The founder of a pharmaceutical cannabis company is confident the operation continues to have a bright future despite being in administration.
Tauranga businessman Greg Misson was the founder of Eqalis, a medicinal cannabis company that merged with another medicinal cannabis company, Cannasouth, last June. But in late March Cannasouth was placed into voluntary administration.
The companies merged to combine Cannasouth’s established dried cannabis technology with Eqalis’s skills in extraction technology that enabled large-scale, cost-efficient extraction of cannabinoid components THC and CBD.
However, the operation had burnt through the last of its cash reserves by March, prompting it to turn to voluntary administration late last month.
Administrators Blacklock Rose were appointed as joint administrators of the company.
Cannasouth has also announced to the NZX its CEO Mark Lucas has resigned, effective April 8.
“The company is down but definitely not out,” said Misson, who was also the founding managing director of Open Country Cheese.
A key focus of Eqalis had been to lower the extraction and manufacturing cost of cannabinoid-based medicines, a major barrier to patient uptake, along with a need for a wider evidence base to prescribing doctors.
The company’s tech includes a DNA test to identify a patient’s risk profile for developing psychosis in response to THC compounds used to treat glaucoma and muscle spasticity.
“I am confident that at this juncture the administrators are doing a very good job of creating a more agile and leaner operation,” Misson said.
“We remain very excited for the products that have already been developed, and to be able to get them to people who need them affordably.”
There was concern among shareholders about the rate of cash burn Cannasouth was experiencing, with the call to administrators coinciding with the end of about $2.9 million in shareholder funds.
Meantime, revenue earnings projections have been pushed out further to 2025.
In June last year when Eqalis and Cannasouth merged, Cannasouth CEO Mark Lucas acknowledged the regulatory barriers in the sector are difficult and can be hard to clear.
“Getting compliance, building the team and getting to the start line has been a bit of a pain point, but we are there now,” he said.
The company has recently completed its first harvest of outdoor-grown medicinal cannabis in Canterbury and continues to run its indoor nursery site in Katikati, Bay of Plenty.
A statement to the NZX said the administrators would be undertaking a detailed review of the Cannasouth operations, focusing on identifying the profitable lines of products and services.
