Australian biotech company Avecho and Swiss company Sandoz, which focuses on “off-patent’ medicines, have announced an exclusive ten-year deal for the rights to a CBD capsule for insomnia in the Australian market.

The deal, announced on March 3, is a development and licensing agreement with Sandoz Group AG for the commercial rights to Avecho’s Phase III cannabidiol (CBD) capsule used for insomnia in Australia. 

Under the deal, Avecho retains the rights to commercialize the product in all other territories, while Sandoz is granted a first right of refusal for these markets. Avecho’s CBD capsule aims to be the first pharmaceutical CBD product registered with Australia’s Therapeutic Goods Administration (TGA) as an over-the-counter medicine.

Sandoz has agreed to an upfront licensing fee of US$3 million for the exclusive commercial rights to the CBD product for insomnia in Australia. Avecho will also continue to fund and oversee the ongoing Phase III clinical trial. Upon successful completion of those trials, Avecho and Sandoz will both collaborate to secure TGA regulatory approval. 

Sandoz will then purchase the finished product from Avecho and assume responsibility for the product’s commercialization, including marketing and distribution in Australia. 

Avecho is also eligible for development milestone payments totalling US$16 million prior to commercialization and will receive tiered royalties ranging from 14% to 19% on net sales once on the market.

The initial ten-year agreement comes with the potential for automatic extensions for two further renewal terms of two years each, unless terminated by agreement between both parties. 

“We are excited to announce this partnership with Sandoz, which underscores the commercial potential of Avecho’s drug delivery platform and our shared commitment to deliver innovative insomnia treatments,” said Avecho CEO Dr Paul Gavin. 

“Nearly 9.5 million Australians experience symptoms of insomnia with approximately 3.6 million of those considered chronic. Sandoz’s extensive reach and expertise in the Australian market will ensure our products are widely accessible to insomnia patients across Australia. This partnership provides Avecho with a strong commercial foundation for success.”

Although the deal has no direct impact on the Canadian cannabis market, Deepak Anand, an industry consultant and advisory board member at the Cannabis Health Products Coalition (CHPC), tells StratCann that he hopes the announcement pushes Health Canada to move forward with its potential plans for health products containing cannabidiol (CBD) that the agency has been working on since 2019.

“The recent announcement of Avecho Biotechnology Limited partnering with Sandoz, a global pharmaceutical leader, for the commercialization of a CBD capsule for insomnia in Australia marks a significant milestone in the cannabis industry. This partnership underscores the growing legitimacy and potential of CBD-based pharmaceuticals in mainstream healthcare. 

“From a Canadian perspective, this partnership should serve as a wake-up call for Health Canada to expedite its plans for regulating CBD as a Cannabis Health Product (CHP) according to recommendations by the The Scientific Advisory Committee, which was established in December 2020. If Health Canada moves forward with these plans, we could expect to see similar interest from pharmaceutical giants in the Canadian market.”

That report was initially said to have been shared in fall 2024, but Anand says he now expects it in the coming weeks. In 2022, Health Canada also released a report on health products containing cannabis. In their Forward Regulatory Plan: 2024-2026, released earlier this year, Health Canada also said it intends to create a regulatory pathway for health products containing cannabidiol that would not require practitioner oversight. 

The Cannabis Health Products Coalition (CHPC) has been advocating and holding Health Canada accountable for creating an additional pathway for the sale of cannabis health products (CHPs) through additional sales pathways that would include pharmacies, health food stores, and other stores. 

Currently, Canadians can only access CBD products through Canada’s cannabis for medical use program, which only allows online sales, or through non-medical “recreational” stores where employees cannot discuss medical effects. The over-the-counter CBD market offers enormous financial opportunities in Canada, as well as Australia, continues Anand.

“The potential for over-the-counter CBD products in Canada, similar to what Avecho and Sandoz are pursuing in Australia, could open up a significant market opportunity. With the Australian over-the-counter CBD market projected to grow to over US$125M per annum, we can anticipate comparable, if not greater, potential in the Canadian market given its more mature cannabis industry and acceptance of CBD products more generally.”

Avecho is currently conducting its Phase III, multi-centre, randomized, double-blind, placebo-controlled clinical trial evaluating the efficacy and safety of CBD TPM soft-gel capsules in adults to reduce insomnia severity. Avecho says the trial is to be the largest of its kind testing cannabidiol, taking place at multiple sites around Australia. 

Aided by advice from international sleep and regulatory experts, the trial has been designed to meet the requirements of the Australian Therapeutic Goods Administration (“TGA”), the US Food and Drug Agency and the European Medicines Agency. Trial participants will be randomly assigned to one of three groups to receive nightly doses of either 75mg or 150mg of CBD, or a placebo for eight weeks. Participants will use validated questionnaires and daily sleep diaries over the course of the study to record the duration and quality of their sleep.

On December 15, 2020, the Australian Therapeutic Goods Administration first published its decision to down-schedule certain low-dose cannabidiol (CBD) medicines from their current classification under the Australian Poisons Standard as Prescription Only Medicines (Schedule 4) to Pharmacist Only Medicines (Schedule 3).

The decision allowed TGA to approve low-dose CBD-containing products, up to a maximum of 150 mg/day, for use in adults, to be supplied over-the-counter by a pharmacist without a prescription. 

The decision limited over-the-counter supply to only those products that are approved by the TGA and included on the Australian Register of Therapeutic Goods (ARTG). The decision also outlined additional limits on dosage form and packaging requirements, including pack size and child-resistant closures.

The decision was made following an earlier TGA safety review of low-dose CBD, which indicated that the known adverse events of CBD at low doses were not considered serious. The decision was made by a senior medical officer at the TGA, acting as a delegate of the Secretary of the Department of Health, following extensive public consultation.