High Heals: An Exclusive Interview with MedLab CEO Dr Sean Hall

MedLab Clinical Limited (ASX:MDC) is an ASX-listed healthcare company with a focus on providing therapeutic pathways for chronic diseases.

The company operates primarily out of Australia—with an organic chemistry set up in Southern California and additional offices in Malta and London—and has a market capitalisation of approximately $80 million.

MedLab is currently involved in the development of numerous medicinal products targeting everything from antibiotics to insulin, as well as therapies aimed at treating conditions such obesity and depression. However, it has been attracting serious attention for its research into cannabis-based medicine targeted at pain management—particularly chronic oncology pain—which is an increasingly lucrative field.

MedLab believes that ongoing cancer-related pain is one of the market's most significant unmet needs, and that many patients have already been self-medicating with illegally obtained cannabis for years.

The company takes a research-driven approach to the market and has a diversified product offering which already includes several cannabinoid products such as NanaBis and NanaBidial. MedLab have also developed a nano-particle medicine delivery system known as Nanocelle, which is being applied to its medicines, off-patent drugs and nutritional products.

To find out more about this exciting company, we decided to sit down with the CEO of MedLab, Sean Hall, for an exclusive interview with The Green Fund.

Prior to founding MedLab in August 2012, Sean Hall was the former founder and CEO of FIT-BioCeuticals, and brings more than 20 years' experience in nutraceutical sales and development, along with early drug discovery in the Australian, US and Asian markets.

Hall has a stellar track record, and under his guidance FIT-Bioceuticals grew into the most innovative, research-driven practitioner brand in Australia, prior to its sale to Blackmores in 2012. With Bioceuticals having subsequently gone on to become "the hero strategic business unit to the Blackmores portfolio", he brings a unique legacy to MedLab as a problem solver and builder of innovative products in the Australian pharmacy market.

Hall is also a qualified medical doctor—with an MBA in clinical pharmaceutical management—and is an active member of Medicines Australia, the European Medical Association, the American Federation for Medical Researcher, The World Medical Association, and the Special Operations Medical Association.

However, what motivated Hall to eventually found MedLab was the loss of several friends and a close family member to cancer, which gave him a "unique desire to go into chronic diseases".

"I took a real interest in chronic diseases and had a look at the landscape, saw what our friends in pharma were doing on their 10, 15 year pipeline, what taxpayers were paying for them and what inadequate responses we had to today's problem."

"So I basically said to my father that I'm going to go back into research, I'm going to drive innovation in products."

"And hopefully at the end of the day I'll have a number of drugs that will pass the regulatory requirement, staple claims on them, clinical use and we can start to make a dent in things like pain management, diabetes, depression, the way we age, how be become infirmed, and overall what our quality of life looks like. And that's really what brought MedLab to the cusp," Hall said.

 

 

Triple Threat

The next step in creating MedLab was to build their own labs, which took roughly 18 months to go from design to certification. This was of critical importance to Hall, as sub-leasing or co-owning a laboratory space could result in the company "giving away a lot of potential IP just by the way the laws work".

While MedLab began with an initial focus that was purely in the realm of bacteria research, Hall decided to expand the company's offering after several of his acquaintances urged him to get back into the nutraceuticals game.

However, what really pushed him over the line was the idea that offshoots of the generation of 28 patents the company is currently working with today could be used to also develop products for the Vitamins, Minerals and Supplements (VMS) market.

"We can bring them [VMS] back to the market and we can continue innovative, quality-driven, clinically-run products that doctors and pharmacists can again rely on."

– MedLab CEO, Sean Hall

"So, when we look at MedLab today, we really have three very exciting, very emerging business channels."

"One is we have our own branded VMS line which we loosely refer to as nutraceuticals, and at the start of the year we announced two separate arrangements with rather large banners."

The first deal took place in January when MebLabs secured an agreement with the Priceline API Group, which will see the company's nutraceuticals range stocked in more than 2100 Priceline pharmacies throughout Australia. According to the company, the agreement is expected to significantly boost sales in the 12-month period following the initial product rollout.

This was followed in February by a similar agreement with the Symbian TerryWhite Chemmart Group, to stock their clinical-standard range in TWC pharmacies across the country.

Hall believes that once the onboarding for both agreements is complete—along with a number of independent pharmacies that company is working with—MedLab's products will be sold in two thirds of Australian pharmacies.

MedLab's management is also well-aware of the dangers of spreading yourself too thin, and Hall says that the company is not trying to crank out "300 skews and four variants of every type of product" it produces. Instead, MedLab is focused on developing "specific novel formulations, clinically trialled, and good research backing".

"And that's where we're starting off. So, nutraceutical business is going forward, April really was a pipeline load for us, and we did sales well in excess of a million dollars which was very nice.

"So, we move forward, we've got a good business case for that, we have very good relationships with those two banners, and personally I'm very excited about what the immediate and the long term future holds for that area of the company," Hall said.

MedLab's second revenue channel is its early-stage drug development, which currently has "23 different exemplars ranging from antibiotics to, believe it or not, an insulin product" on the company's delivery platform.

