Clinical Cannabis: How GB Sciences is Redefining the Industry Through Research

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Las Vegas’ GB Sciences is using controlled cultivation, specific product formulations and dedicated research to redefine how the industry thinks of medical cannabis.

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March 15, 2019

Photos by Jacob Kepler

Dr. Andrea Small-Howard, co-founder and chief science officer of Nevada-based GB Sciences, wants to redefine what is understood and expected of today’s medical cannabis industry.

She doesn’t consider GB Sciences to be a “medical cannabis” producer in any traditional sense. And while the 28,000-square-foot pharmaceutical-grade facility in Las Vegas serves the state’s adult-use market, that recreational side of the business is even less a part of the company’s branded identity.

Instead, Small-Howard prefers GB Sciences be referred to as a “clinical cannabis” company, because “we are not content to simply produce bulk products," she says, adding, "We are going the extra mile to get evidence behind the products that we are going to provide."

GB Sciences is expanding both its Las Vegas and Baton Rouge facilities with future plans for a combined 30,000 sq. ft. of cultivation canopy.

This distinction between medical and clinical cannabis is an interesting concept for the entire industry: Without the institutional knowledge that supports the medicinal claims of current pharmaceutical substances or compounds, can the medical cannabis industry confidently say that it is offering medicine?

That isn’t to say that patients don’t receive health benefits from the various compounds and formulations found in cannabis varieties, as the entire GB Sciences team is quick to point out. Rather, little to no evidence exists to confirm that the ways cannabis is being used to treat certain conditions are the most effective ways to use it. Small-Howard and her team hope to establish—and share—that knowledge.

Research, Develop and Protect

When Small-Howard helped to co-found GB Sciences in 2014 and took on the role of CSO, she had two mandates: 1) establish a standardized supply chain that could consistently produce pharmaceutical-grade cannabis, and 2) develop a research and development (R&D) program to study the medical efficacy of the company’s products. “Part of what I've been doing since the beginning is making sure that we can standardize the compounds that we need for our medicines,” she says.

More than 100 known cannabinoids and hundreds of terpenes, monoterpenes, sesquiterpenes and terpenoids exist in the cannabis plant. Standardizing those compounds into bioavailable formulations would be nearly impossible, so Small-Howard researches "the link between chemovars—defined based on the active compounds they produce—with the potential for treating different diseases,” she says.

Beyond formulating a product and offering generic information about each compound (a common practice in many dispensaries), Small-Howard and GB Sciences collaborate with nine universities in the U.S. and internationally to conduct pre-clinical and clinical studies. Leveraging these connections, Small-Howard has co-authored a peer-reviewed study with faculty members and teams from Chaminade University (Hawaii) and the University of Kyoto (Japan) on the role of a cannabinoid receptor in mitigating and reversing the negative impact of heart failure. She also has presented GB Sciences’ research results on the use of minor cannabinoids and terpenes for pain management at CannMed 2018 held at the University of California, Los Angeles (UCLA), and other industry events.

A GB Sciences employee collecting a tissue culture sample. GB Sciences has an in-house tissue culture lab to keep costs low and ensure it has clean genetics.

“The research that we've done wouldn't be possible without the universities that have partnered with us, that have run all the validation trials, and done the animal[-testing] work, and are working on these novel delivery methods,” Small-Howard says. “One of the things that we try to be in the world is a great collaborator, to bring information out there and get movement in an area where it's not always easy to get this research funded.”

Among the partnerships essential to GB Sciences’ clinical research into therapeutic uses and specific cannabinoid formulations is its relationship with the Louisiana State University (LSU) Ag Center.

In exchange for GB Sciences operating the LSU Ag Center facility, the center's team, which received a medical cannabis cultivation license from the state of Louisiana, gives GB Sciences “experience in doing marker-assisted breeding programs,” Small-Howard says. That’s important because “a lot of our formulas are based on these minor cannabinoids and terpenes, so we're looking to breed specific chemovars that will enhance those compounds that we need for our formulas.”

