ZLD 4.11% 70.0¢ zelira therapeutics limited

Richard Hopkins interview transcript

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    I thought I would repost my transcript of the Q&A Session with Richard Hopkins (link in other thread), seeing as we probably have, or will have, several new holders on board. Great result today - I topped up after listening to this interview (and typing it up) yesterday, since it reinforced my excitement about Zelira's prospects.


    Several points supported my investment in Zelira: clinical trials, patents (RH: ‘It will be Armageddon for everyone else’), international reach and experience, multi-product launch strategy, speed of execution since revealing that plan (RH: ‘5 products launching in the next 3 months’).


    Today showed the reaction when a product is launched. Given we have the sports injury study going on and we are in with 7 News, I expect to see more news segments coming up in the near future. With progress in the US and Germany to follow, there is going to be a lot of attention on ZLD. The Autism Advocacy groups are a strong voice, as we have seen already with them being discussed by other MC companies. Insomnia sufferers also are great advocates for a solution like what we have.

    … Please forgive errors as some bits were unclear (see my (?)) …

    Interviewer: What do you see the medicinal cannabis market in Australia looking like in the next few years?

    RH: …it’s continued to grow at an extraordinary rate, at 100-300% annually. Based on the numbers coming out of the USA I think we’re going to maintain that rate for the foreseeable future. So I think we’re going to be well north of one or two, three hundred million dollars in valuation over the course of the next few years. And so getting a front line position as that market expands is going to be critical to I think returning value to shareholders.


    Interviewer: When you are looking to launch those two products in Australia, is that going to be in select states, or country wide?

    RH: Absolutely country-wide.


    Interviewer: Why Pennsylvania and Louisiana specifically?

    RH: So Louisiana was actually the home base of Zelira (?) Healthcare where that opportunity stemmed from. It’s a very large state in the United States, so it proved a fantastic testing ground to demonstrate just how effective that launch strategy can be. Within its first year it’s had incredible success for such a niche market. It’s arguably the best selling product line in Pennsylvania at the moment, generating millions in revenue each year, for again a niche market. Shows you the appetite there is for that. And I think they’ve taken a significant share of the autism market per se, so that Model T4 that they’ve established there is the concept that we are going to roll out across the US. It’s been really successful.


    Interviewer: A similar question – why Germany was chosen as a market as well?

    RH: Germany is interesting – it’s very difficult to get into. The Germans are Germans. And I think they’ve had some unfortunate experiences with the Canadians moving in initially, but Australia is very well positioned. We’ve got a mutual recognition agreement in place, which allows all of our products to move, potentially, into Germany. It’s a very high margin market, fully reimbursed, and arguably the best profits in the world can be achieved in Germany, so that’s a very critical place. But it resembles Australia in terms of its medical standards, so we’re really well-positioned …


    Interviewer: Can you elaborate a bit more on the aged disorder products launching in the second half 2020?

    RH: Yes, I didn’t get a chance to mention it, but we formed a ..?... announced a strategic partnership with the Parkinson Foundation, which is the largest Parkinson’s group in the world … and the intention there was to survey their membership base to understand their use of medicinal cannabis, much like we’ve done with Autism, we’re going to the community to learn how they are actually using products. That information is going to be used to develop formulations that we’ll come back to that market with, so we already have a pretty good idea that there will be utility and therapeutic effect because they have told us those formulations work.


    Interviewer: Can you provide a quick snapshot of the upcoming clinical trial milestones?

    RH: Yeah. So you’ll hear some news coming out from one of our partners where we are going to be launching a sort of observational trial format for both the insomnia and also the autism products. That’s going to be that learn part of the equation. And then we’re going to be using that information to inform the design of clinical trials for both Insomnia and Autism in Australia at some point next year. And what we’re really about there is trying to get ourselves on a path to formal registration which is the market really expanse for us. Again, generating revenues to fund your trials, where you’re derisking them. It’s a very exciting concept.

    Interviewer: And your key challenges that you think you might face in the next year?

    RH: I think it’s education. It’s still developing the data to bring conservative medical practitioners around to the idea that there’s no stigma attached to cannabis, you just need to treat it as a drug. And to be fair to them there’s been a lack of data to support that if you like movement into the more conventional mainstream. But I think we’re well-placed to crack that space open. The other one is cost. Cannabis cost. You pay out of pocket. So we’ve got to find a way to get the reimbursement dealt with in this country.

    Interviewer: Are these prescription medicines or over the counter?

    RH: There is no over the counter cannabis, medicinal cannabis, available in Australia and there won’t be for the foreseeable future. So we’re absolutely prescription based.


    Interviewer: and that’s in all markets?

    RH: In virtually all markets around the world, it’s the same.


    Interviewer: There’s a lot of talk around uncertainties on long term effects of cannabis. I.e. we are solving one aspect but creating a separate issue potentially. And how do you ensure that supply remains consistent.

    RH: You’ve got to be careful when answering any comment around that because a lot of the studies which have come about the long-term use of cannabis have come from the recreational market, where people are smoking bongs and joints and vaping and all sorts of bits and pieces and you have got no control of the dose and you have no control over the drugs they are taking, so they are often in environments where there is a lot of harm being dealt to them anyway. Cannabis unfortunately gets stigma attached to it. What we are talking about is medicinal use, where the dosages are much much lower, and I think the jury is still out on long-term use, but as with any other medicine, if you are not abusing them, using them at the right doses, then you can mitigate the side-effects. And I think all of the results from our clinical trials support the fact that if you use these medications properly, there are minimal to no side-effects. So we will study that, but I think you need to separate out the recreational market from medicial.


