Perry Davidson was frustrated. Nine years ago he was living in Tel Aviv’s Neve Tzedek neighborhood and was going to the beach every day for six months. “When you end a chapter in your life,” says Davidson, “it’s very important not to do anything – to let out all the air before you’re filled with a new spirit.”
Roaming the beach became Davidson’s daily routine after he resigned that year as CEO and cofounder of Tikun Olam, the first company in Israel for growing and distributing medical cannabis. In those days Tikun Olam participated in some of the discussions of the Knesset Labor, Welfare and Health Committee, and Davidson begged the committee members to allow the creation of a financial model for medical cannabis companies.
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Tikun Olam, which operated during its first years as a non-profit organization, was overwhelmed by the demand for medical cannabis – and its operating costs were growing by the month.
“We ran around like crazy to bring the medication to the patients, we didn’t sleep at night, we killed ourselves over the problem – not like most of the pharmaceutical companies, which are busy organizing formal dinners,” he recalls.
The need to make the medicinal properties of cannabis available to as many patients as possible is what spurred Davidson to leave Tikun Olam.
“I asked myself, how can a few volunteers be responsible for treating the most seriously ill patients? Where are the pharmaceutical companies, which were supposed to make the medical potential of cannabis available to everyone?”
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Before we continue, let’s go back a moment to 2005, to understand where the connection between Davidson and cannabis was formed. After his army service,he and his friend Tzahi Cohen began to take an interest in the research of Prof. Raphael Mechoulam of the Hebrew University in Jerusalem – who had discovered and distilled the THC molecule (one of the active ingredients in cannabis) in his research into the plant’s medicinal properties.
Davidson, incidentally, never completed his high school matriculation exam. But he served in a technological position in a combat intelligence unit and over the years he has registered over 10 patents in defense technology.
“Prof. Mechoulam demonstrated in the 1990s how child cancer patients who took medical cannabis didn’t suffer from any side effects during chemotherapy, compared to other anti-nausea medications. We approached him and asked, ‘Why didn’t you do anything with that?’ Mechoulam replied, ‘Parents were very afraid to give their children hashish, because of the stigma.’”
In 2005 Davidson and Cohen turned to the Health Ministry to request the first license in Israel for growing and distributing medical cannabis. A year later their request was approved – and Tikun Olam was founded.
According to Davidson, part of the problem of medical cannabis is that the usual methods of taking it – joints, oils and sprays – don’t meet the healthcare system’s standards for pharmaceutical treatment. Doctors’ prescription must contain a precise dosage when it comes to patients suffering from illnesses such as cancer, multiple sclerosis and PTSD. But a prescription for 20 grams of cannabis a month does not enable the doctors to control the medical process. Many of them are afraid to provide their patients with cannabis.
“There was no solution for the patients, but they had heard testimonies about medical cannabis,” says Davidson. “They pressured their governments, but until recently most of them believed that it was a dangerous drug. In the end the policymakers said, ‘We have no medical solution, our backs are to the wall, let’s approve cannabis for quasi-medical use.’
“We always knew that oils and products for swallowing don’t work as well,” continues Davidson, “Eighty percent of the patients use cannabis by smoking or vaporization. Had we thought that oil or a pill were the best solution for the patients, the story would have been over within a year or two – we would have developed an excellent cannabis oil, and that’s it.”
Over the years Davidson began to realize that to make the advantages of medical cannabis available to as many patients as possible as fast as possible, distributing joints was not the way. If he wanted to develop a product that would be widely accessible, he had to create a metered-dose inhale that ensured precision quantities.
Many patients use cannabis by inhaling, but each of them inhales the cannabis in a certain way, which introduces a difference dosage of cannabinoids (the active ingredients in cannabis). Due to the disparity in the dosages people often inhale overly large quantities, and their functioning is adversely affected. In other words, they become high.
“I realized that I had to leave the world of growing [cannabis], because I had reached the maximum number of patients who would receive permission to use medical cannabis in the existing format,” recalls Davidson. “To break into the mainstream – you have to provide the cannabis in the best possible way, both for the patients and for the medical community. That’s the idea that led to the founding of Syqe.”
Today, eight years after it was launched, Syqe Medical employs over 100 people in a building in the Jaffa industrial area, which was originally meant to be only a temporary office. The company has raised $83 million so far from the Shavit Capital Fund, the OurCrowd crowdfundraising platform and Martin Bauer Group, a German herbal products company.
Davidson didn’t know how inhalers work or were constructed, but he researched the subject for half a year. He designed and printed a 3D prototype, with each part of the mechanism printed in a different color, so he could easily explain to potential investors how the device works. The result looked more like a Lego toy than a pharmaceutical product.
Brian Cooper, the founder of Retalix, an Israeli retail-tech company that was later bought by NCR, was the first one to agree to invest in Syqe.
