Marijuana Business Magazine November-December 2019

Partnership PIONEERS Vireo Health and Ligand Pharmaceuticals CASE STUDY A s an emergency room physician and the founding CEO of Vireo Health, a multistate marijuana company based in Minnesota, Kyle Kingsley had thought extensively about how cannabinoids could replace opioids for pain relief. So, in 2015, when Vireo’s then-chief technology officer told Kingsley that he had a friend at Ligand Pharmaceuticals, a well-established California drug developer with several U.S. Food and Drug Administration (FDA)-approved medicines on the market, the CEO asked him to set up a meeting to discuss collaborating. “It’s one of the first overt instances (that I’m aware of) of a cannabis company working with quote-unquote big pharma,” Kingsley said. “For us, this was just really about a new line of products and figuring out new ways to make cannabis more effective.” HOW IT CAME TO BE Kingsley was specifically interested in Ligand’s drug Captisol, a modified version of cyclodextrin, a chemical compound that improves the solubility, stability and bioavailability of other drugs, thereby improving how those medicines are delivered in humans. Kingsley believed Captisol could enhance the cannabinoid-based medicines that Vireo was developing. “We looked into the chemistry of what they were doing with Captisol, and it was a well-established FDA agent in a wide array of medicines,” Kingsley said. “It made a lot of sense to us to explore opportunities. I’m an ER doc by training, so I’m always interested in finding new paths for cannabinoids, and I was interested in potentially applying this intravenously. You go into the emergency room and—instead of getting an IV of morphine—you’d get an IV of cannabinoids in the future.” For a young company such as Vireo in a federally prohibited market, working with an established company such as Ligand would have buoyed credibility and legitimized its own drug- development efforts. Founded in 1987, Ligand went public on the Nasdaq in 1992 and rang up $251.5 million in sales in 2018. Ligand has more than 100 partners and licensees, including many household names such as Lilly, Merck, Novartis and Pfizer. “You want to work with people who are well-versed in the FDA process and with well- established products that have passed muster with the FDA in the past. That was our thought process,” Kingsley said. DEALINGWITH CHALLENGES How did Vireo convince Ligand that collaborating with a cannabis company was worth the gamble? By demonstrating transparency and scientific leadership. “The initial meeting was high-level. We just opened the kimono. We told them exactly what the scoop was. We told them the exact federal situation. Whenever we’re talking to partners, we say, ‘Look, the people you need to talk to are (the) legal and compliance (departments). It’s a foregone conclusion that this will change, but there’s no mincing words here.’ You just have to be frank with people,” Kingsley said. Multistate operator Vireo leverages relationship with drug developer Ligand to improve cannabis-delivery methods Lab By Omar Sacirbey Partners Marijuana Business Magazine | November-December 2019 78

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