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@Dana2801

High hopes for medical marijuana trials

• THE AUSTRALIAN
• OCTOBER 23, 2015 12:00AM

“So would you want to buy shares in Johnnie Walker when prohibition ended? Of course you would.”
That’s how would-be dope mogul Andreas Gedeon puts it when asked about the potential to develop an industry around medical marijuana.
The hopes of Gedeon and other entrepreneurs trying to grow a legal pot industry in Australia got a fillip last week with Victoria announcing it would establish the groundwork for a medical cannabis supply chain and eventually begin to allow the drug to be used for certain types of patients.
The commonwealth has since declared it won’t stand in the way of states’ efforts to legalise medicinal cannabis.
Victorian Premier Daniel Andrews became convinced of the efficacy of using cannabis products for certain conditions through meeting children suffering severe epilepsy, and their parents, while he was opposition leader.
Last week he announced the government had set in train the legal and regulatory processes to get an industry off the ground to treat these 450 or so patients from 2017. Eventually the approval is likely to extend to tens of thousands of sufferers of chronic pain or conditions such as HIV-AIDS, multiple sclerosis and cancer.
With clinical trials beginning in NSW into using cannabis products to treat childhood epilepsy (and to treat pain and nausea among chemotherapy patients and those with terminal illnesses), and rhetorical support from the federal government, suddenly the climate seems to have changed towards medical marijuana.
It is a development that mirrors what has happened in Canada, which is in the grip of a so-called “dot bong” boom amid rapid expansion of medical marijuana, with a swag of new firms emerging on the Toronto stock exchange.
A minor version of that is already occurring here, with three listed companies aiming to cash in on the global move to medical marijuana. Gedeon heads MMJ Phytotech, a $43 million market capitalisation cannabis hopeful.
The company made headlines for all the wrong reasons last year when chief executive Ross Smith exited following a scandal over threatening postings on social media. Smith says the postings, which talked about using military weaponry and paying an online critic a “visit”, were the work of malicious hackers, but departed nonetheless.
That hiccup is all in the past, says the company, with some new directors and Gedeon, a former German army officer, at the helm. He warns the Canadian experience shows it pays to tread carefully for investors.
“There were mining companies turning into marijuana companies. There were a lot of shysters coming through. It got really messy,’’ he says. “The world is full of companies that have great plans, but we are actually walking the walk. The hype around medical marijuana is not industry-driven — it comes from the demand from people wanting to try it because just smoking a joint already helps so many people.”
Cannabis has been legalised for medical use in more than 20 US states, Canada, Israel and several European countries.
The stock price of MMJ — which is manufacturing cannabis pills in Switzerland and selling them in the EU and also has operations in Canada — was bumped up this week, but at 37.5c is down from its high in January of almost double that.
For those who grew up watching Cheech and Chong films, there is always some humour that bubbles to the surface when writing about legalisation of marijuana in any form. But in this case, those setting the ground rules are keen to make this a sober debate about medical issues. It is an approach that seems to be working.
In Victoria, the main tabloid paper — the News Corp Australia-owned Herald Sun— and the opposition are supporting the government’s move, which has been closely aligned with the plight of preschooler Cooper Wallace and his parents.
Suffering treatment-resistant epilepsy and cerebral palsy stemming from a bacterial meningitis infection, the wheelchair-bound Cooper relies heavily on cannabis oil to stave off his seizures and retain quality of life.
Under threat of police investigation, his parents — Rhett Wallace and Cassie Batten — have to risk obtaining materials from unregistered suppliers, where the potency and effectiveness may vary.
Accompanying the family at a press conference to announce the reforms last week, Andrews said the initial move would allow treatment by 2017 of the 450 children in the same predicament as Cooper.
With medical approval, it likely would be extended to those in chronic pain and people battling MS, HIV-AIDS and cancer.
In line with suggestions from a Victorian Law Reform Commission report, the government initially would grow and harvest the first crops but later would license private growers and hand over the rest of the supply chain — processing and dispensing — to approved private providers.
With automotive manufacturing poised to wind down, Andrews, under pressure to generate jobs, has made no bones about what he sees as the economic potential of a cannabis industry in Victoria along the lines of the opiate poppy industry that operates in Tasmania and now in Victoria to supply the world morphine market.
But while poppies are grown and controlled in ways that minimise the effects that make them attractive to drug users, that won’t be so easy for marijuana crops. Securing the supply chain from criminal elements or recreational users will be a much tougher task.
In NSW, Premier Mike Baird is not eyeing the commercial potential of cannabis but has declared himself a supporter of its use for treating a range of conditions.
“Why are these people, who are in the fight of their lives, why are they undertaking pharmacy in their back yards?” he asked earlier this year when launching the first clinical trials of medicinal cannabis in Australia.
