While other companies in the Australian cannabis sector are looking at over-the-counter sales opportunities, Neurotech International (ASX:NTI) is firmly focused on the vast potential of bringing an approved drug to market.

Perth-based Neurotech announced this week that a phase 1/2 clinical program evaluating its unique hemp strains to treat autism would begin at Monash Children’s Hospital towards the end of this current quarter.

Neurotech non-executive chairman Brian Leedman says while it’s positive for the industry that the Therapeutic Goods Administration is relaxing regulations to allow low-dose cannabinoid products to be sold in pharmacies without a prescription, that’s not something Neurotech is interested in.

“We’re not selling the standard cream and feel-good type products,” Leedman told Stockhead recently, comparing the Schedule 3 products that might be sold under the new rules to Blackmore’s supplements.

“That’s not our market. Our market are products with actual clinical claims associated with them that requires regulatory approval.”

There’s just one company that has brought a cannabis-based product through clinical trials to gain approval: GW Pharmaceuticals (NASDAQ:GWPH), the Ireland-based company that was acquired earlier this month by Jazz Pharmaceuticals (NASDAQ:JAZZ) in a blockbuster $US7.2 billion ($9.4 billion) deal.

GW Pharma only has one product – Epidyolex, approved to reduce the seizures associated with two extremely rare forms of epilepsy.

In contrast autism is relatively common, affecting about one per cent of the population.

There’s no treatment for autism, so a drug that reduces its symptoms “could be a very lucrative product, because if you’re able to substantiate your claim with a regulatory approval, it can be prescribed for that treatment.”

The cannabis sector is hot right now because of the TGA’s decision, Leedman says, “but in my opinion, the big profits to be made from this sector are in developing specific drugs for what ails you”.

“Otherwise you’re just in the over-the-counter space, which will always be a crowded space, by its very nature.”

Cannabis companies seeking to sell over-the-counter CBD products risk getting into a race to the bottom on price, Leedman says.

“But if you’re in our space, there’s no competition if you develop a product that’s better than what’s presently available,” Leedman says. “You’ve then got a very lucrative product.

“If we’re successful in developing our cannabis strains for treatment for autism, then we potentially have a blockbuster product that is unique and will be available by prescription.”

Neurotech would have to prove that its product is safe and effective to gain regulatory approval – but there are presently no effective drug treatments for autism.

“So if someone comes up with an effective treatment to treat this neurological disorder, it’s an incredibly lucrative place to be in.

“That’s part of the reason why I think Neurotech is doing so well,” Leedman says, alluding to how NTI shares have nearly quintupled over the last five months – although its market cap remains tiny at just $35 million.

“We are developing this very exciting treatment that could be used in combination with our regulatory approved Mente autism headband to provide an effective treatment for what’s presently not treated effectively.”

Neurotech plans to research its special cannabis strains to evaluate their potential to treat other neurological disorders including Alzheimer’s, Leedman says.

This article was developed in collaboration with Neurotech International, a Stockhead advertiser at the time of publishing.

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