Orange County, which is known for its concentrations of medical device makers and drugmakers, is quietly building a medical cannabis industry.
Medical marijuana has become more popular in recent years as researchers have found that its active ingredients, including tetrahydrocannabinol, or THC, are beneficial in fighting cancer and neurological and ophthalmic conditions.
Costa Mesa-based Nemus Bioscience Inc. is taking on a large market with its drug candidates, which are developed from therapeutic molecules found in cannabis plants.
The company’s NB1111 drug candidate targets glaucoma, which affects about 3 million American adults and is a major cause of blindness.
“These molecules are called cannabinoids,” said Dr. Brian Murphy, Nemus’ chief executive and chief medical officer.
Nemus is working to re-engineer the cannabinoid molecules into therapeutics “that are essentially optimized for safety and efficacy,” Murphy said.
Therapies would be administered by various routes, depending on the disease, he said. Nemus would seek a partner for glaucoma applications to develop such products as eye drops or an implantable device.
Other possibilities include buccal patches—which are inserted into a patient’s mouth and allow for faster drug delivery through bypassing the gastrointestinal tract—or transdermal patches placed on the skin.
The company has one product for which it plans to seek Food and Drug Administration approval through the agency’s 505 (b) 2 designation: a prodrug of Marinol, an already approved medication for treating chemotherapy-induced nausea and vomiting. Prodrugs become active once metabolized.
“Ideally, in the best of all possible worlds, we would ultimately hope to qualify for a drug approval in a matter of 20 months to 24 months as opposed to years of development,” Murphy said.
Nemus plans to seek out larger drug or biotechnology companies to help commercialize its therapies, he said. The company’s pipeline also includes compounds for multiple sclerosis spasticity, anxiety and epilepsy.
It licensed its development technology from the University of Mississippi in Oxford, Miss.
Ole Miss is “the only entity in the United States that can legally grow, cultivate and study the cannabis and cannabinoids autonomously by virtue of the license awarded by the federal government,” Murphy said.
Nemus works with the FDA and the Drug Enforcement Administration on regulatory matters.
Murphy said its activity isn’t directly influenced by the “California Control, Regulate and Tax Adult Use of Marijuana Initiative,” which would legalize recreational use of marijuana and hemp if voters adopt it in November.
“I don’t expect it to have a profound impact on what we are doing. We are developing drugs for medical conditions,” he said, adding that when cannabinoids are developed into drugs, they are more likely to gain insurance coverage.
Nemus, which is traded on the over-the-counter bulletin board stock exchange and had a recent market value of $10.2 million, has a local heavy hitter on its board in Vice Chairman Douglas Ingram.
Ingram, who spent roughly two decades at Allergan Inc. [now Allergan PLC, see related story, page 1] now is chief executive of Irvine-based Chase Pharmaceuticals Corp., which is developing drugs to treat central nervous system conditions.
Ingram’s time at Allergan included serving as the drugmaker’s president under the leadership of former Chief Executive David Pyott.
“He brings a lot of credibility,” Murphy said.
Cultivation Control
Cannabis Science Inc. is another publicly traded company that’s calling OC home for now, having moved its corporate headquarters to Irvine in June from Colorado Springs, Colo.
The company is publicly traded on the low-profile Pink Sheets exchange and has a market value of about $28.6 million. It’s developing cannabis-based treatments for skin cancer, HIV/AIDS and neurological conditions.
Cannabis Science is negotiating for a laboratory and medical treatment center in Los Angeles, which was one of the reasons for the move.
It said last month that it was in the final stages of transferring ownership of a 20-acre cultivation center in Northern California and starting indoor and outdoor cultivation and production on the land.
Having the cultivation center and laboratory “allows us greater control of our operations and proprietary formulations,” said Chief Executive Raymond Dabney in a news release.
Cannabis Science “will be able to bring new concepts from seed to consumers’ hands much faster now because we will be directly expanding our cannabis supply,” he added.
The company may not be part of the OC medical cannabis scene for long. Executives have said its local headquarters is temporary and that the company is likely to land permanently in the Washington, D.C., area.
Farm Operation
Irvine-based Cultivation Technologies Inc. is taking a different path from that of the companies developing cannabis-based therapies.
The privately held company plans to build a 6-acre cultivation campus in the Inland Empire town of Coachella, which is roughly two hours by car from Irvine. Cultivation Technologies’ campus will encompass 111,500 square feet and include four cultivation centers, two manufacturing facilities, a testing laboratory, distribution arm, transportation hub and pharmaceutical office.
“[We are] a company that supports the cannabis industry through the creation of infrastructure. Primarily in this case, we are talking about the development of our first cannabis cultivation campus,” said Chief Marketing Officer Fred Heim.
“We do not grow the actual product. What we do is we build the facilities [and] put the equipment in place, and then we have lessees that actually use the facility and the equipment,” he said, adding that the business model is similar to that of alcohol, in which a producer turns over its inventory to a distribution company.
Cultivation Technologies chose Coachella to develop its campus for several reasons, including a receptive city government, according to Heim.
“The mayor [Steve Hernandez] was very progressive. He saw that the tide had shifted and that cannabis was a burgeoning future industry, and he wanted to take advantage of that and see the benefits for his city by doing such,” he said.
The company plans to have the campus operating starting in December.
Potential Upside
Heim also downplayed the California initiative as a factor in Cultivation Technologies’ business.
“Our business model … doesn’t hinge on the approval of recreational marijuana during the November election. Our facility is built to be a medical-focused cannabis campus that’s all completely 100% legal as of today.”
Heim did point out that if the ordinance passes, “It will increase the demand of product, which benefits the entire industry.”
Cultivation Technologies’ campus is designed to meet anticipated regulatory requirements that will come in 2018 if California voters pass the recreational ordinance, said Michelle Guthrie, the company’s marketing manager. She said those include using “absolutely no pesticides” in cultivation, and a testing lab for products within the facility.
It’s also readying to market its first product, Coachella Premium Cannabis.
“It’s a highly recognized name. Most people know it because of the festival,” Heim said, referring to the annual Coachella Valley Music and Arts Festival held in Indio.
Corporate headquarters will remain in Irvine, Heim added.
Cultivation Technologies’ post on the Crowdfunder website mentioned that it “expects to replicate this in other municipalities in California.”
