Medicinal Genomics Uses DNA Sequencing on their Strands of Marijuana

Boston Business Journal

Medicinal Geonomics Woburn company applies DNA sequencing to budding marijuana industry

 

By: Jessica Bartlett

October 6, 2016

From Purple Haze to Orange Crush, the names given to different strains of marijuana are colorful, and largely just based on where the plant is grown or what people experience when smoking it.

But with medical marijuana’s recent legalization in many states, Woburn-based Medicinal Genomics Corporation is clearing the haze from the differences among different kinds of plants, offering genomics-based quality and strain identification testing for medical and recreational marijuana.

Medicinal Geonomics Lab Photo Woburn“We set out to ask, what questions can we answer with DNA?” said Kevin McKernan, chief scientific officer for Medicinal Genomics, which also offers genomics testing for patients. “The first thing that became apparent in the market is people are tired of not knowing what strain they are dealing with. People name the strains with esoteric and colorful names, but there is no guarantee of what you have.”

After offering a test version of the service to Colorado marijuana manufactures in April, the five-year-old company this week started offering genomics testing for marijuana growers across the country. Clients send DNA samples to the company and receive a partial genome sequencing of the plant, providing a fingerprint of each plant. That can help growers know which plants are psychoactive — containing the euphoric ingredient tetrahydrocannabinol — and which have high amounts of a compound known as cannabidiol that offers medicinal properties of the plant, without the ability to get someone high.

In the 25 states and the District of Columbia which have legalized medical marijuana, the market for genomics testing is wide open. Scientists now typically test only for contamination of plants.

But growers have started to sequencing their strains for intellectual property reasons, and also analyze the genetics to determine which plants are male and shouldn’t be planted (male plants pollinate, ruining an entire crop), and which ones are most productive. For consumers, genetic mapping can tell patients which strains are related, so they can effectively shop at dispensaries. In recreational pot markets, growers are using genetic testing as a branding tool.

McKernan says the size of the market is tough to gauge, but he says safety testing in the food industry — which typically captures 1-3 percent of the market — may be a good guide. If that same percentage holds true in cannabis, the market opportunity could be as much as $1 billion, given the estimated $20 billion to $40 billion market anticipated by 2020. McKernan argues it could be even larger if the company helps marijuana growers breed specific plants with specific properties such as a longer plant with tall stems for hemp fiber, or one with a lot of seeds to make oil.

“We think it will go beyond measuring the fingerprints,” McKernan said. “Traditional agriculture genomics is they began measuring … to select particular traits and could accelerate breeding programs.”

While Medicinal Genomics is growing the marijuana-testing side of the business, the 100-person company will recognize most of its 50-100 percent annual growth on the other side of the business that looks at patients’ genomes to determine the best treatments. Currently, the company is sequencing between 500 to 1,000 patients a month.

Initial Public Offering: A Fleeting Thought or a Fast-Moving Plan

Last year was a record year for biotech with the NASDAQ Biotechnology Index up 65.61% and the S&P Biotech Index up 48.4%.  Performance in the biotech sector beat out the S&P 500 which was up 29.6% and NASDAQ which was up 38.3%, both of which were at record highs.

This year got off to a hot start, too, with 29 life science companies going public in Q1.

Still, many companies thinking about it remain on the sidelines due to past volatility of the markets, demands of “living in a fish bowl,” and the costs associated with being public.

If you’re thinking about it, here are some things to think about:

ipo infographic

Preparation Phase. Choosing your partners can take a few months. Investment bankers will help determine fair value for your company and its brand, choose the ideal time to go public and conduct due diligence to verify the financial information, your market and technology/product story to determine how it will resonate with investors. Legal counsel leads SEC filings and responses, corporate governance issues and contracts. Corporate and public relations counsel will provide a roadmap for building value for your health science innovations such as how to craft messaging around corporate milestones and dissemination and coverage. This phase is about storytelling and connecting your brand to the right stakeholders that matter to you most.  The right investor audiences are important in this phase but so are the influencers with whom investors rely on for their information such as Key Opinion Leaders in the medical community.

Registration Phase. Considerations in choosing the right exchange for you should include stock liquidity, process and timeline of going public, valuation, regulatory environment and the listing standards and fees.  You will also want to come up with the company story for your roadshow.  You should be prepared to tell a compelling equity story with a clear message about how IPO proceeds will be used to fund growth and how your strong management and advisory teams are positioned to bring success in the future.  Is your message clear, consistent, sustainable and supportable?  Speaking of management, identify your company spokesperson and consider training that individual to improve on their verbal and nonverbal communication skills.

Marketing Phase. Bankers will be training their salesforce to sell your stock and you and your CFO will hit the road.  The roadshow, where the bankers will take your senior management team on a whirlwind tour, will begin, and the bankers will start to build the order book where they will compile a list of interested buyers.   At this point you will also want to get investor relations professional’s input on investor allocations.

Check out our next blog about developing your communications process post-IPO.