patients, prescribers and payers.
Requirement: To create and evolve a
Requirement: To define the RELEVANCE RECOGNITION target product profile with distinguishing
most promising patient attributes and a value proposition that is
How can I
segments with high unmet Is my product truly differentiate my customized to the disease needs in
needs, prioritize niche relevant to the needs product’s attributes order to build trust among stakeholders,
of patients and health in a manner that will
segments and factor in the systems both now
drive customers to a specific cannabis
be recognized by
potential for “over the counter” and in the future? payers, systems
product and offer beneficial experience
use of medical cannabis Maximized and patients? and outcome for patients.
obtained through dispensaries. Value
Requirement: To strategically prioritize
RAPIDITY commercialization options that may present
What decisive actions opportunities for early revenue streams while
will get the product to derisking development by leveraging the
market in as rapid a existing knowledge base and experience with
manner as possible? cannabis and coordinating stakeholders early in
the process.
Confidential 15About Shift Health
Confidential 16Overview of Shift Health
Shift Health brings a science mindset to strategy consulting for the health research and innovation ecosystem.
We blend scientific depth, sector leadership and global perspective,
tackling our clients’ most challenging questions with curiosity, rigour and courage.
Rigorous Creative Collaborative
We approach questions with Our clients are unique, and we We invite our clients to view us as
discipline and clarity, generating design innovative approaches peers, committed to achieving a
meaningful, evidence-based and original solutions that reflect shared vision of success.
insights that our clients can trust. our clients’ specific goals,
questions and contexts.
Delivering sharp insights and customized solutions, we’re helping to create the future of healthcare.
Confidential 17Our Team
The experience and expertise of our team enables us to deliver comprehensive, original,
evidence-based strategies that generate results.
>85 years of collective strategic health research
and innovation consulting experience
100% of our team has an advanced life sciences
degree, 93% at a PhD-level
Confidential 18Our Sector Expertise
Resolutely focused on serving the health research and innovation ecosystem, we work with leaders from
Government, Academia, Industry, Not-for-Profits and Care Providers on complex strategic initiatives that move
ideas, knowledge and technologies from concept to impact.
GOVERNMENT NOT-FOR-PROFIT
CARE
PROVIDERS
ACADEMIA INDUSTRY
Confidential 19Service Offerings
Corporate Strategy Research Strategy Product Strategy Opportunity Assessment
Planning for organizational growth Research leadership in the context of Positioning development programs Life sciences investment analysis
and leadership scientific and technological change for commercial success
Policy Strategy Partnership Strategy Program Evaluation Proposals + Pitches
Creating a policy environment that Development and management of Performance and impact Investment attraction for strategic
supports innovation R&D alliances assessment initiatives
Confidential 20Track Record Highlights
20 300+ $2B+ 50+
YEARS R&D
CLIENTS RAISED
supporting health PARTNERSHIPS
across the health to support health R&D
research and successfully
ecosystem efforts
innovation globally implemented
Confidential 21Shift Health®
162 Cumberland Street, Suite 310
Toronto, Ontario M5R 3N5
Canada
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