Emerald Clinics has been promising an IPO for about a year but has seen the writing on the wall: after four years of blue sky promises, ASX investors want to see the colour of potential pot stocks’ money.

Emerald chair Stewart Washer says 2019 is the year but it will bring at least one deal, a shiny new CEO, and a share register packed with big names for inspection at an IPO.

The company nominally falls into the medical cannabis patient access category — as distinct from growers or biotechs, for example — thanks to its two clinics in Perth and Sydney, and one due for launch in Melbourne.

But that’s where the family resemblance stops.

They’re actually closer in personality to Zelda (ASX:ZLD), a medical cannabis biotech that is focusing less on making pills and more on selling data on cannabis products.

Emerald wants to sell data, but on how medical cannabis works in people.

‘We’re nerds’

The two existing clinics launched last year and do “deep dives” into a small number of regular patients, Washer says. It’s a system where a first appointment can take several hours as doctors go into the fine detail of a person’s condition.

Emerald packages the data into reports that look at issues such as which cannabinoids work for an individual. It’s all pretty nerdy, Washer says.

For example, neuropathic or nerve pain is a popular condition for medical cannabis, but while it may work for Multiple Sclerosis sufferers, it may not work on neuropathic pain among diabetics.

The idea is that companies will pay Emerald to expand on the data — the “data deal” Washer wants to sell an IPO on the back of — using the company’s own products, allowing them to target specific groups of patients for whom their medicines work best.

Incidentally, to do this Emerald has to have certificates of analysis for every product its patients use, so it knows exactly what quantities of active cannabinoids they contain. Initially there was some push back, but being forced to provide specifics has meant generally the consistency of products coming to Emerald is rising.

Washer says this level of granular data is what brought Cann Group (ASX:CAN) and the biggest pot stock in the world, Canopy Growth (TSX‎:WEED) and (‎NYSE‎:CGC), onto the share register in February in a $2.5m capital raise.

It’s also what has local insurers sniffing around Emerald’s door.

A good news day for insurers?

“If insurers can prove opiate reduction decisively in patients they’re interested in, it’s very likely they’ll cover it,” Washer says.

“Opiates are the biggest health nightmare [even in Australia].”

Armed with deep, specific data from 10 people, the door is open to insurers and others to then fund the broader observational studies they need in order to cover medical cannabis products, Washer says.

“Insurers are very excited,” Washer says.

Not only are they being “bothered” about medical cannabis by their members, but the first health insurer in Australia to cover medical cannabis treatments will likely be very attractive to a vast number of new members already willing to pay top dollar for medication.

Medical cannabis products in Australia cost from $300 a month upwards.

Washer repeatedly mentioned Bupa Health in an interview with Stockhead, but wouldn’t reveal whether they are a sure thing for a “data deal”.

However, UK medical name Sir Professor John Tooke is on the board of Bupa and an advisor to Emerald, giving weight to Washer’s hopes.

‘Canopy wanted to buy us’

In February, Emerald raised another $2.5m in addition to the $3m it lifted in May last year. Washer says Emerald has a little over $4m to play with now.

In the later round Cann and Canopy joined in, as did US fund CB1, but saw their allocations cut right back to just $250,000 each.

Washer says Bruce Linton from Canopy was pretty keen to buy them outright, but the time wasn’t right — Emerald needs to be bigger first, and to get bigger it has to maintain its independence.

But one of these companies is likely to be the source of the big data deal Emerald wants to bring into an IPO.

Washer was very coy about who the company is but did let slip that they’re on the register.

Data, not product sales

Emerald’s two clinics return a small profit on the back of consultation fees, Washer says, but he expects the big money to come once they can start signing data deals rather than from patient volume.

“We’re not about giving you 1000 patients for your product, “ Washer says.

The model has already confused one potential investor: before the last capital raising a Canadian producer asked how Emerald could guarantee it’d be selling its products in five years time.

Washer told the director that’d only be possible if doctors trusted the data behind it.

That company did not invest.