    Interviewer: How do you ensure that suppliers remain consistent?

    RH: There’s going to be a glut of medicinal cannabis flower and product as it gets commoditised right around the world. So input sources for us are going to be plummeting, so our cost of goods will come down, but there’s going to be lots and lots of material for us to be able to work with. So TasAlk are a fantastic supplier, they are not going to run short of cannabis, but we might look in due course to setting up supply agreements with other groups around the world, just to give some redundancy to the system. We don’t need that many – one or two is all we need.


    Interviewer: As a follow up to the prescription question, if it is prescription, you have to have doctors prescribing it. Do you think there is a system take up there?

    RH: Absolutely, that’s like the system that is expanding rapidly in Australia right now, that’s predicated purely on that basis, so you’re talking about 50-60,000 SASB scripts getting written each year in Australia. Australia to its credit has set up a really efficient system and continues to improve upon that to make that process easier and easier. … The regulator should take a lot of credit for what they have done.


    Interviewer: Why did you decide to launch a CBD toothpaste – it seems to be quite diverse to the other products you have got?

    RH: Well, it still falls under the cannabis banner, so it’s still within the wheelhouse of what we understand the market to be, but in the United States and the UK and Germany it’s a much faster path to market, we don’t have the requirements we do here, so it just represents another revenue stream. We have partnered with the group we are working with have already established the distribution networks, so we are just tapping into that. They didn’t have the CBD formulation experience – they did have experience with the formulation of toothpaste, so we thought it was a really efficient use of our capital to work with these guys and streamline the process of hitting the market. It complements what we are doing on the prescription side.


    Interviewer: How would approval of medicinal cannabis at the federal level effect Zelira’s business model and would Zelira’s strategy be the same?

    RH: We don’t care either way, to be honest. The licensing model works, but we are equally excited that when the federal government changes its position, and it will, we think in the next 18 months you will see. There is a lot of legislation coming through. We are perfectly positioned because what happens when federal government changes its laws is it gives oversight to the whole sector to the FDA and the first thing the FDA will ask is, “Where is your clinical evidence to support the use of your products?” Remembering in the United States they can’t do clinical trials because of that federal prohibition, so products such as ours, which are clinically validated in one of the best jurisdictions in the world will put us at the forefront of that sector. It will be Armageddon for everyone else and I think a lovely situation for us. So we’re pretty excited about either prospect.


    Interviewer: And the launch strategy for Zenivol and Hope in Australia?

    RH: They are slightly different markets, so for Zenivol because that’s an insomnia product which GPs will understand we are really targeting conventional GP practices and we are interested in the 97% of subscribers who are not currently prescribing cannabis and we are coming at them with ostensibly another drug, which just happens to contain cannabis. So we think that language works. For autism it’s a little bit different, because there’s such an active space from community groups and it’s a specialist orientated play. A lot of this will be community driven, because the unmet need is so great and the impact on quality of life is so profound. We are working with community enterprises, advocacy teams as well as specialist, so it’s a more sophisticated approach. But we’re excited that the feedback that’s coming back to us is that this is going to be taken up pretty rapidly.


    Interviewer: Which product has the highest margin and what is the average margin across the other products?

    RH: We are not disclosing margins at this point. I’ll tell you that Hope has a better margin than Zenivol. Zenivol is customised and that’s the point – you are not able to recreate this, so no peer or competitor can easily create the formulation we have. That means we really have to get to volume before we really start to capture the upside in COGS, but that will come, and then as we improve the manufacturing process we think the margins will come very quickly back to that product. For Hope it’s a much more conventional format, but that hits the market with a beautiful price point as well, so we’re really excited that one will return a lot of value right from the get go in terms of the company.


    Interviewer: Any plans or timelines on Phase 3 trials for Zenivol

    RH: So here’s the crafty thing – that Australia by virtue of its regulatory system allows us to collect data from real-world environments, which can potentially surrogate for some forms of clinical trial. They don’t replace, but they can surrogate for. So our idea is to use that to accelerate the path to Phase 3. So that’s absolutely core to our strategic thinking, but the launch program allows us to generate revenues and still fast track to that Phase 3 state. So we’ll articulate that more as we start to collect the data, but that’s the intention. We are absolutely on the path to registration. And similarly for Hope, by virtue of the fact that we can launch, we ostensibly are doing a Phase 1 and then we can go straight to a Phase 2, so we’ve already designed a trial. It’s just a question of when we elect to do that.


    Interviewer: Back onto Zenivol – is that patented?

    RH: Absolutely – everything in our company is patented. We are like a biotech.


    Interviewer: What are your key priorities in the next 12 months?

    RH: Very much focussed on that … 5 products launching in the next 3 months. It’s incredibly (?) see the whites in my eyes to see where it’s come from (?) Look we are really on track, I think what’s amazing is that we only announced the results from the insomnia trial in April / May and 4 or 5 months later you are launching a product. It’s insane. That’s how disruptive cannabis is. So that’s really our core focus at the moment. All the pieces are in place, we just want to execute on that strategy and do it really well. Our US colleagues are working equally hard on licensing those products in the US, but also launching their two products in the US markets over the next few months. So really that’s the core focus.

 
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