Weed-Meets-DNA Startup CEO Says Hysterical Market Needs to Relax

(Bloomberg) -- EndoCanna Health launched last month on the promise of bringing together two of the buzziest areas of health care: cannabis and genetic testing for consumers.

The company sells tests it says can help consumers find the ideal variety of marijuana for their genetic makeup. Since it started doing business in August, EndoCanna says it has sold a few hundred of its $199 kits. That’s been enough to bring bankers knocking about an initial public offering, Chief Executive Len May said in an interview with Bloomberg.

“We’ve had four firm offers of firms that want to lead us through the IPO process,” said May. One expression of interest came this week, he said.

“You have two sets of people right now: The big financial players who are coming in who don’t know anything about cannabis, and you have these gray-market guys who have been in the space for a long time,” May said. “It’s funny to me that you have these stoner guys sitting across the table from these Fortune 500 players. Someone is going to make a movie about it one day.”

After watching a handful of medical and recreational cannabis-related stocks take wild rides this week, with one rising to a market value of about $17 billion, May has a message for the market: Chill out.

Read more: Meet Tilray, the $17 Billion Pot King With Scant Revenue

“I went though the dot com crash and burn. I’ve watched the housing market crash and burn,” said May. “When you actually look at these companies, when you actually look at their financials, they are extremely overvalued.”

EndoCanna makes no health claims about its products, which could attract scrutiny from drug regulators. Instead, the Los Angeles-based company helps consumers use a genetic screen to figure out which types of marijuana are best for them. With the tagline “Cannabis is Personal,” it says it can use a person’s genetics to better select marijuana to manage pain, avoid anxiety or just have a more enjoyable recreational experience.

A person carrying the CYP2C9 gene, for example, might have trouble metabolizing the active ingredient in cannabis and should therefore stay away from edibles, the company has said.

May said the company is focused on building its business, including using the company’s test kits in clinical trials in Australia.

In the meantime, May, a 26-year veteran of the pot industry, has some advice for Wall Street: “Invest in companies that have fair price-to-earnings ratios, good financials, and are not smoke and mirrors.”

©2018 Bloomberg L.P.