CANNAINVESTOR Magazine October / November 2016 - Page 59

Traylor believes the combination of his technical, operational and transactional experiences has provided unique perspectives and has been critical in completing successful transactions. One of his first positions involved process development and manufacturing. Those experiences were critical in his initial interest in cannabis, with his appreciation for economies of scale, Good Manufacturing Procedures (GMP), QA/QC and standard operating procedures. “In that role, I was lucky enough to be put in a position where I could contribute, resulting in being named as an inventor on two patents,” Traylor modestly admitted. The industry will continue to move toward GMP and the successful enterprises will master operational efficiencies.

His operational experiences also provide a solid transactional foundation. In five years of business development, Traylor completed over twenty transactions, including co-development, cross-licensing, technology access and option-based structures. Background with these various deals allows GEP the ability to mix the appropriate transaction to the goals and needs of its clients, instead of just recommending a merger or acquisition. “Being creative with deal structures for our cannabis clients is where we can perhaps add the most value,” explained Traylor.

Cannabis and Risk

“Cannabis is similar to the Life sciences sector in that it is a highly regulated industry, it depends upon a biological supply chain and essentially it’s a drug,” he explains. Another commonality with Life sciences is high risk. Bringing pharmaceuticals to market is a long, protracted process requiring sometimes hundreds of millions of dollars in R&D and fraught with failure. While a typical cannabis business doesn’t require near that level of investment, there are many legal, regulatory and cultural barriers to overcome before a strong investment can come to fruition. Even after overcoming some of these hurdles, operations can be shut down if they don’t abide to strict regulations. “I’m not sure there’s a sector with more uncertainty than cannabis?” he asks.

Marijuana and Future Regulation

But there are some real medicinal benefits of cannabis today that are changing people’s lives and tackling specific conditions, including terminal diseases like cancer. Unfortunately, most of the impressive medical results are anecdotal and don’t come from stringent studies. Planning and running randomized, controlled clinical trials in the U.S. is still hard, although the pronouncement in August by the DEA on scheduling included an effort to loosen the reins on research in the U.S. Unfortunately, as of early October this initiative has yet to bear fruit.

The future direction of cannabis research in the U.S. may be helped by the lower barriers for cannabis research for Israeli companies and universities. GEP has had an Israeli company as a client, which along with its fellow Israeli companies is pushing cannabis research forward.

Well run human trials in Israeli can provide the data and information that will be necessary for the DEA and FDA to reschedule cannabis. “I think the real question is how many states approving medical marijuana will result in bring the FDA into regulating cannabis. Having over 40 states with medical marijuana may result in regulation from the FDA, which may in turn drive rescheduling,” added David Traylor.