Sat | Feb 29, 2020

Lowe gets backing from Canadian company

Published:Wednesday | November 7, 2018 | 12:00 AMSteven Jackson/ Senior Business Reporter
Research scientist Dr Henry Lowe.

Flavocure LLC, a drug company founded by Jamaican scientist Dr Henry Lowe, now has a fresh injection of capital from Canadian firm Atlas Biotechnologies Inc, which has taken a 20 per cent stake in the operation.

Atlas has paid US$5.75 million for the stake in Flavocure, a US-registered company, which values Lowe's outfit at some US$29 million ($3.7 billion). Flavocure is one company within the Eden Gardens Group of Companies held by Lowe.

"This investment in Flavocure by Atlas validates the view that Jamaican science and technology is as strong and viable as anywhere in the world; and can stand up and compete globally, once there is support," said Lowe on Monday.

Atlas is part of a legal marijuana outfit, whose partnership with Flavocure will bring its pharmaceutical drugs to market. The company has already made progress on one drug, Cresorol, which last year got approval as an orphan drug for cancer treatment. That designation allowed Flavocure to proceed with plans to commercialise the drug.

Lowe has long said the real value of medical marijuana was in pharmaceutical drugs, rather than therapeutic or recreational oils.

Atlas will acquire the 20 per cent stake in Flavocure via a share swap, accompanied by an investment of US$500,000 in the company.

Flavocure plans to seek another round of equity financing next year, which it will utilise, alongside an expected inflow of grant funding, to advance its research efforts on treatments for three target cancers.

"Their FDA orphan drug designation for the treatment of Acute Myeloid Leukaemia, combined with their attractive oncology pipeline, made them an obvious choice for collaboration," said Atlas CEO Sheldon Croome in a statement about the acquisition.

"We intend to jointly develop specialised cannabis cultivars to further unlock the potential of targeted flavonoids in medical research," he said.

Atlas recently raised CDN$25.6 million in equity, including CDN$7.6 million related to acquisition of land and other investments, and also has CDN$6.25 million bank term loan as a revolver for future use.

The FDA's orphan drug approval indicates that there are upwards of 200,000 patients with the condition that the drug is intended to treat. However, drug commercialisation is usually a yearslong process. Lowe previously indicated that the development of Cresorol in its current state could fetch anywhere from US$15 million to US$50 million for its intellectual property.

Flavocure has also developed two other therapeutic molecules, which use cannabis flavonoid derivatives in the treatment of aggressive forms of cancer - pancreatic and brain cancer.

The company was founded in 2015 by Dr Lowe and the company's CEO, Dr Ngeh Toyang. The lab is one of three science-based institutions developed by Lowe for the purpose of cannabis research.

Flavocure will need more funds to develop its drugs, which Lowe indicated will be sourced through different means. But he declined to comment on what avenues are being pursued until Atlas and Flavocure's principals finalise their decision.

"We will say more at a later date," he said on Monday.

As before, he was critical of both the Jamaican government and local financial houses for not backing operations like his that are focused on R&D.

"We need to have a national research and development and innovation fund to take viable scientific and technology innovations to go forward," he said.

He outlined three methods that could be used to seed the fund: a percentage of the annual grant funding from international donor agencies; a portion of the unclaimed funds in banking system, also referred to dormant funds; or private sector injections, which would receive tax breaks for R&D investments.

"We need a $1 billion fund to start and it would not be driven by the strictures of the banking system but managed by a committee of public, private sector stakeholders along with representatives from international agencies," Lowe said.