Big pharma Sandoz steps into Aussie CBD scene; could this be the start of a rush?

• Sandoz backs Avecho in $3m CBD sleep capsule play
• Neurotech also eyes sleep as secondary endpoint in CBD trials
• The hot sleep space is led by companies like Resmed and Compumedics
   

Melbourne-based biotech Avecho has just pulled off a big move, and it could change how Aussies tackle sleepless nights.

After years of plugging away on its own, this little biotech just landed a $3 million investment from Swiss pharma company, Sandoz.

Yep, Sandoz… the Swiss-based giant and one of the biggest names in the game.

The deal will give Sandoz exclusive rights to sell Avecho’s CBD (cannabidiol) capsule for insomnia in Australia for the next 10 years.

This capsule, if approved by the TGA, would become the first ever CBD product registered as an over-the-counter sleep aid in the country.

That’s massive, especially when nearly 60% of Aussies say they struggle with sleep. We’re talking millions of tired units, just waiting for something that actually works.

Avecho’s soft-gel CBD capsule isn’t your average sleeping pill. It’s powered by Avecho’s own special tech called TPM, which is basically a souped-up version of Vitamin E.

What that does is help the body absorb the CBD properly, so you get more bang from a smaller dose.

This capsule is currently in a full-blown Phase III trial, with hundreds of people testing it across Australia.

Stamp of approval

But this deal with Sandoz isn’t just about the dough; it’s about what it means.

Sandoz doesn’t back any old Tom, Dick, or Harry – this is a seriously big pharmaceutical player with global reach.

Its investment doesn’t just keep Avecho’s lights on; it’s a huge stamp of approval for the company as well as for the sleep and CBD space more broadly.

Under the deal, Avecho will still own the rights to sell the product in other countries, but Sandoz gets first dibs if things take off globally.

And if the Phase III trial goes to plan, this little capsule could be on Aussie chemist shelves sooner than you think.

“With ample capital to complete our pivotal Phase III trial through to the interim analysis, our primary focus is to advance the study to this key inflection point as swiftly as possible,” said Avecho CEO Dr Paul Gavin.

Burgeoning CBD space

And while Avecho’s turning heads, it’s not the only Aussie biotech eyeing this booming space.

Neurotech (ASX:NTI), another local player, has been quietly building its own case for cannabis-based treatments; not for sleep exactly, but sleep’s still in the mix.

Neurotech’s lead product, NTI164, is a full-spectrum CBD therapy (minus the THC high) that’s being trialled for conditions like Rett Syndrome and cerebral palsy in kids.

Sounds heavy, and it is. But what’s interesting is that in these trials, the company is also keeping a close eye on sleep quality as a key secondary outcome.

So while it’s not the main game, better sleep is definitely on the radar for Neurotech.

And with Sandoz jumping into bed with Avecho, there’s now real momentum building around CBD-based treatments in Australia.

That sort of attention could easily shine a sharper spotlight on Neurotech too.

Neurotech’s promising deal

Just like Avecho, Neurotech has also been making its own global moves, locking in a partnership deal with RH Farma, a promising European player in the cannabis space.

RH Farma has the technology to produce a broad-spectrum CBD drug that works with different cannabis strains. This will ensure NTI’s product remains consistent and high-quality, no matter which strain is used.

CEO Dr Anthony Filippis says the deal with RH will let it tap into new international markets, and could give the company an edge in this fast-growing space.

“This agreement not only accelerates our global growth strategy, but also ensures we can deliver premium-quality products with unparalleled consistency and scalability, independent of strain- specific limitations,” Filippis said.

Other ASX companies in the sleep space

Compumedics (ASX:CMP)

Compumedics is stepping up in the brain imaging and sleep testing world.

Founded in 1987, this Aussie company has evolved from a small startup to one of the global leaders in cognitive and sleep analysis.

Its flagship product, Orion MEG, is a brain-imaging tool that Dr. David Burton, the company’s founder, believes has the potential to rival MRIs.

MEG technology is used to scan for neurofunctional disorders like epilepsy, Parkinson’s, and Alzheimer’s, and Compumedics is already leading in markets like China, with plans to expand into the US.

Alongside brain imaging, Compumedics is making promising progress in the sleep testing space.

Its Somfit and Falcon devices, both FDA-approved, are now entering the US market, where home sleep tests for conditions like sleep apnea and insomnia are in high demand.

With the US market for sleep testing estimated to be worth hundreds of millions, Compumedics has already made a strong start, generating $1 million in the first eight months.

The company is also working on a single-use version of Somfit to tap into even more of the US market.

Compumedics said it’s on track for solid growth, expecting $60 million in sales this year and more in the future, as it expands globally.

TrivarX (ASX:TRI)

TrivarX is diving into the link between sleep and mental health with its AI-driven tools designed to screen and monitor mood disorders.

The company’s Stager sleep software and MEB-001 device focus on analysing sleep cycles, specifically REM and N3 (slow-wave) sleep, which are often disrupted in people with depression.

According to COO Kai Sun, 75% of people with depression have sleep issues, but mental health screening is rarely done in sleep clinics, leaving a big gap in care.

TrivarX is using its tech to track over 60 biomarkers during sleep cycles, including heart rate variability and EEG bands, to create predictive models for depression.

The company has recently made progress with the MEB-001 device, announcing positive results from its Phase 2 SAMDE study.

ResMed (ASX:RMD)

ResMed has come a long way since 1981, when Professor Colin Sullivan and his team at the University of Sydney developed the first successful non-invasive treatment for sleep apnoea using a CPAP device.

After Sullivan’s breakthrough, ResMed founder Dr. Peter Farrell helped commercialise the technology, founding the company in 1989 after Baxter Healthcare backed out of the sleep apnoea market.

Today, ResMed is a global leader in sleep apnoea devices, with manufacturing facilities in Australia, Singapore, France, and the US.

The company has grown into one of Australia’s largest medical device exporters, with its CPAP machines and other sleep-related products playing a big role in a market worth an estimated US$6.5bn in 2024.

At Stockhead we tell it like it is. While Neurotech and Compumedics are Stockhead advertisers, they did not sponsor this article.

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.