Exclusive Interview With Cannvalate CEO Dr Sud Agarwal

The Green Fund sits down for an exclusive interview with Dr Sud Agarwal to discuss his career, his company and his appointment to Impression Healthcare.

It's been a mammoth year for Impression Healthcare Limited (ASX: IHL) after the company announced the unveiling of its cannabinoid drug discovery brand, Incannex Pharmaceuticals.

Incannex is set to release four novel cannabinoid formulations targetting obstructive sleep apnea, Temporomandibular joint dysfunction, Gingivitis, and Traumatic Brain Injury/Concussion.

Though perhaps just as exciting as the trials themselves, is the partnership that they'll be conducted under. IHL scored the snag of the century in March, when it appointed the internationally recognized key opinion leader in cannabinoid medicines, Dr Sud Agarwal, as the company's Chief Medical Officer and Non-Executive Director.

Dr Sud Argawal is also on the Green Fund's inaugural "5 Australian Cannabis Thoughts Leaders" list, and not only has a stellar resume but also serves as the CEO of Cannvalate, one of Australia's leading medicinal cannabis companies.

5 Australian Cannabis Thought Leaders

Over the course of 15 years—prior to his involvement with cannabis—Dr. Agarwal developed an impressive leadership track record, commercializing several healthcare companies while also becoming a successful property developer.

To find out more about Dr Agarwal and his role in IHL, The Green Fund Founder and CEO, Mark Bernberg, sat down for an exclusive interview with the esteemed doctor.

Dr Sud Agarwal enters the Cannabis Industry

Dr Agarwal began his career studying medicine in the U.K at the University of Bristol, before immigrating to Australia in 2001 to specialize in anaesthesia. Over the next 15 years, Dr Agarwal went on to build an impressive track record, commercializing several healthcare companies while becoming a successful property developer.

Cannvalate CEO Dr. Sud Agarwal

It wasn't until 2016 that the cannabis industry would catch the eye of Dr Agarwal.

"It's 2016, and the cannabis industry is really kicking off. At this point, I'm a specialist anaesthetist, and I've had almost 10 years of practice as a specialist," he said.

"I've now completed seven property developments and become relatively comfortable with deal structuring and financing."

"I've got a whole network of people that will back me financially if I go into a venture, and I've scaled and exited three commercial businesses in the healthcare space, so I really understand bootstrapping product-market fit, scaling employment, and this hyper-growth style, fast startup California style business."

Dr. Agarwal's reputation landed him an advisory role on the board of Cann Group, a developer and supplier of cannabis, cannabis resin, and medicinal cannabis products.

Cann Group was the first Australian company to secure the necessary licenses and permits required to cultivate and research cannabis for human medicinal purposes. This gave Dr Agarwal valuable insight into the inner workings of the cannabis industry and sparked his interest in starting something of his own.

I was very much interested in the late value-chain of cannabis. So not the cultivation, not the extraction, but everything that happens once you've got a product.

Dr Sud Agarwal

How do you get a physician to prescribe it? How do you get the product to a patient? How do you get the right product to the right patient, validated and tested at the correct dose? That information wasn't easily available in Australia back in early 2017."

This interest to bridge the gap between cannabis companies, doctors, and patients within the cannabis industry came to a head for Dr Agarwal, when he was asked to speak at a Cann10 Conference in 2018. Little did he know, this would serve as the birthplace for his company Cannvalate, and was where he would meet his co-founders.

"I was invited to speak at the Cann10 conference, which basically finds niche entities that want to set up and scale within an industry and acts as a kind of cannabis accelerator. That's where I met Darryl Davies and Asaf Katz."

"We assembled a meeting and realized there was a big potential in creating the late value chain of cannabis because no one had successfully done it. The numbers of patients getting prescribed… it was barely, 10 to 80 patients. And so we thought, you know, there's a solution to this," Agarwal said.

And so, in May 2018, Cannvalate was born.

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The Growth of Cannvalate

The aim of Cannvalate was to provide a platform that would connect suppliers of medicinal marijuana with the doctors who can then prescribe it to qualifying patients.

Within just six months, the company received its license to sell medicinal marijuana and had raised $4 million in Series A funding, with over 50% of funds coming from the medical profession.

"Come October 2018, we've now got the whole set of licenses, big storage space in Melbourne and a similar space in Sydney. We've also now got 600 pharmacies nationally and close to about 800 doctors that we had affiliated with," Agarwal said.

"You could see that from October, November, December, January, February, March, it was just going ballistic, the TGA numbers were escalating beyond what anybody thought. And it seemed like, we'd found something that worked."

"It was—as Marc Andreessen says—you know you've hit product-market fit when things explode. That seems to be what has happened here."

