Disruptive healthcare company Impression Healthcare (ASX: IHL) has teamed up with Australia’s largest network of medical cannabis clinics, Cannvalate, to distribute cannabinoid (CBD) medicines and undertake four clinical trials, including a “first of its kind” study on the effects of CBD oil on traumatic brain injury.
The company emerged from a trading halt this morning to announce the execution of a binding agreement, under which Cannvalate will purchase (on a wholesale basis) and distribute Impression’s licenced medical cannabis products throughout its huge network of more than 1,000 prescribing doctors and 600 pharmacies.
Cannvalate will also fund the majority of the expenditure associated with four proposed medical cannabis clinical trials.
One of the trials has been described as “one of the first of its kind”, focusing on the use of synthetic CBD oil to improve the radiological signs of traumatic brain injury and neuro-cognitive function in Australian Rules and rugby players following concussion.
The other three trials will study dronabinol for obstructive sleep apnoea; CBD chewing gum for severe gum disease; and CBD oil for temporomandibulor joint disease (TMJ).
Cannvalate chief executive officer and co-founder Dr Sud Agarwal described the clinical trials as potentially “game-changing” since all four of these diseases have “no existing therapies available today”.
The trials are also expected to leverage Impression’s existing intellectual property and profile within both the dental industry and sporting communities.
Parallel to its emergence in the medical cannabis sector, the company has a range of dental health products and a keen involvement in Australia’s sporting industry, with its Gameday Mouthguards becoming an official licensee of the Australian Football League (AFL) back in August 2018.
In addition, the collaboration paves the way for Impression to advance talks with a Canadian cannabis oil producer for the potential distribution of its oils through Cannvalate’s network.
The four proposed clinical trials have been estimated to cost more than $3 million, but under the binding agreement, Impression’s contribution will be capped at $80,000 (plus GST) per trial – a combined total of $320,000 plus GST.
The trials are phase 1, with each designed to collect data from 30 participants over approximately a three-month period. Successful outcomes from the completed trials are expected to form the basis of justification for a commercialisation application with Australia’s Therapeutic Goods Administration (TGA) for the creation of specific products under the Special Access and Authorised Prescriber schemes. This all means the potential for increased sales in four new markets.
Under the collaboration agreement, the rights to any developed intellectual property vest in Impression. However, the company will grant Cannvalate various options with exercise prices ranging from $0.02 to $0.14 per share, to be vested upon the achievement of milestones associated with the clinical trials.
The amount of options Cannvalate receives increases with the exercise price such that, theoretically, Impression would receive significantly more cash from the exercise options post the achievement of milestones. Should all milestones be triggered, and the options exercised by Cannvalate, a total of $10.1 million would be received as an investment into Impression.
Dronabinol for obstructive sleep apnoea
In December 2018, Impression inked an exclusive licencing deal with US-based Resolution Chemicals to commercialise the generic drug dronabinol in the US, Canada, Australia and New Zealand.
Dronabinol comes in the form of capsules made of pure delta-9 tetrahydrocannabinol (THC), the main psychoactive ingredient of the cannabis plant.
It was the first-ever authorised cannabis medicine in the US and has been used to treat the loss of appetite in people with HIV/AIDS, as well as nausea and vomiting in patients undergoing chemotherapy.
Cannvalate’s proposed trial will examine the benefits of using Dronabinol for severe obstructive sleep apnoea syndrome (OSAS) compared to a placebo.
OSAS represents a substantial under-met market, even in Australia alone. According to Snore Australia, it is generally thought that 4% of men and women have symptomatic OSAS, representing severe health implications.
Participants will be treated with nocturnal dronabinol and have their apnoea-hypopnea index (which indicates the severity of sleep apnoea) re-measured, plus will record a daily log of daytime wakefulness, alertness and wellbeing.
Last month, Impression announced a memorandum of understanding (MoU) with US-based RespireRx Pharmaceuticals to licence, partner or complete a joint venture over proprietary information associated with completed phase 2 clinical trials using the drug to treat the disorder.
The trial under the Impression and Cannvalate collaboration aims is to create locally-derived evidence to help educate Australian sleep physicians to prescribe dronabinol for the condition and to commence commercialisation.
Synthetic CBD oil for traumatic brain injury and neuro-cognitive function
Considered one of the first of its kind, this trial will examine whether CBD reduces the radiological and neuro-cognitive symptoms after a serious head injury compared to a placebo.
The trial will involve participants who have had a career in contact sports, particularly Australian Rules football and rugby, commencing a twice-daily treatment of CBD oil. They will then undergo weekly brain MRI scans and neuro-cognitive scoring for an eight-week period.
Traumatic brain injury in sport is a topical issue internationally, with reports of an impending class action against AFL involving more than 100 former players who claim head knocks and concussions during their footy careers are to blame for long-term neurological damage.
The World Anti-Doping Authority and the Australian Sports Anti-Doping Authority recently confirmed that synthetic CBD, which does not contain THC, is not illegal for consumption by elite athletes.
According to Impression, CBD is considered a neuroprotective agent which could prevent secondary neurological damage after traumatic brain injury through a variety of anti-inflammatory mechanisms.
CBD chewing gum for gum disease
This trial will examine the benefits of CBD chewing gum (or similar product) to reduce the grading of periodontitis (gum disease), which in severe cases can lead to tooth loss, bone damage and can even increase the risk of heart and lung disease.
The participants will use the chewing gum twice daily and have their periodontitis grading re-measured at four weeks.
The chewing gum may be provided under a separate arrangement by AXIM Biotechnologies, the leading US biotech company that Impression first entered the medical cannabis market with late last year.
CBD oil for TMJ dysfunction
Cannvalate’s fourth proposed trial involves testing the use of CBD oil to reduce the severity of TMJ dysfunction, which is a very painful disorder involving compromised movement of the jaw joint and surrounding muscles. Symptoms of severe TMJ can be chronic and difficult to manage, affecting a patient’s quality of life.
This trial will involve the twice-daily treatment of CBD oil and weekly re-measurements of the severity grading of TMJ, in addition to a weekly log of dental pain and related symptoms.
The people behind Cannvalate
Melbourne-based Cannvalate operates medical cannabis-prescribing clinics across all states in Australia and accounts for 30% of the nation’s medical cannabis prescriptions.
The company is hoping to become Australia’s largest cannabis cultivation hub, with stated plans to IPO later this year after already completing a Series A raise of $4 million last October.
This innovative company developed its network very quickly and the quality of the people behind the business is a major endorsement of Impression and what they company has achieved in the medicinal cannabis space within a relatively short period of time.
Cannvalate’s Dr Agarwal is a specialist anaesthesiologist and was the former medical director of Cann Group (ASX: CAN), which was the first company to secure necessary permits and harvest a medical cannabis crop in Australia.
A shareholder of Cannvalate is Nick Bell, who placed 19th on Australia’s Young Rich List in 2018 with a net worth of $170 million. Mr Bell is the founder of digital marketing agency WME Group and founded and co-founded more than 10 other companies locally and internationally before investing in medical cannabis.
This latest collaboration should entail further news flow for both Cannvalate and Impression, with announcements expected on commencement and progress of trials as well as sales initiatives into Australia’s medical cannabis access schemes.
Impression chief executive officer Joel Latham said, “partnering with Cannvalate provides Impression the capability to open new markets in the medicinal cannabis sector in Australia and abroad. It is an endorsement of our existing products and projects from a group that has strong medical credentials and financial backing. We are delighted to have partnered with them and look forward to collaboratively working together to grow sales and oversee clinical research of the highest calibre”.