The company is engaged in "rather robust trials" which have been specifically designed to meet the regulatory requirements of the TGA in Australia, and the FDA and EMA for the US and European markets respectively.

MedLab is also developing numerous additional products, including therapies aimed at treating depression, and its flagship cannabis product NanaBis, which is intended to be an ethical alternative for pain management.

Hall says that in total, the company has close to 35 drug candidate programs that are presently in various stages of development.

"So we have, in the last couple of months, announced two heads of agreement which are drug framework related. One is with Pharmascience in Canada and that is NanaBis going into Canada, and the other with a Thai public company called Mega Lifesciences who're expanding operations into South America and want to take NanaBis in as one of their lead products."

"We have another four, it's hard to talk about them at the moment because on one side I've got confidentiality agreements, and on the other side I really don't have anything signed that would constitute an agreement or a go-forward framework."

"But a lot of deep and meaningful discussions, and these are primarily around either NanaBis, or they're around the use of our delivery platform to give big-purpose generics drugs—you might know them as an anti-histamine, you might know them as an antibiotic, whatever it may be—a new lease of life."

MedLab's final revenue stream is contract research on behalf of other companies, which is only undertaken once or twice a year depending on the availability of their research team.

The company's fully-owned laboratory environment has proved to be an attractive asset to other third-party businesses such as Arborvitae, who recently contracted MedLab to research more natural substances aimed at treating diabetes.

Hall says that MedLab recently submitted final documents for the project, and are fulfilling the contract as we speak.

"So, three early but very encouraging revenue streams. We're going to very decent progression on them as we step forward over the next year or two. We've got a drug candidate called NanaBis that has been headlined with the three major regulatory agencies globally, being TGA in Australia, FDA in the US and the EMA in Europe."

– MedLab CEO, Sean Hall

"We've done our pre-pathway meetings, we know what the trial designs need to look like going forward."

"We know where we can fast-track—and from a couple of these agencies we've had very strong opinion that the drug is suited to the fast-track mechanism—we've escalated our research agenda to bring this whole program, some 12 odd plus months ahead of its initial schedule.

"It's doing extremely well and we're looking for solid movement in the regulatory pathway in the very short foreseeable time," he said.

 

 

Taking on the Competition

NanaBis is currently sold in Australia under the government's Special Access Scheme (SAS), which requires a doctor to lodge an application on behalf of a patient.

According to data gathered by MedLab through the Freedom of Information act in March this year, NanaBis accounts for roughly 14 percent of the market share, despite it being only one product operating against pot stocks that may have up to twelve different cannabis-based drugs on the market.

However, Hall says that at this point the company is still taking a cautious approach, because NanaBis is not currently a registered drug. In fact, legally it's referred to as a non-ARTG item, which means that it has not been entered onto the Australian Register of Therapeutic Goods.

Although this may sound like bad news, it's still "great for the here and now", as the designation gives doctors the ability to prescribed NanaBis as a last resort medication for patients suffering from intractable pain.

This fits in well with MedLab's present goal of using NanaBis to target cancer patients suffering from moderate to severe pain, as the current best therapy available is opioid use.

"But what we do now is in this country, Australia, there is around about 130,000 patients every year that are cancer patients, they are advanced in disease progression, and whilst they're on opioids to try and manage the pain, they are not managed," Hall said.

"In fact, we get stats commonly through health policy publications that will say things like 64% of patients with metastatic disease have pain. Of that, 50% will say that their pain is undertreated."

The decision to target pain management is a smart move for MedLab, as the opioid industry has recently begun to undergo a serious public backlash in regard to fears that over-prescription may have led to the creation of a drug crisis in the US and other countries.

Hall believes that this may eventually lead to "bloodshed" in court, which bodes extremely well for the prospects of cannabis-based medicines as a long-term pain management alternative to opioids.

"So, what we have is a situation where the best of the best today is not good enough, and this is the gap that NanaBis is going to fill. And it's a great area to fill because when we look at our competitive radar, we've got blue sky. There's no one there with us."

"Our closest competition was a company called GW Pharma, good company, I value the work they've done and I take my hat off to them, but their contender was a drug called Sativex."

"Sativex is well known and if you Google Scholar search it, you'll see that Sativex, in the areas of pain management for oncology, failed its pivotal three trials and subsequently did not get up a drug registration package before FDA or TGA or EMA," he said.

However, the real goldmine could be cracking the US market, which Hall estimates as having almost ten times the quantum of Australia.

As patients become more aware of pain management alternative and begin to move away from opioid use, MedLab will be well positioned to capitalise on the market's growing demand.

 

 

Let's Talk NanaBis

MedLab has been working in close contact with the TGA ever since development of NanaBis began several years ago.

As part of their consultation with the government body, the company was also advised on potential trial designs and possible deviations from the "traditional phased research agenda".

After taking on the TGA's advice MedLab subsequently designed a Phase 1 Crossover 2A study of NanaBis, which is currently being conducted by Professor Stephen Clarke—one of Australia's leading oncologists—at the Royal North Shore Hospital.

Stage 1 one of the trial has been primarily focused on ascertain the drug's safety and tolerability profile, and the company's recently published results have shown "extremely encouraging" data.

