Evogene takes gene science to cannabis with AI platform and years of experience

Cannabis is one of those new markets where everyone and his brother is racing in to make a quick buck. About 500 cannabis-related companies are listed on exchanges in countries like Canada, yet only a handful of those companies are involved in serious biotech endeavors or research. The rest of them, about 90% of those companies are selling recreational products with claims and products that lack medical or scientific backing.

 

Are they worth investing in? Only if you are willing to take big risks. In the early days crypto investors made millions, but the market went bust last year and well? There is still so much uncertainty there. My friends who were investing in cannabis Canada say it’s too late. The best opportunities are over. But can that be true in a very, very new market just starting to play out? Of course not. But I want to help you see a bit about where I think things are going from my perspective as both Israeli and Canadian writing on pharma/biotech and agtech for 20 years.

 

Canada is recreationally legal when it comes to cannabis, yet still you will have a hard time getting cannabis at a hospital or clinic there. I know, I tried when my dad was dying from cancer last fall. Yeah people are hotboxing in their cars all over the place and smoking their faces off anywhere you go (it’s legal!!!), but if you want pain relief from cancerous tumors or arthritis, good luck. You might get your hands on some “weed” through a clinic, but you will never figure out how the product, dosing and strain will make sense with your body and condition unless you have an expert by your side and are willing to experiment. I was there, with the world’s biggest expert in my pocket and it was a complete disaster. Only a handful of people in the world have experience and advice I would touch and even with that it’s still trial and error.

 

The medical establishment in Canada, well those who run it, are still leery of how the research angle will play out with federal and institutional funding that they aren’t investing in medical cannabis research yet. For similar reasons in the United States too. That’s why interest in cannabis has piqued so much in Israel where researchers have been studying the compounds and effects of the plant since the 60s. I was one of the first to write about Professor Raphael Mechoulam, who discovered and isolated THC and CBD decades ago. Yet Americans and Canadians with financing are saying, let’s start a company, let’s bring the money and rely on Israeli research — in medical or agriculture – to base our claims. Because let’s face it, without IP or patents or both, you don’t have much. Cannabis is easy to grow and easy to get your hands on. Where the money is exactly what Evogene, an Israeli company is about to do.

 

So if you aren’t going to get your hands into biomedical research in pharma or drug delivery devices and you aren’t going to be creating technologies for growing (like flux) or technologies for growing ideal strains like Evogene which I am going to talk about below, better put your money into software (SAAS), the kind of software that has helped other industries grow.

 

One company I am excited about from Israel that I think might be worth investing in is Evogene ((NASDAQ: EVGN) (TASE: EVGN). The company is long established as a genomics company that has worked with the largest agriculture and chemical companies in the world.

 

Evogene is an Israeli seed company that uses research and development to improve crop performance. The company uses plant genomics and biotechnology to create plants and biofuels that carry desirable traits such as resistance to stress or pests. Evogene is transferring genes between plants from the same family rather using transgenics, or GMOs. Seed giant Monsanto has a stake in the company now traded on the New York Stock Exchange.

 

One of their inventions is a mini plant, a Lilliput plant, that let’s them grow tomato plants quicker so they can cycle through desirable plant qualities faster, and weed out what they don’t want.

 

Evogene is taking the knowledge accumulated from modern genome research with classical farming methods, such as crossbreeding, which is used to improve the positive qualities of plants. If, for example, a particular plant thrives on salty water, this property can be enhanced by breeding this trait so that it will grow in salty soil, like that of Israel’s Negev Desert.

 

The same approach can be taken to cannabis. And last month it announced it will open a new subsidiary called Canonic to develop next generation medical cannabis products. Evogene issued a report that it has been evaluating the medical cannabis field for more than a year, including market evaluation, obtaining governmental approvals for its research program and the establishment of a research facility, technology assessment and initial product line planning.

 

Canonic’s initial activities will focus on creating improved cannabis varieties by addressing the current developmental roadblocks of yield, stability and specific metabolite composition. These development efforts will be based on the utilization of Evogene’s big data software platform, which has in the past demonstrated success in addressing similar objectives for other crops.

 

Evogene says that they are looking at $13 billion cannabis market, which is expected to grow to $24 billion by 2025. Although the cannabis market is growing rapidly, it is well recognized that next generation products will need to address the current limitations of:

 

(i) low metabolite yield – causing high costs for patients

 

(ii) low variety stability – causing inconsistent products that have become unreliable as a medical treatment and

 

(iii) uncertainty in connecting cannabis metabolite profile to specific medical indications.

 

Evogene is uniquely positioned to provide a significant competitive advantage in the resolution of these development roadblocks through its software platform and its recognized capabilities as a leader in the area of plant genomics.

 

These products have been developed and utilized for more than a decade through multiple collaborations with world leading agritech companies such as BASF, Bayer, and Monsanto focusing on crop improvement via plant genomics and are now expected to allow Evogene’s newly established subsidiary, Canonic, to not only meet the challenges but also to accelerate the product development process through its predictive science driven approach.

 

Does this mean the big ag companies will dive into cannabis through Evogene? We can only hint so much.

 

Canonic’s current business aims to go in this direction creating three main product types, through a non-GMO approach:

 

(i) high metabolite yield cannabis varieties

 

(ii) stable varieties with consistent metabolite performance and

 

(iii) cannabis varieties with a unique metabolite profile tailored to specific medical indications. The indications that the company will currently address are: post-traumatic stress disorder (PTSD), severe chronic pain and cancer.

 

Dr. Arnon Heyman is the new Canonic CEO.

 

“The field of medical cannabis fits perfectly within both our plant genomics activities and our human therapeutics activities. We have been evaluating this field and our relevant competitive advantages for over a year, and now, with the establishment of Canonic, we expect the new company to advance rapidly in executing its mission of developing next generation medical cannabis products and to create substantial value in a relatively short time,” said Ofer Haviv, Evogene President and CEO in a public statement issued to the press.

 

“This expectation is based largely on Evogene’s capabilities in plant genomics and computational know-how that will allow Canonic to uniquely address the major challenges in this large and rapidly growing field,” he added.

 

What we like about Canonic is that Evogene is already established in the market and it seems to be quietly helping the large ag players step into this potential megabusiness of cannabis with sound data and serious science behind it. That’s investable.