The new development will be tightly focused on supply active pharmaceutical ingredients for new drug development, said Adam Ismail, chief strategy officer for the company. To some degree it’s a statement about how the uncertain regulatory framework for hemp/CBD nutritional products in the United States, Europe and elsewhere is inhibiting innovation.
“Our focus is really on the pharma market for cannabinoids. That’s where we really see a lot of growth potential. It has a completely different regulatory framework from supplements,” Ismail told NutraIngredients-USA.
Growth in API demand
Ismail noted that there are hundreds of proposed studies or research underway using various cannabidiol formulations. A search on the clinicaltrials.gov database shows 759 hits using ‘CBD’ as a search term. Some of these are prospective and not yet recruiting and some have been withdrawn. Still, the scope of the activity makes it obvious that this is the growing end of the market for CBD ingredients.
“What we are doing is more narrow than some of the other extraction companies,” Ismail said. “It requires GMP manufacturing capabilities and it requires drug master fils be in place.”
“There are more than 100 products that are Phase 2 or Phase 3 clinical trials. Ultimately those companies will need a source of APIs and we think we can supply that need,” he said.
KD Pharma is already experienced in supplying fish oil-based APIs and will continue to build on that expertise, said KD Pharma CEO Oscar Groet.
“KD Pharma is a leader in lipid technology focused primarily on omega-3s, but our technology suite has applications in other lipid sources like cannabinoids,” Groet said. “We have committed to expanding our technology portfolio to develop APIs from cannabinoids and plant extracts, and these assets give KD Pharma additional pathways to develop new products for this emerging market.”
2020 licensing deal with Italian firm paved way
In the run up to today’s deal, KD Pharma concluded a deal in the summer of 2020 that added to its extraction capabilities. In that deal with Italian firm Herbolea Biotech Srl, KD Pharma licensed that company’s proprietary Bio-Herbolysis extraction technology.
Bio-Herbolysis is billed as a scalable, solvent-free and environmentally friendly technology that can extract cannabis' full phytocomplex starting from wet or dry material. The approach said to offer extraction efficiency topping 90% while maintaining the source material’s terpene profile.
The KD Pharma announcement is yet another sign that the extraction end of the hemp/CBD picture is still ripe for investment. While Ismail said his company’s focus will be on the pharma end of the spectrum, many other new manufacturers of CBD isolates, in Colorado and elsewhere, claim to be aiming at the same market.
New market syndrome
While he was not necessarily predicting an imminent market shakeout, Ismail said the situation of current cannabinoid extraction capacity as well as the plethora of finished products brands is characteristic of many newer markets in general.
“It’s like any of the other high growth ‘new economy’ type industries where there are low barriers to entry. If you look back to the dot.com era, there was tremendous growth then with a lot of companies launching into the space and not many of them surviving. To me the cannabinoids space is similar, especially on the wellness side of the coin. The companies that can consolidate are the ones that will last the longest,” he said.
While today’s announcement is focused on APIs, Ismail said KD Pharma has not slammed the door on potential future CBD supplement type products. He noted that the company has participated in the EU Novel Foods process, and the company still advertises its Phyto3 cannabinoids plus omega-3s ingredient platform.