Those patent-pending formulas are the key to GB Sciences’ long-term success. To strengthen its intellectual property protections on those formulas, the company hired renowned Silicon Valley-based law firm Fenwick & West, which specializes in bringing tech companies public and in intellectual property writing and litigation. Fenwick & West, which works with companies like Airbnb, Amazon, American Express and Apple (and those are only some of the As), was initially skeptical when approached by the Las Vegas-based cannabis company. But when GB Sciences presented the law firm with a plan to separate its plant-touching business from its R&D business, the research endeavor piqued the firm’s interest. After a conference call between the lawyers, Fenwick & West landed its first cannabis client.

GB Sciences finally had the legal authority to defend its patent applications covering complex mixtures derived from specific cannabis-chemovars that were designed to treat conditions such as Parkinson’s, Alzheimer’s, and Huntington’s diseases, inflammatory disorders, heart diseases, and chronic and neuropathic pain, among others. Hiring Fenwick & West legitimized the company’s position as a clinical cannabis company and a leading authority on cannabinoid research.

Yet, even with these research partnerships, the company could have gone bankrupt in 2017 had it not been for some quick reconfiguring.

Cannabis hanging in a drying room. Once dried, these plants move to the trimmers who sort and trim the buds.

Re-Launch

Initially, GB Sciences conducted its research to advance the design of its GrowBLOX cultivation system, which current chairman and CEO John Poss describes as a “telephone booth that was rigged with every technology you can imagine to grow pristine, pharmaceutical-grade cannabis.” But in 2015, the company faced angry investors displeased with lackluster results after an initial $7 million-investment round, so the board of directors called Poss to redress the company.

Poss has taken on various roles with various struggling companies throughout his executive career, including CFO of a NYSE-listed company at age 33 and CEO of a multi-million-dollar NASDAQ-listed construction company at age 40. “I like to say that I spent my life shaving the hair off pigs,” Poss says. “That is, doing those things that nobody else wanted to do: workouts, problem-solving, turnarounds.”

Poss analyzed the GrowBLOX cultivation system, how the company was spending its funds, as well as the deals and agreements the company reached. He quickly saw a glaring problem: The cultivation system was not viable at scale, and GB Sciences was rapidly heading toward failure with few investors willing to save it from demise.

GB Sciences' post-harvest team at work. As part of the company's QMS, every employee has clear directives on how to complete every task, from cultivation to trimming.

But the company did have some interesting assets, not the least of which were the company’s research (and associated network) and a provisional cannabis cultivation license from the state of Nevada, Poss says.

His ultimate recommendation? Kill GrowBLOX and follow-up on those two opportunities if you want your company to remain in business.

“The research … was evidence-based,” Poss says about the early studies GB Sciences conducted. “Essentially with not much money, [Dr. Helen Turner, VP of Innovation at GB Sciences] and Andrea had demonstrated one of the major assumptions of the entourage effect posited by Raphael Mechoulam many years ago in the early ’90s,” namely that the different compounds found in cannabis interact with receptors in the human body to create a therapeutic effect.

The board ultimately sided with Poss, who remained with GB Sciences as the company’s new chairman and CEO. His decision to stay was based in part by the excitement of joining the cannabis industry. But more importantly, Poss connected on a very personal level with the work and research at the heart of Small-Howard’s two mandates.

In 2000, Poss received a diagnosis for malignant gastrointestinal stromal tumor (GIST), a rare form of cancer that was untreatable at the time of his diagnosis. Stage four. Two years to live. Not what an otherwise healthy 52-year-old Texan wants to hear.

With local doctors offering no hope, Poss researched other treatment options for this “untreatable” condition on his own. After months of calls and emails, he found a clinical drug trial in Boston and was able to get himself into the study. “When I entered the trial, I was in a wheelchair,” Poss remembers. “My liver was failing from the tumors exploding. I had maybe three weeks to live.”

Tissue culture is the cloning practice by which a genetically identical plant is created by scraping a few newly formed cells from a mother plant.

Poss’ tumors shrunk after the first treatment. He’s been in remission for 19 years after completing what ended up being a very successful drug trial.

“I emerged from that knowing that I had something that I had to do, that I would not live for no purpose,” Poss says with his southern drawl. “When I saw this research and saw the immense medical potential of these formulations [at GB Sciences], I said, ‘This is what I'm here to do.’”

However, while Poss is both personally and professionally invested in the research GB Sciences is doing, the same can’t be said of the company’s financial backers.

Dominick Monaco in GB Sciences' extraction lab. Most of the company's lab is in a container-style attachment to the main structure.