“We had a good relationship, but when I presented the idea to him for the first time, he told me ‘I won’t talk to you about cannabis, my reputation is too important to me – speak to me when you have other ideas.’ After repeated requests, Cooper said, ‘Speak to my attorney. If he doesn’t throw you out, I’ll speak to you about it.’ In the end he invested $300,000 in the seed round,” says Davidson.
After finding a first investor, Davidson hired asvice president of research and development Benny Schwartz, who had worked in the defense industry. The two met when they were serving together in the Israel Defense Forces Military Intelligence.
Now Davidson had to find someone to be in charge of the medical and regulatory aspect of developing the inhaler. “I sent an email to Dr. Eytan Hyam, who was the director general of the Health Ministry when I was the CEO of Tikun Olam. I wrote to him: ‘Shalom Eytan, I have a project of national importance,’” says Davidson.
Hyam by then was the CEO of Assuta, the private hospital network. He says that Hyam was afraid they had planted cameras in his office when Davidson came and starting talking to him about cannabis. “In the end he agreed to join as a consultant – and later he was appointed chairman of the board.”
The original inhaler looked like a “small white Discman,” according to Davidson. The inhaler contained a vaporization chip – an invention that the company improved, and in the product’s following generation inserted into a plastic envelope. The third generation of the inhaler included a plastic envelope with 60 vaporization chips inside – each of them enough for one inhalation.
Within two years the employees of the company were able to demonstrate in a laboratory that the inhaler could administer consistent doses of the active ingredient to a standard that would meet the approval of the medical profession.
The inhaler’s second mechanism controlled the final stage of administering the cannabis. “At Tikun Olam I sat with nice old aunties who were cancer patients, and I had to teach them how to inhale the joint deep into their lungs. But to reach as many patients as possible, you can’t depend on volunteers to sit for hours and teach them how to inhale properly.
Syqe continued with clinical trials for about four years, in order to find a therapeutic window for medical cannabis – and found that it is in the range of 250-500 micrograms at each inhalation. At this level, the patients benefit from pain relief without a psychoactive side effect.
Syqe included a mechanism in the inhaler that makes it possible to change the dosage with every inhalation. “The U.S. Food and Drug Administration always praises individually adapted medication. Well, I don’t know of any invention that’s more individually adapted.”
He says the pharmaceutical companies were interested in the possibility of reducing the dosage of opiates (painkillers that are usually produced from the opium poppy, and can cause serious addiction) over time in order to reduce withdrawal symptoms.
Not just cannabis
“It’s easier for us to do it with a molecule distilled in the lab, as opposed to plant-based medications. However, with the knowledge we’ve accumulated about the use of our technology, and the possibility of controlling the inhaler and administering medications from a distance – we realized that we have a platform for administering medications of different types and dosages – not only cannabis.”
In June Syqe began to sell its inhaler through Teva Pharmaceuticals. The cost of the inhaler itself is 1,950 shekels ($550), and the cost of each plastic envelope is about 740 shekels. That’s a lot, but the inhaler has been deemed an approved medical device, so many patients are insured for the cost. Today 80% of the 40,000 Israeli patients who use medical cannabis do so by smoking or vaporization.
But Davidson considers medical cannabis only a first stage on the way to exhausting the potential of the inhaler.
Syqe recently signed an agreement with Martin Bauer Group to examine the medical effectiveness of other plants.
According to Davidson, “75% of the medications approved in the past 35 years come from plants or were inspired by plants in terms of their molecular structure. You can name almost any synthetic medication and I can go to the professional literature and find the plant that resembles it: Aspirin is the bark of the willow tree; atropine is a belladonna extract; there’s a plant-based cure for malaria that has almost no synthetic alternative.”
Until now, the drug industry has had no way to offer the plants as medicine instead of synthetic materials, because it is difficult to extricate a precise dosage of an active ingredient. As a result, it is difficult to show that a plant works better as a medication than its synthetic version. Maybe now, says Davidson, that will change. He looks forward to the ability “to demonstrate that plants have a greater medicinal potential than synthetic medications.”
Davidson believes that the inhaler can also be used to improve the efficiency ofclinical trials. For example, an inhaler can be filled with a variety of different substances whose dosage can be altered with the press of a button to discover their level of effectiveness with great precision.
“You could quickly change dosages at a level of hundreds of micrograms. It sounds trivial in the world of technology, but in the world of pharmaceuticals it’s a process that usually takes decades,” he says.
Despite the rigid nature of the pharmaceutical industry, Davidson is convinced that it will have no choice but to change in light of the current wave of innovation.
“We’ve developed a drugstore that can be put into the pocket of the patient. He’ll be able to change the dosage and the type of medication in real time, while the doctor supervises remotely ...That’s the future.”
Davidson is already imagining how the next generation of the inhaler will look.
“We have a road map for seven years ahead. We have an endless number of features in development. Every 18 months we’ll release a new version with upgrades that will enable us to improve the treatments. We have no pretention of knowing which treatment is the best one for those treated with cannabis, but we think that we have the best treatment existing today.”