As the global medicinal cannabis space matures, Avecho Biotechnology (ASX: AVE) has secured more than $5 million via a heavily oversubscribed placement to advance its pharmaceutical cannabinoid program.
This follows last week’s news that global giant Jazz Pharmaceuticals had lobbed a US$7.2 billion offer for GW, which has a strong pipeline of cannabinoid candidates. GW also owns the cannabinoid-based drug Epidiolex, which was the first plant-based cannabinoid pharmaceutical to be approved by the US Food and Drug Administration.
With the global spotlight again on cannabinoid pharmaceuticals, Avecho was readily supported in its $5.06 million placement, which also added investment fund Horizon 3 Biotech to the company’s register with its $1 million subscription.
Avecho issued 230 million shares at $0.022 each to raise the $5.06 million with each new share having an attached option on a 1:2 basis. The options are exercisable at $0.035 each and have an expiry of 31 December 2023.
Peak Asset Management acted as lead manager to the placement and underwrote the other $4 million. By close of business on 9 February, the placement had received more than $23 million in bids.
Avecho chief executive officer Dr Paul Gavin said the company was “immensely grateful” for the “strong support” it had received from existing shareholders and new sophisticated investors and professional funds.
“We have been observing, for some time, the growing interest in pharmaceutical cannabinoids and the response we have received to the placement is indicative of the strong commercial momentum building in this space.”
Cannabinoid pharmaceutical development
Avecho will use the placement proceeds to further develop and register the company’s new pharmaceutical grade cannabinoid products.
Late last year, Avecho launched clinical testing of its oral cannabinoid formulation based on its proprietary drug delivery system called TPM (Tocopherol Phosphate Mixture).
The TPM delivery system is derived from vitamin E using unique, proprietary and patented processes.
According to Avecho, TPM enhances the solubility and oral, dermal and transdermal absorption of drugs and nutrients.
Avecho’s research is part of Australia’s largest running observational study for medicinal cannabis products – the CA Clinics Observational Study.
The company expects the trial will shape further development of the product, and provide real world feedback.
It will also underpin indications of value priorities for phase II studies and assist with exploring the potential for a special access scheme category B prescribing.
Dr Gavin said the placement proceeds would advance Avecho’s cannabinoid program beyond this trial and the phase I PK study, which is in the final planning stages.
“It will support the finalisation of a pharmaceutical CBD TPM dosage form, the conduct of a potentially phase II/III clinical trial, and the development of the registration dossier for submission,” he said.
He added planning for this work will occur in parallel with the ongoing studies.
Inherent value in cannabidiol TPM formulation
Avecho believes there in inherent value in its cannabinoid TPM formulation, with Australia’s Therapeutic Good Administration now allowing registered cannabinoid products up to a maximum dose of 150 milligrams per day to be purchased directly from a pharmacist without a prescription.
“The down-scheduling of cannabinoid [dosages] is fantastic news for patients, but a 150mg dose is on the limits of efficacy for a range of indications,” Dr Gavin explained.
“We believe increased bioavailability will be a key value driver that will positively differentiate our products in this growing competitive market,” he added.