Avecho Biotechnology (ASX: AVE) has signed an exclusive ten-year development and licensing agreement with Sandoz Group AG to bring Avecho’s pharmaceutical cannabidiol (CBD) capsule for insomnia to the Australian market. Under the agreement, Sandoz gains exclusive commercial rights in Australia, while Avecho retains rights in all other territories. Sandoz has a right of first refusal if Avecho receives external commercial offers for other markets.
The deal includes an upfront licensing payment of US$3 million (approximately A$4.8 million), with potential development milestone payments of up to US$16 million before commercial sales commence. Once the product reaches the market, Avecho will receive tiered royalties ranging from 14% to 19% on net sales.
Avecho will continue to fund and oversee the ongoing Phase III clinical trial for the CBD capsule. Upon successful completion, Avecho and Sandoz will collaborate to secure Therapeutic Goods Administration (TGA) approval. Sandoz will purchase the finished product from Avecho and take responsibility for commercialisation, including marketing and distribution in Australia.
The CBD capsule aims to become the first pharmaceutical CBD product registered with the TGA as an over-the-counter medicine. Market forecasts estimate the Australian over-the-counter CBD market could exceed US$125 million per year.
Avecho’s chief executive officer, Dr Paul Gavin, said the agreement strengthens the company’s commercial prospects while improving access to insomnia treatments in Australia. He noted that around 9.5 million Australians experience insomnia symptoms, with 3.6 million considered to have chronic insomnia.
The agreement has an initial ten-year term, with automatic extensions for two additional renewal terms of two years each, subject to standard contractual terms.
Avecho will hold an investor webinar to discuss the partnership in further detail.