Australian Medicinal Cannabis Industry Growth

And Dr Agarwal is not wrong on that front. The total number of monthly medical cannabis prescriptions grew by more nearly 1000% in the last 12 months – and Cannvalate prescriptions currently account for over 30% of the Australian market.

"We had found what the solution was. It just required some cooperation between doctors and pharmacists, and for patients to be aware of it. From there, patient numbers were doubling and doubling every month and we were thinking, wow, this is fantastic," he said.

"And it's good to have been there from the start. So, that's really how Cannvalate was born."

The impact of Cannvalate in Australia's medicinal cannabis market was undoubtedly huge, but the story doesn't end there. In February this year, Cannvalate purchased over 100 acres of farmland in south-east Melbourne, with plans to become Australia's largest cannabis cultivation hub.

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Then, the company forged a collaboration between the Cannvalate clinical team and Swinburne University to create Australia's first cannabis-dedicated research department.

"Swinburne is a really powerful asset to have under our wing, where we bring the clinical aspects, they bring the scientific aspects, and we do genuine research on unique cannabinoids. They have very deep roots in the scientific world, and specifically, they are Australia's largest illicit drug research company, or illicit drug department of any University."

"There's only really a couple of places in Australia that can do research on synthetic cannabinoids, and Swinburne is one of the two places that you can do that in," Agarwal said.

It's by far the largest cannabis Research Institute in Australia, probably one of the top three largest in the world.

Dr Sud Agarwal

With the facilities and licensing to cultivate and research cannabis—as well as extensive distribution networks in the medical community—Cannvalate had all their ducks in a row to become one of the most powerful players in Australia's medicinal marijuana industry.

And it wasn't long after establishing their collaboration with Swinburne, that Cannvalate was approached by Impression Healthcare (ASX:IHL).

The Impression Healthcare Collaboration

For Impression Healthcare, having Dr Agarwal and Cannvalate under its wing would add tremendous medical and scientific expertise to the company's senior management team, as well as providing the capital and facilities for IHL to carry out novel cannabinoid trials. IHL had a lot to gain, while Cannvalate, as Dr Agarwal informs us, would be spending "hundreds of thousands, if not millions of dollars."

It would seem like a tough sell to get the medical powerhouse on board, but Impression's CEO Joel Latham managed to pull it off.

"IHL approached us with some great ideas about novel cannabinoids that they wanted to formulate and do research in, but they didn't have any sort of formal scientific backgrounds to execute those items themselves. So they approached us and they said, look, this is what we want to do, this is where we want to go, how do we go from A to Z?"

"Through further conversations, we got closer and then it reached the point where they said, look, we're happy to give you a very large equity position in our company if you can pull this off for us."

"And so we said, look, this is something that we love, this is where we want to go, this is what we think the future of cannabinoid-based medicines are, we'll do it. That's where the affiliation was born," Agarwal said.

The deal allows Agarwal to receive up to 6,000,000 Milestone Performance Rights which will convert into shares once 46 specified milestones have been reached.

Agarwal, alongside other appointees, will also be issued Value Performance Rights which can be vested and converted into shares at fully diluted market capitalizations of $60 million, $125 million, $150 million and $200 million.

Disclaimer: Past performance is not an indicator of future performance.

Disclaimer: Past performance is not an indicator of future performance.

The announcement of Dr Agarwal's appointment to IHL and their collaboration with Cannvalate sent the stock climbing 24.59% on the day, and it has continued to perform solidly since.

Through the newfound collaboration, IHL, under their company Incannex, is creating four novel cannabinoid formulas to target four currently untreated issues. The issues are obstructive sleep apnea, Temporomandibular joint dysfunction, Gingivitis, and Traumatic Brain Injury/Concussion.

"We're about to clinically validate a product for real patients who suffer from sleep apnea. That's a really exciting place to be," Agarwal said.

"If someone asked me to give a financial figure, what's the dollar figure that clinical aspect is worth at the end of the road?"

"It would be hard to say, but I would be confident it would be in the hundreds of millions of dollars because it's never been discovered before. It's a massive, massive thing."

While the potential wealth to be gained from the venture could be enormous, Dr Agarwal explains that the money isn't why he aligned with IHL:

"I generally feel that IHL is going to have new chemical entities that are going to be registered, I think they're going to have four registered entities. And I want to be part of it."

"It's the excitement of creating a new drug that's going to potentially have life-changing, and industry-changing effects. I want to be front page and center of it," he said.

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Louis O'Neill
Louis O'Neill

Louis is a writer based in Sydney with a focus on social and political issues. Having interviewed local politicians and entrepreneurs, Louis now focuses on cannabis culture, legislation & reform.

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