The benefits of medical cannabis are becoming increasingly apparent as companies like GW Pharmaceuticals plc (GWPH) publish the results of the clinical trials for their cannabinoid-based medicines. For example, their Epidiolex has shown tremendous potential in treating Dravet and Lennox-Gastaut syndromes.
The creation of protocols such as Epidiolex are possible, in part, as a result of innovations in breeding technology. By genetically engineering cannabis strains to vary the concentrations of psychoactive THC and non-psychoactive CBD, among other characteristics, researchers are able to create pharmaceuticals customized to address specific medical conditions.
BreedIT Corp. (BRDT), a leading provider of software designed to help breeders modify crops to emphasize specific traits, through its Israeli subsidiary BreedIT Ltd., recently teamed up with Seach Ltd. – one of only eight entities licensed to grow and distribute medical cannabis in Israel — to form KanaboSeed. Harnessing the horticultural expertise of Seach and the technical capabilities of BreedIT, KanaboSeed seeks to discover, develop and commercialize new cannabis strains for the management of a variety of diseases and conditions.
The partnership was recently featured in the Times of Israel, where the journalist discussed the significant potential that the partnership has within the industry. In this article, we’ll take a look at some of these competitive advantages and the partnership’s plans to capitalize on the growing medical cannabis market by registering new medical cannabis strains and monetizing them.
BreedIT’s competitive advantage stems from its proprietary Intelligent Decision Support System (IDSS) platform, iBreedIT. Designed to optimize the breeding process, iBreedIT supports breeders at every stage of development; integrating planning, field work, harvesting, data collection and analysis, as well as facilitating documentation and communication across the spectrum.
Based on research conducted by Professors Haim Rabinowitch and Nachum Kedear at Hebrew University, the concepts underlying the software have revolutionized plant genetics over the years. For example, the team developed cherry tomato strains that contain a ripening inhibitor gene that guarantees a longer shelf life than traditional varieties.
Kanaboseed is employing the same concepts to cultivate plants with specific CBD-to-THC ratios and improve the economics of commercial harvesting. For instance, screening for strains that grow successfully in lower light conditions could potentially reduce the energy costs associated with large-scale growing operations.
KanaboSeed’s business model hinges on its ability to generate intellectual property that it can monetize through licensing agreements. Only three months after its formation, the Company successfully developed two proprietary cannabis strains with specific CBD-to-THC ratios, which it submitted for registration with the Israeli Ministry of Agriculture & Rural Development Plant Breeders’ Rights Council. If approved, the Company would own the rights to those genetics, and be protected from the unauthorized propagation of those plant strains as well as the use of any harvested material, including entire plants and parts of plants, and any products produced directly out of harvested material.
“These two registration applications are just the first for what we anticipate will be a line of new potential cannabis varieties that KanaboSeed is developing to address specific medical uses,” said BreedIT’s Dr. Oded Sagee when the submission was announced. “We intend to capitalize on the commercialization of new varieties, as allowed by the laws and regulations, in Israel and other countries.”
While Seach Ltd. will initially be growing the KanaboSeed strains, the long-term plan for the business model stems from potential license agreements with medical cannabis growers interested in the proprietary genetics. These license agreements could pave the way toward high-margin recurring revenue streams for shareholders.
BreedIT offers a unique opportunity to participate in the multi-billion dollar cannabis industry. While breeders can purchase a SaaS (software as a service) license for the proprietary iBreedIT platform, BreedIT also has the potential to help grow operations, such as Tweed Inc. (TWMJF) or Bedrocan Cannabis Corp. (BNRDF), economically produce customized varieties of cannabis, through its “end to end” breeding services. By partnering with BreedIT, growers could have the opportunity to develop and monetize their own intellectual property portfolio without dedicating the time and resources necessary to establish an in-house research organization.
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