Rhinomed finalising nasal cannabis deal with US developer; expands global distribution network
Rhinomed expects its agreement with Columbia Care to be finalised later this month.
Australian medical technology company Rhinomed (ASX: RNO) is scheduled to finalise a licensing deal this month with United States-based Columbia Care to develop commercial solutions for nasally-delivered medical cannabis and cannabinoid compounds, analogues and derivatives.
A non-binding term sheet signed in June outlined proposed terms for the licensing of Rhinomed’s patented nasal technology platform which will enable Columbia and Rhinomed to jointly develop a range of unique cannabinoid products targeting a wide range of significant and unmet clinical and consumer health needs in the US.
Rhinomed has advised that while negotiations are “substantially complete”, the signing of the agreement is likely to be before month end.
The deal will leverage Rhinomed’s nasal platform with development taking place at Columbia’s US research and manufacturing facilities.
According to Rhinomed chief executive officer Michael Johnson, joining forces with Columbia will enable both companies to establish a leadership position in the largest market in the world.
“Partnering with Columbia Care [allows us] to bring a revolutionary range of nasally-administered, dose-controlled, cannabis-based formats to the US market,” he said.
“By offering consumers and clinicians access to range of products that solve specific unmet clinical needs, we believe we can modernise this market in a new and radical way.”
Columbia Care is the biggest provider of cannabis-based products and services in the US, which is currently the world’s largest medical marijuana and medical device market.
With licenses in 12 densely-populated US states and territories, Columbia Care is positioned to offer its pharmaceutical-quality medicines to more than half the nation’s population over the next two years.
Nasal respiratory success
Rhinomed has reported early US success with its Mute nasal respiratory spray which has been found to reduce the volume and frequency of snoring in 75% of users.
Despite only entering the market through 4300 Walgreen’s stores in October, Mute recorded 299% growth for the 2018 financial year, and was named the fastest growing product in the ‘Nasal Strip’ category in US Over the Counter sales data figures.
“We achieved this despite the other top five products in the category having greater store distribution, appearing across multiple retailer brands and significantly outspending Mute from an advertising and marketing perspective,” said Mr Johnson.
“This result [proves] we are well placed to grow our franchise in the sleep and snoring market and also bring further innovation to market in due course.”
US nasal strip sales reached US$115 million during the period, generated from over 80,000 retail outlets.
Global distribution
Rhinomed also announced today an expansion of its global distribution network for Mute which will see it add 360 pharmacies and grocery stores across the US and Canada to its books, including London Drugs, Fred Meyer and the nationwide chain Bed, Bath and Beyond.
The company has also signed with WH Smith in the United Kingdom to stock Mute at its airport-based stores.
Although initial product orders have been received, revenues from the new distribution channels are not expected to impact Rhinomed’s business until March 2019 at the earliest.
Rhinomed said it is on track to be in over 11,000 stores globally toward the end of October.
Sleep trends
According to the US Centre for Disease Control and Prevention, insufficient sleep is now a public health epidemic with 30% of adults getting less than the recommended six hours a night and many of those requiring assistance to get there.
Research shows the snoring and sleep-aid market is forecast to grow to approximately US$10 billion by 2020 at a compound annual growth rate of 6.4% from 2016 to 2020.
Rhinomed developed Mute as an over-the-counter product to promote good sleep by supporting nasal breathing.
It enables snorers or those with nasal obstruction and congestion to breathe more freely through their nose and help keep their mouth closed during sleep.
Mute is designed to fit the natural anatomy of the nose and can be adjusted on both sides to control the level of dilation and airflow.
At midday trade, shares in Rhinomed were 6.52% higher at $0.245.