“Why don’t we get the best minds in the country to see whether they can solve this and let those with terminal illnesses spend time with themselves and spend time with their family?”
The trials will test cannabis products’ ability to treat symptoms including fatigue, loss of appetite and insomnia among terminally ill patients, well as children suffering severe epilepsy. “It will involve increasing doses of drug and measuring levels in the blood and linking those levels to patient benefits or side effects,” says University of Newcastle chair of clinical pharmacology Jennifer Martin.
Victoria and Queensland are now co-sponsoring these trials.
Last weekend the federal government came to the party, announcing it would amend the Narcotic Drugs Act to allow cannabis to be grown for medicine or science and to ensure Australia was not in breach of international drug treaties.
Health Minister Sussan Ley said she had been moved by the stories of sufferers for whom cannabis brought relief and the commonwealth did not want to stand in the way of helping desperately ill patients.
While stoners have long extolled — and embellished — the health benefits of marijuana, experts say recent research has finally established the positive effects of cannabis for certain conditions.
“There are three groups who are going to benefit from this,” pharmaceutical chemist Nial Wheate says.
“People who are suffering very severe seizures — we have seen lots of evidence there that cannabis is very good at reducing the severity and prevalence of them.
“The second group is people who are in chronic pain; and the third group is people undergoing chemotherapy, who are often battling reduce appetite and nausea.”
Wheate says the evidence is clearest when it comes to seizures and less so on pain relief, as this is notoriously hard to measure.
“Still, I agree with the premise that there is enough evidence there to warrant doing clinical trials,” he says.
The University of Sydney chemist agrees there are side effects, including psychological ones: “We know that long-term use affects cognitive capacity and that people who smoke cannabis long term tend to have the same respiratory problems as smokers.”
But he says the risks need to be balance alongside the alternatives, which for pain relief are opiate drugs. These can be addictive, he warns, and leave users vulnerable to overdose. He doesn’t consider cannabis addictive for short-term users.
“There are studies in the US where users have swapped opiates for cannabis and there have been less overdose deaths and similar efficacy,” Wheate says.
The two biggest problems — in Wheate’s eyes — will be smoothing the enormous variations in potency of cannabis crops and convincing pharmacists to be involved in dispensing marijuana, given it will involve greater security, storage needs and potentially significant red tape.
Australia’s version of the dot-bong boom may be a bit more sedate than in the US, where, to the chagrin of the federal Drug Enforcement Administration, four states — Alaska, Colorado, Oregon and Washington state — and Washington, DC, have legalised recreational marijuana use.
That has seen big money from Wall Street flow into the dope business: Seattle has become the headquarters for a new breed of marijuana mogul, many of whom are preppy Ivy League types who would never confess to have puffed on a joint but see big potential in legally capturing a share of the $40 billion a year illicit dope trade in the US.
In Denver, the local paper has its own pot critic; marijuana dispensaries now outnumber Starbucks outlets.
There may not be as much at stake in the more limited market envisaged in Australia, although Canada experienced a surge of corporate activity around its moves to approve medical marijuana last year.
Legislative changes needed to establish a medical industry in Australia are likely to take at least a year.
In the meantime, expect any loopholes to be exploited. Last year an Australian company, chaired by former federal MP and doctor Mal Washer, found a way to sidestep Australian export bans on cannabis crops by opting to grow and ship its wares from self-governed Norfolk Island. That has hit a snag: the licence granted by the island’s parliament has been called into question because it was issued after federal parliament passed laws ending self-governance on Norfolk.
Amid the growing noise about local listed marijuana plays, one leading watcher of small-cap medical stocks warns that the sector — although tiny — is already badly overhyped in the same vein as investments in agricultural managed-investment schemes, ostriches and alpacas have been in the past.
He says the technology is nothing special and the market size in Australia too small to create any scaleability, and there would be considerable costs to meet manufacturing and regulatory standards.
“This stuff is never going to be exported over state lines and everyone knows governments are going to tax the shit out of it,’’ he says. “I would say that a good-sized Melbourne fruit and vegetable stand does a better business.
“It’s a medium-value, high-regulation crop. You have to ask: why would you want to be in the publicly listed space unless you are just sucking people in? There is no shortage of private equity financing out there for agribusiness.
“There are certain types of stories that appeal to retail investors, I suppose.”
In his view, notions of Australian marijuana companies playing a role in the real economy are simply pipe dreams. These may be stocks for the seriously deluded rather than serious investors.
But for young Cooper and fellow sufferers of treatment-resistant epilepsy there is more than money at stake: it is a matter of life and death.