Following the success of the initial NanaBis trial, the study has now progressed to Stage 2—which is currently 50 percent complete—and has shown remarkable results as a treatment option for patients suffering from advanced stage metastatic disease.

According to the company, the patients being treated with NanaBis have demonstrated significant improvements in pain management, appetite and sleep quality, as well as a noticeable reduction in nausea.

Once the Royal North Shore trial is complete and the results published, MedLab hopes to push the TGA and EMA to give the drug a provisional status.

Although Hall admits that this would likely take his regulatory team several months to navigate, achieving it would be a huge milestone for the company, as it would remove NanaBis from the SAS framework, allowing it to be sold in a pharmacy like any other drug.

However, even without this MedLab already has a considerable edge on the competition, as it is one of the few companies worldwide to have its cannabis assets in the market while currently being in the midst of clinical trials.

"What we're playing with is essentially a 'just in time inventory model' on a per-patient basis, so not a lot of economies of scale in that. If we can get it into provisional or conditional approval—which is the step before full drug approval—then we can remove that aspect and we can put small stock holdings into pharmacies and we can get around the need for the doctors to be pre-approved to prescribe NanaBis going forward."

– MedLab CEO, Sean Hall

Hall believes that this may have been allowed be because regulatory agencies want to highlight MedLab as a "poster child" for industry compliance.

"We've got permission from two of the global regulatory agencies to be allowed to use our SAS data in our regulatory package, which is quite unique. In the US, there's a lot of cowboy stuff happening every day of the week. A lot of the stuff you buy is adulterated in one way, shape or form, from benign to some pretty serious stuff like fentanyl-spiked CBD to give it a high," Hall said.

"There's reports that volumizers are used in some of these legal dispensaries so that if you buy a baggie by the ounce, and you see a green head, something's been added in to make it a little heavier. And all this does is put people at significant risk."

"So, if you're going to go to a regulatory agency and say 'Listen, I've got the gusto to do this, I've got the funds to do it, and I have the technical to do it', and they believe it, then they're going to work with you because, pardon the expression, they need a poster child."

This kind of setup is a rare occurrence for a cannabis stock, as it essentially allows MedLab to commercialise a drug trial.

While Hall claims that there are several other pot stocks that have similar arrangements with the SAS scheme, he agrees that it puts MedLab in "a very small global group".

 

 

What's Coming Next

Although things have been progressing steadily for MedLab, the company has no plans to slow down yet. In fact, the company has big things on the horizon as it looks ahead to the 24-month outlook.

Aside from taking on any further big projects, the next big move for MedLab will be to be begin Phase 3 of its NanaBis trials after the current study is complete.

The next phase of the drug trial is expected to be multi-centred, with a relatively small patient group. MedLab is currently looking at taking on approximately 300 participants for the study, which is expected to be funded by the company's research partners.

And the company isn't too worried about cash burn either, as it expects the nutraceutical branch of MedLab to become the "hero" of its portfolio within the next two years.

While this may seem like a big gamble to make, current market trends indicate that it is likely a very safe bet. Nutraceuticals are one of the fastest growing sectors of the health and wellness industry, and in 2018 the global nutraceuticals market reached an estimated value of $266 billion.

According to a study by the IMARC Group, this number is also expected to jump to $403 billion by 2024, growing at a CAGR of roughly 7 percent between 2019-2024.

"As far as cash revenue is concerned. That [nutraceuticals] should be paying for everything in the company and producing a profit."

– MedLab CEO, Sean Hall MedLab

Looking beyond the two year period, MedLab expects to start seeing a "king's ransom" in revenue once the company's partnership deals are in place and it picks up a couple of milestone payments, along with securing drug registration status.

At the same time, its' highly valuable nutraceutical business is predicted to advance in "leaps and bounds". However, Hall also explained that after examining its five and ten-year progression lines, the company now expects to see a significant flip in which part of the business generates the "lion's share of the revenue".

"So, here and now, let's go two to three years, it's nutraceutical business. At around that mark, the money coming in from the drug side should be more significant than the revenue and the progression in the revenue model from our nutraceutical business," Hall said.

"And we value our IP. Now, most of the IP around NanaBis is the delivery platform, NanoCell, right? That's unique unto itself. But we have other patents around there, about how we preserve the API so that they don't denigrate based on light and temperature, specifically heat. THC's the big one."

 

 

High Expectations

While many companies are attempting to rush products to market to capitalise on the growing interest in cannabis-based medication, MedLab has a better chance that most, thanks to its stellar management team and diversified, IP-focused revenue model.

Additionally, its deal with Canadian pharmaceutical company, Pharmascience Inc, for the further development and distribution of NanaBis globally will give MedLab the opportunity to expand into additional territories such as the US and Canada.

Although stock in MDC recently began trading down after news broke that a company insider, Michael Hall, sold off 30,000 shares of MedLab stock on May 23rd—eventually hitting $0.36 a share—it has recently begun to rebound, showing a 1.41 percent increase as of 20 June 2019.

And, if NanaBis really takes off then MedLab could potentially wind up being on the front line of non-opioid based pain management.

Everything else is just down to pot luck.

Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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