One of the most exciting aspects of Khiron’s model relates to his positioning to disrupt the opioid market in Latin America and the EU. With a total population of more than 1 billion people, we believe that these markets offer attractive long-term growth opportunities. Khiron is led by a management team who know how to build a substantial business model and understand that Latin America and the EU are emerging markets.
Khiron recently released financial results for the first quarter, which showed massive growth in medical cannabis compared to the previous quarter. For the future, the management team assumes that this trend will continue due to the business ramp-up in Colombia, Germany, Peru and the UK.
Khiron aims to reach 1 million patients and customers by 2024 and we believe the first quarter financial results show that the business is on the right track. If the company can disrupt the opioid market in Latin America and the EU, we believe it can easily achieve that goal and is positive about the growth prospects associated with the business.
We believe that Khiron’s vertical integration strategy will play a key role in achieving its goal of reaching 1 million patients and customers by 2024. Because of the structure of the business model, we believe that it will be difficult for companies to replicate the Khiron model and find that this is a key aspect that Khiron sets up for success. Given the complexity of the business model and its early mover advantage in several emerging markets, Khiron is well positioned to benefit from the global trend towards legalizing cannabis.
There are a number of reasons to explain our confidence in Khiron’s strategy and how the business could disrupt the opioid market:
- In Latin America and the EU, more than 75 million people have illnesses that can be treated with medicinal cannabis (chronic pain, anxiety, depression, epilepsy, and more).
- In Colombia, the cost to the insurance company to treat a patient with neuropathic pain is $ 5,200. Approximately 80% of these costs are associated with opioid prescriptions, and medical cannabis can significantly reduce these costs for the insurance company
- Khiron works with one of 15 insurance companies in Colombia. By using real data from the sale of more than 20,000 prescriptions in Latin America, cooperation with other insurance providers in the country is to begin. We believe that an increasing number of insurance companies should prove to be an important growth catalyst and expect an increase in sales as a result
- Khiron has recently started selling recipes in Peru and expects to see strong sales growth from Brazil in the near future. In Mexico, the company trains doctors at Tec of Monterrey and has supply chain agreements. In the second half of the year, Khiron expects the opening of the first clinics in Mexico and Brazil. We believe the international dimension of doing business in Latin America will play an important role in how Khiron disrupts the opioid market
- To disrupt the opioid market in the EU, Khiron will use real-world insights from its clinics in Colombia and Peru to educate doctors about the benefits of treating debilitating diseases with medicinal cannabis. We expect Khiron to convince insurance companies and doctors in the EU to prescribe medical cannabis by presenting the medical evidence and lower costs associated with using medical cannabis to treat certain medical conditions instead of opioids
- The chronic pain market in the EU is significant. Khiron plans to replicate its success in Latin America in the EU, starting with Germany (the largest market in the EU) and the UK. In Germany and Great Britain around 8 to 10 million and 7 to 10 million people, respectively, suffer from chronic pain. Similar to Latin America, the cost of opioids is much higher in the EU than cannabis, and we expect this to add to how Khiron disrupts the opioid market
- With a business-to-consumer model, Khiron pursues a strategy aimed at improving quality of life, educating doctors, promoting medical cannabis, building strategic relationships and responsibly creating demand, Khiron is positioned for the long term growth
- In the first quarter, Khiron reported a 50% patient retention rate, and we attribute the high rate to the close relationships it has created as a result of Khiron’s business-to-consumer model. We expect this strategy to play an important role in how the company transforms the opioid market over the long term
- Compared to the previous quarter, Khiron saw the number of prescriptions issued increase by 120% in the first quarter. These numbers imply that Khiron has the potential to disrupt the opioid market and is positive about the growth the management team is forecasting for the coming quarters.
- Compared to full year 2020, Khiron saw the number of medical cannabis prescriptions issued in Peru increase by 175% in the first quarter of 2021
- In the first quarter, Khiron reported that 60% of prescriptions issued were from insurance companies. Compared to the previous quarter, this amount has increased threefold. In addition, it is reported that 90% of patients have seen benefit from medical cannabis treatment after four months. We believe this to be a bullish indicator and a positive trend in terms of disruption to the opioid market
Under an agreement between StoneBridge Partners LLC and Khiron Life Sciences Inc. (KHRN), we have been hired to publicly disseminate information about (KHRN), including on the website, for a period of 90 days from May 5, 2021 to August 5, 2021 and other media like Facebook and Twitter. We are paid US $ 6,000 per month (KHRN) for blocked common shares or “0” shares have been paid. We own zero shares of (KHRN) that we bought in the open market. We plan to sell the “ZERO” shares of (KHRN) that we hold during the time that the website and / or Facebook and Twitter information is recommending to investors or website visitors to buy without notice to you. We may buy or sell additional shares of (KHRN) in the open market at any time, including before, during or after the website is made available and cheap information is publicly distributed.
Michael Berger is a Managing Partner of StoneBridge Partners LLC. SBP continues to drive awareness for leading cannabis industry companies in the US and abroad.