Colombian Medical Cannabis Producer Khiron Life Sciences Prepares to Serve Latin America

Exclusive Interview with Khiron Life Sciences CEO Alvaro Torres

Colombia is a developing cannabis market that has captured the attention of many. A country known historically for being a black market supplier of cannabis and cocaine has embraced medical medical cannabis and recently awarded several companies licenses for cultivation, processing and sale.

We connected with Alvaro Torres, CEO of Khiron Life Sciences, to learn more about the developing market and his company’s goals. Khiron, which is in the process of listing on the TSX Venture, is based in Canada, where it has raised its capital. The company, which aims to have 10mm grams of production capacity next year, plans to serve the local market in Colombia, but it is pursuing the entire Latin American region, which has a population of 620mm.

Thanks, Alvaro, for taking the time to discuss Khiron Life Sciences with our readers. Before we get into my questions about your company, can you please let us know a little about your background and how you got into the cannabis industry?

Certainly. I am an Industrial Engineer with a Masters in Industrial Engineering from Rensselaer Polytechnic Institute in Troy, NY and an MBA from Georgetown University, and I have been involved in the development, engineering and construction of large infrastructure and real estate projects across Latin America. I was formerly the Business Development Manager for SNC-Lavalin in Colombia, an operation we grew from 2 people to close to 2,000 people in a span of 3 years, and then I became General Manager of one of Colombia’s largest engineering firms with over 400 people, positioning it to become the top ports engineering firm in the country. I then pivoted towards real estate, where I became General Manager of a USD 1 Billion skyscraper project in Bogota before I decided to venture into my own infrastructure investment advisory firm before co-founding Khiron, where I am lucky to work alongside some of the most capable professionals I have had the pleasure to learn from. The advisory firm is now being run very successfully by my father and my brother so I can focus all my attention on Khiron, where I am lucky to work alongside some of the most capable professionals I have had the pleasure to learn from.

As an entrepreneur and executive I am constantly looking for challenging opportunities with great potential, and the Colombian government’s efforts to regulate the new medical cannabis industry caught my attention. This is an exciting new industry with plenty of opportunities both in Colombia and Latin America and our goal is to improve the quality of life of patients by delivering the benefits of medical cannabis in a consistent and affordable manner in the region.

Your company was just licensed for the cultivation, processing and sale of cannabis in Colombia and for export. When do you expect to make the first sales, and what types of production goals do you have?

Now that we are fully licensed, we are planning to begin sales of product by the 3rd quarter of 2018. Our licensed facility is 4.5 Ha, in which we will have 1,000,000 sqft of installed cultivation capacity for the next year, with a potential of 10,000,000 grams of flower production . We also have an option for another 16 Ha to allow us to grow our capacity when our target export markets in Latin America and North America expand. Throughout 2018, we will focus on engaging in constructive and educational conversations on medical cannabis with physicians and patients associations across Colombia and other countries in the LatAm region.

Can you share your estimates for the local market demand for medical cannabis?

According to Health Canada, there were 200,000 registered patients by Q2 2017 with a population of around 35 Million people, resulting in an adoption rate of almost 0.6% after only 3 years. Colombia is a country of 48 million people, and the Government does not require patient registration. There are close to 6 million diagnosed and treated patients with conditions such as neuropathic pain, epilepsy, PTSD, anxiety, depression and others that could benefit directly from medical cannabis. With all of this, it would not be surprising that Colombia could have more than 500,000 patients within 3 years. According to our own market studies there are more than 68 million diagnosed and treated patients with the same conditions across Latin America, so this is a market that is well positioned for the use of medical cannabis and great patient adoption potential.

The Colombian government is supportive, your climate and light conditions are ideal and I expect your labor costs are quite low. Many think that Colombia could eventually become a major global cannabis supplier. How do you see this playing out?

The government of Colombia has made great advances in regulating and supporting this new industry because it sees a potential for improving public health issues and becoming an important player in the growing worldwide medical cannabis industry. We see Colombia as a major medical cannabis supplier in the next 2 to 3 years, but we have to be also aware that most countries are also looking for ways to develop their own cultivation and manufacturing industry for medical cannabis, such as Germany, Peru, and Argentina. We at Khiron are focused on expanding our patient base and we will work with the countries in Latin America to develop their local industries while bringing world-class scientific expertise, capital markets access and medical credibility with physicians and patients to ensure the local industries are developed correctly, in a compliant and safe manner to patients.

Khiron is a Canadian company focused on Colombia, similar to a peer, PharmaCielo. What is the advantage of this structure, and will Colombia be the exclusive focus of the company?

It has been well known for some years that the Canadian capital markets are very supportive of this industry. Access to significant growth capital for medical cannabis in the unmatured Colombian and Latin American capital markets is very limited, and this is why we decided to incorporate the company as a Canadian company.
Our focus, however is not only in Colombia. We are a medical cannabis company focused on addressing the unmet medical needs in a market of over 620 million people across Latin America. Colombia, because of its more advanced regulations and the optimal agricultural conditions serves as the platform on which we will build our business but we expect to be present in every major market in the region within the next 2 years.

Can you address the competitive situation in Colombia, with just two fully licensed companies, so re at this point?

We believe that our scientific approach and our patient-focused strategy will make us a top player in the country and the Latin American region, but we also welcome other initiatives that help us strengthen the industry and protect it in the long term. Because of this, we are one of the founders of Asocolcanna, Colombia’s first medical cannabis guild, and we are certain that Khiron will benefit from a healthy competitive environment. Although we don’t anticipate to have such a large number of companies competing as in Canada, there will be more licensed companies in the future. Our goal is to be the top choice for our patients to improve their quality of life by delivering the benefits of medical cannabis and we believe we have a winning strategy to create patient and physician brand loyalty over the long term and lead this industry in Colombia and the region. Furthermore, we also believe that patient safety and DEA-level compliance standards to ensure anti-diversion across our supply chain are part of our competitive advantages and we have recently engaged Mr. Matt Murphy, former DEA Chief of Pharmaceutical Investigations as our Chief Compliance Officer to implement the highest compliance standards in the industry.

What are some potential risks specific to Colombia? Are you concerned about the black market? Are there any special operational issues?

We believe that the major risk is related to patient safety and how patients will access quality, consistent and affordable products in a closed loop system that eliminates diversion. The Government of Colombia, through INVIMA, which is the agency equivalent to Canada’s Health Canada, recently announced major successes in confiscation of illegal and unsafe products as well as legal actions against their producers. These actions strengthen the commitment of the Government to set up a highly regulated and safe medical cannabis industry and they need to be complemented by the joint efforts of the medical cannabis companies in the country. This is why Khiron is implementing world-class compliance and pharmaceutical standards to avoid product diversion across the supply chain. We are committed to the safety of our patients, and we will work alongside other companies in the industry and the Government to implement the necessary protocols to ensure that patients have access to safe, consistent and affordable products.

How much capital has Khiron raised to date, and what investments have you made thus far?

We have raised more than CAD 5 Million in our last 2 rounds, and we are in the process of raising additional CAD 6 Million as part of our go-public offering, which has already been presented to the TSX:V. Our capital has been invested primarily in the construction of our 4.5 Ha facility in Colombia, license applications, and staffing, which includes several PhDs in the areas of scientific, pharmaceutical and medical research.

Thanks, Alvaro, for discussing your company with our readers, and we look forward to watching your progress.

To learn more about Khiron, visit its corporate website.

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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