On July 18, Israeli media outlet Calcalistech reported that Philip Morris International (PMI) is in the process of acquiring Israeli medical marijuana company Syqe Medical for up to $650 million. Syqe's main product is a medical marijuana-measured dose inhaler for pain relief.
Acquisition of all shares for USD $650 million
According to the report, PMI will first invest $120 million to support the Syqe inhaler's approval by the U.S. Food and Drug Administration (FDA). If approval is granted through clinical trials, PMI will go on to purchase all remaining shares of the Israeli company for $650 million.
The deal will be carried out through PMI's subsidiary Vectura, which specializes in the inhaler space. PMI had acquired Vectura for £1 billion in 2021 as part of its strategy to transition to smoke-free world.
It is public information that in 2016, PMI made a $20 million investment in Syqe.
A number of independent patented technologies
If the acquisition goes through, it will be one of the biggest deals in the Israeli med-tech sector in recent years; and if it reaches a valuation of $650 million, Syqe will become one of the top 10 cannabis companies in the world.
Founded in 2011 by Perry Davidson, who still serves as CEO, Syqe holds around 120 patents, and its main innovations are the use of the raw inflorescence of the cannabis plant rather than processed products, and the ability to accurately measure the dosage given to patients.
It's worth noting that total investment in the company to date is $80 million, with Davidson holding more than 10 percent of the shares.
Currently, more than 80% of medical marijuana consumers use smoking products such as cigarettes and e-cigarettes, leading to potential overdoses, and Syqe's inhaler provides relief without the need for an overdose, avoiding the "psychoactive effect".
FDA approval is a key milestone
In the past, these inhalers were marketed and distributed through the Israeli pharmaceutical company Teva. Recently, however, Syqe has chosen to market independently and has entered into partnership agreements with the Ministry of Defense and Meuhedet HMO.
Syqe's primary target market is outside of Israel, and its FDA approval is a key milestone. According to the report, PMI will play an important role in getting Syqe through FDA approval. If successful, Syqe will be the first company in the world to receive FDA approval for the use of raw cannabis inflorescences as medicine.
PMI is one of the world's largest cigarette manufacturers with a market capitalization of $154 billion. In recent years, PMI has launched a new tobacco transformation strategy, and today more than one-third of its revenue comes from smokeless products, including heated tobacco products like IQOS.
According to PMI, the medical marijuana market is worth $24 billion, growing at a 15% annual rate through 2030. The wellness market, which includes cannabis-based tranquilizers and sleep aids, is estimated to be worth an additional $4 billion, with an 8% growth rate.
Syqe's inhaler is currently available in Israel and Australia, which are relatively small markets. The Israeli market is estimated at only NIS 100 million (approximately USD $27.5 million) per year, serving approximately 50,000 medical marijuana patients.
Reference:
【1】Philip Morris acquiring Cannabis inhaler developer Syqe Medical for up to $650 million
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