More Money, More Problems

Currently, GB Sciences trades its stock on an OTC-market, a less regulated, non-major exchange with fewer barriers of entry, more listings and, as such, more risk and volatility. It is part of Poss’ responsibilities as CEO to find new investors. Additionally, he must convince those first investors not to pull their investments out of the company. “The bulk of my time is spent raising money,” he summarizes.

Convincing the early investors not to rebel was reasonably straightforward: Poss simply explained the company was going to start growing and selling medical cannabis products and if Nevada ever went recreational (which it did in 2015), then it would sell into the recreational market as well.

“There [was] a certain set of investors that was just looking for a company that was going to sell weed. My plan was to generate cash flow for growing and selling cannabis, and initially make the science secondary,’” Poss says. Of the company’s roughly 20,000 investors, Poss estimates that two-thirds fit into the cannabis-for-cash flow category. The remainder includes those who “understand that the real play, the real value field is on the medical side, on the research side, on the compound side.”

The issue is that GB Sciences' investor base wants different things from their investments: Those in the first category want to see that cash flow into their pockets, those in the second want to see that cash flow used to advance the research and product formulations that Small-Howard and her team create. This creates valuation challenges for the company. GB Sciences started 2018 with a bang, closing the first day of trading up 20 percent at $1.02; by New Year's Eve, the company’s stock was $0.14.

“With our stock prices low relative to our competitors, it means it's more expensive for us to raise money because we have to issue more shares to get the same amount of dollars,” Poss says. "We're challenged to find investors that value our science and its potential.”

Part of what makes GB Sciences a tougher sell to investors is what the company grows. Rather than producing solely high-THC cultivars (Poss says these could fetch upwards of $3,000 in the current Nevada wholesale market if they test above 30-percent THC, with diminishing returns for every percentage point lost), GB Sciences mostly develops cultivars with cannabinoid and terpene profiles that match the needs of Small-Howard and her team in the product formulation lab.

A GB Sciences employee weighing a pre-roll. Standardizing products includes both cannabinoid profiles and dosing quantities

The other part is the company spent nearly $12 million on a 200-light facility that is just now breaking even. (A new container-style addition to the building offers GB Sciences the ability to make its own extract products and will help cash flow by generating $2 million to $3 million in revenue each year, according to Poss.) But GB Sciences knew that it would require a pharma-grade facility for the research it needs to conduct to achieve its long-term goal of creating product formulations that help patients in a targeted fashion.

“We built it because we wanted to be able to control the dosing, to grow the same cannabis over and over again without [genetic variations], with controllable, minimal variability in any single constituent cannabinoid and terpene in any particular strain we grew,” Poss says of the company’s investment.

A bucket half-filled with finished pre-rolls

Human Trials?

The current regulatory environment, in the eyes of the GB Sciences team, is the main issue holding the company back from making the inroads it expects to make in the cannabis industry.

“Going to the [Food and Drug Administration (FDA)] has been really a challenge in that there's something called a ‘sole-source provision’ right now,” Small-Howard says. The sole-source provision is an FDA and Drug Enforcement Administration (DEA) oversight rule that only allows cannabis studies to be conducted using materials from the University of Mississippi—the only American institution with a DEA license to legally grow cannabis—or by using materials sourced, manufactured and then imported for testing from international sources (what GB Sciences currently is doing with its European partners).

“Despite the fact that we've invested heavily in standardizing our own supply chain, we can't use it for an FDA trial, and that's a tough one to accept,” Small-Howard says. There is hope on the horizon, as GB Sciences is awaiting approval for its own DEA license that would allow it to provide its own materials for research, both for its in-house work and studies conducted with its multiple university partners.

Trimmers at work. Trimmers sort through buds and pull out flower-grade specimens from the box dedicated for extracted products.

In addition to sourcing foreign compounds for FDA trials, GB Sciences is trying to conduct what little human research it can by using Patient Reported Outcome (PRO) clinical trials using its own Vegas-grown products. “Basically, because we can sell in certain states, we can ask people questions and we can gather data that way,” Small-Howard explains, “but that's not ideal.”

Through it all, Small-Howard and her team remain focused on their goal of conducting “human trials that will establish that cannabis-based therapeutics are safe and effective like any other drug.”

Brian MacIver is senior editor for Cannabis Business Times and Cannabis Dispensary magazines.