Philip Morris International (PMI) is in the process of acquiring Israeli Medical cannabis company Syqe Medical for up to $650 million, Israeli media outlet Calcalistech reported. Syqe’s main product is a medical cannabis metered dose inhaler for pain relief.
Will buy all the shares for $650 million
PMI will initially invest $120 million to support the approval of the Syqe inhaler by the U.S. Food and Drug Administration (FDA). If approved through clinical trials, PMI will proceed with the purchase of all shares in the Israeli company for $650 million.
The transaction will be conducted through PMI’s subsidiary Vectura, which focuses on the inhaler segment. PMI bought the company in 2021 for £1 billion as part of its strategy to transition to smoke-free smoking.
According to public information, PMI invested $20 million in Syqe in 2016.
Has a number of independent patented technology
If the acquisition goes through, it would be one of the largest deals in Israel’s medical technology sector in recent years. If it can reach a valuation of $650 million, Syqe will become one of the top 10 cannabis companies in the world.
Syqe was founded in 2011 by Perry Davidson, who still serves as CEO. Syqe, which holds around 120 patents, is primarily innovative in using the original inflorescence of the cannabis plant rather than a processed product, and in being able to precisely measure the dosage given to patients.
It’s worth noting that the total investment in the company to date is just $80 million, with Davidson holding more than 10 percent.
Currently, more than 80 percent of medical marijuana consumers use smoking products such as cigarettes and e-cigarettes, leading to potential overdose. Syqe’s inhalers provide relief without overdosing, avoiding “psychoactive effects”.
Currently, Syqe’s inhalers are sold in Israel and Australia, which are relatively small markets. The Israeli market is estimated at just NIS 100 million ($27.5 million) per year, serving about 50,000 medical cannabis patients.
FDA approval is a key milestone
In the past, these inhalers were marketed and distributed through Teva, an Israeli pharmaceutical company. But recently Syqe chose to market independently and signed a cooperation agreement with the Ministry of Defense and Meuhedet HMO.
Syqe’s primary target market is outside of Israel, and its approval by the FDA is a key milestone. According to reports, PMI will play an important role in Syqe’s approval by the FDA. If successful, Syqe will be the first company in the world to receive FDA approval to use raw cannabis inflorescence as a drug.
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 now generates more than a third of its revenue from smokeless products, including heated tobacco products such as IQOS.
According to PMI, the medical marijuana market is worth $24 billion and is growing at an annual rate of 15 percent through 2030. The health market, which includes cannabis-based sedatives and sleep AIDS, is estimated to be worth an additional $4 billion, a growth rate of 8 percent.
Calcalistech has asked Syqe for details but declined to comment.
References:
[1] Philip Morris acquiring Cannabis inhaler developer Syqe Medical for up to $650 million