Why these ASX firms are shying away from the pot stock label – Part Two
Health & Biotech
Health & Biotech
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While once an investor favourite on the ASX, cannabis companies have struggled in recent years to maintain momentum with slow progress of legalisation and acceptance in the medical fields.
Poor publicity around companies in the media has also tarnished the reputation of the sector.
In the financial year 2023, the TGA issued 101 infringements and $1.3 million in fines to cannabis companies for unlawful advertising. Predominately, these were for making medical claims about the products benefits in treating a condition.
Here’s Part 2 of our story on ASX companies who want to be known for much more than a pot stock.
Executive director Dr Thomas Duthy told Stockhead NTI is working to distance itself from a cannabis company and says although its lead drug product, NTI164, is derived from a unique cannabis strain, it is not another CBD or THC formulation.
“Unfortunately, given the publicity (often negative) of cannabis companies in the media, we tend not to promote ourselves as a cannabis company,” he says.
“NTI64 is a broad spectrum cannabinoid drug therapy, low in THC, making it especially well suited for treating paediatric patients,”
“However, to make this ‘label claim’ a developer must provide evidence of benefit through well designed clinical trials, and the entire regulatory package, which includes how the product is manufactured and other supporting pre-clinical evidence of safety, must be submitted to a regulator such as the TGA or FDA and then approved.
“Only then can a developer make a substantiated claim regarding efficacy in treating a medical condition.”
He says NTI is taking a drug development approach to NTI164, which means NTI164 will be registered as a prescription-only medicine. The company is investing into clinical trials to show safety and benefit, and pursuing regulatory approval(s) allowing the company make a medical claim.
Furthermore, upon approval it will receive significantly higher pricing and reimbursement plus regulatory levers to give the company a strong competitive position.
“There has been a lot of noise around cannabidiol (CBD) marketed and sold in Australia,” Duthy says.
“NTI64 is broad spectrum, and our major constituent is not CBD, but rather major constituent cannabidiolic acid (CBDA), along with cannabinoids including CBD, CBG, CBGA, other plus terpenes.”
He says NTI164 is only available under a clinical trial and for those patients who have completed its trial and remain on the product, which to date has been 100% of all autism patients and PANAS/PANS children.
Duthy says NTI does not wish to compete in, or be part of an over-the-counter offering.
“For example, there are 48 CBD products registered on the Australian Register of Therapeutic Goods (ARTG) and 44 domestic manufacturers of cannabis products on the IDC website,” he says.
“Additionally there is 35 listed importers of cannabis products. Of all those products, none are able to make a substantiated medical claim.”
Watson says futhermore the dose is limited to 150mg per day of CBD, which NTI argues is sub therapeutic. He says NTI164 is dosed at 20mg/kg per day – so for a 50kg child, this is 1000mg of CBDA.
“This undifferentiated and fragmented market translates to pressure on pricing, and therefore margins,” he says.
“Without a specific medical claim, there is a lack of pricing power that can emerge for over the counter products – given they are all CBD products of some description.”
Duthy says NTI is following the lead of NASDAQ-listed Jazz Pharmaceuticals, who have the only TGA/FDA approved CBD oil, Epidiolex, which has completed clinical trials in three rare disorders, namely Lennox-Gastaut Syndrome, Dravet Syndrome and Tuberous Sclerosis Complex.
“In Australia, this drug costs $24,000 per annum and is reimbursed and on a global basis,” he says.
“Epidiolex is expected to generate US$1 billion in sales, making it a blockbuster drug for rare (orphan) disorders.”
“So clearly there is no cannabilisation by over the counter CBD products because a doctor will follow the evidence and prescribe on-label, while payers take the same view for reimbursement.”
CEO Jo Patterson told Stockhead since BOD’s listing on the ASX in 2016, the company has been focussed on and positioned downstream of the supply chain, working with exclusive cannabis extracts and drug delivery platforms.
“Over the last six years we have been investing in research and development and clinical trials,” she says.
Patterson says BOD has several drug delivery platforms and devices that it is bringing to market and commercialising including:
“Whilst each of these drug delivery platforms and devices have significant application using cannabinoids they are each agnostic in their application and offer a much broader opportunity,” Patterson says.
“The commercial rollout of each solution holds opportunity for applications across cannabis, pharmaceutical, nutraceuticals and beverage markets.
“These will unlock opportunities with existing drugs or new molecules.”
Patterson says the company is not necessarily distancing itself from being a cannabis company and is actively working with cannabinoids as medicines.
BOD is in pole position to have the first Schedule 3 CBD product in the Australian market announcing in September positive preliminary results from its Can-Rest Insomnia trial.
“We are the only company that has completed a Phase 2B trial which will become part of a dossier submission to the TGA to seek a registration for an OTC (over the counter) Schedule 3 CBD product,” she says.
“However our drug delivery platform and device have a much broader application and we will explore all these opportunities to realise their full value.”
Patterson says while BOD is committed to developing cannabinoid medicines and products the company’s horizons are much broader.
“We are now in the growth stage of our journey having done all the heavy lifting and investment in clinical trials and R&D,” she says.
At Stockhead, we tell it like it is. While Neurotech International is a Stockhead advertiser, it did not sponsor this article.