15/12/2020 - 08:00

Research a driver for cannabis

15/12/2020 - 08:00

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The strong growth of the medicinal cannabis industry will need to be supported by research for the sector to take the next step.

Research a driver for cannabis
Richard Hopkins says WA investors’ appetite for risk makes the state a great place to develop the medicinal cannabis sector. Photo: Gabriel Oliveira

The Australian medicinal cannabis industry has grown by nearly every measure during the past year.

Total revenue increased from $30 million in 2019 to more than $95 million this year, customer numbers increased from 20,000 to 60,000, and the number of products for doctors to prescribe has increased to 150, according to consultancy FreshLeaf Analytics. 

There’s been plenty of movement in Western Australia, too.

Several Perth-based medicinal cannabis companies have listed on the ASX since 2016, when the federal government amended the Narcotics Drug Act 1967 to make medicinal cannabis products available for specific patient groups under medical supervision. 

Synthetic cannabinoid developer Botanix Pharmaceuticals, which focuses on dermatology and antimicrobial products, listed in July 2016.

It is WA’s largest ASX-listed medicinal cannabis company, with a market capitalisation of $131.3 million.

Medicinal cannabis manufacturer and distributor, Zelira Therapeutics, has a market capitalisation of $112.6 million and listed on the ASX in October 2016. 

Its stock reached a high of 13 cents per share in February 2018, and now sits at 9 cents. 

Zelira has released five products this year, including HOPE for people with autism and Zenivol for insomnia, both of which have been released for use in Australia and the US.  

AusCann Group Holdings, which develops, produces and distributes medicinal cannabis, listed in February 2017.

The company recently acquired CannPal, which develops cannabis treatments for animals. 

In February this year, Little Green Pharma and Emyria (formerly Emerald Clinics), listed on the stock exchange. 

MGC Pharmaceuticals was technically the first Perth-based medicinal cannabis company to go public, through a reverse takeover of Erin Resources in 2015.  

However, while its headquarters are in Perth, all operations are based in Europe. 

MGC co-founder and managing director Roby Zomer said the company listed in Australia because it was offered a backdoor listing by Perth-based investment firm Verona Capital. 

He said the Australian market was growing fast, much more rapidly than those in other countries. 

“I think that generally the cannabis market in Australia is not properly valued,” Mr Zomer told Business News

“I think a zero is missing in the total valuation of the market.”

Mr Zomer said there was a lot of support for research in Australia, and it was easier to conduct clinical trials here than elsewhere. 

“Basically, the mentality of looking at research is something that is very important and critical,” he said.

“To support companies that want to engage in research is much more appealing, for example, than [in] Slovenia.” 

Zelira Therapeutics managing director Richard Hopkins said the ability to generate clinical data in Australia helped his company sell its products into the US, one of the world’s biggest markets. 

“Unlike the US, we can start to generate this clinical data, by undertaking standard clinical trials,” Mr Hopkins told Business News

“We develop those formulations, we develop a trial, we then launch the trial after getting it approved.

“We then recruit patients, we test whether the drug actually works, and then you conclude the trial and announce your data; and we can do that really effectively in Australia.” 

Zelira, then called Zelda, merged with US company Ilera Therapeutics in 2019. 

The arrangement allows the company to conduct clinical trials in Australia and sell its products in the US. 

Mr Hopkins said many of the first medicinal cannabis companies were established in WA because of the state’s experience in providing capital to the mining sector. 

“Inherent in WA is an appetite for risk, which is good,” he said.

“That’s how we grow up, it’s what we are used to … you go to Melbourne and they are much more conservative. 

“It’s not rocket science to step off from this risk capital from mining into cannabis as it began to emerge. 

“The early movers, a lot of their capital came out of WA, so we were the first to build companies, to cultivate cannabis, to do clinical trials, to build clinics, to house them with doctors prepared to prescribe medicinal cannabis.”

Official tick

The sector has received support from the state government in WA.

Medicinal cannabis is accessed through a Special Access Scheme, meaning a doctor prescribes the drug and arrangements are made to supply or import the product on a case-by-case basis. 

Last year, Health Minister Roger Cook made changes to allow more GPs to prescribe medicinal cannabis to a majority of patients, bypassing the need to see a specialist. 

In August, the state government awarded Little Green Pharma a $300,000 grant towards the development of its manufacturing facilities in the South West.

Upcoming regulatory changes present further opportunities for growth in the sector.

The Therapeutic Goods Administration is expected to announce low-dose medicinal cannabis products can be sold over the counter at pharmacies in late December, having proposed the change in September.  

If forthcoming, that announcement will create a new market for companies operating in the space. 

Under the suggested guidelines, over-the-counter products will be allowed to have a maximum dose of 60 milligrams a day, well below the average dose.

AusCann is among those companies hoping to take advantage of the development. 

Chief executive Nick Woolf said AusCann was working to find out what indications and diseases could be addressed with less than 60mg per day. 

“We are looking at improving the bioavailability of CBD [cannabidiol] such that the 60mg dose we can get more absorbed than if you take an oil or vaped it or any other way,” he said.

Botanix Pharmaceuticals executive chair Matthew Callahan said the focus was now on making sure there was significant evidence to back the products.   

“It’s probably pretty easy to just grow stuff in a greenhouse and try sell it to people for recreational or semi-medicinal purposes, but you do need data to back up whatever the use of a particular drug is, which is a challenge that everyone has faced,” Mr Callahan told Business News

“Unless the Australian government is going to make marijuana or cannabis legal, which I don’t think they are, it’s the path people need to take to generate revenue and ultimately value for shareholders.”

Botanix, which creates products using synthetic cannabis, has recruited patients for a study to investigate whether bacterial infections can kill staph and golden staph infections.

The company is also preparing to study whether CBD can be helpful in the treatment of the skin condition rosacea. 

Emyria and Zelira Therapeutics have partnered to collect longitudinal data on patients using Zelira’s HOPE product for people with autism. 

AusCann is testing the effectiveness of its medicinal cannabis drug in powder form in a hard-shell capsule.

Australian Medical Association WA president Andrew Miller said the rise of medicinal cannabis was unusual because it was initially driven by consumer demand, rather than by pharmaceutical trials. 

“The second way it is unusual is it’s a drug that’s been around for a long, long time, obviously as long as drugs like morphine, yet it’s never found a comfortable place in medical practice because doctors have been unconvinced that it is the best option for the thing it’s proposed to treat,” Dr Miller told Business News

He said the AMA’s stance on medicinal cannabis was the same as any other therapeutic good.

“We support things that are scientifically proven, the right drug for the right patient for the right indication is what we are looking for,” Dr Miller said.

While he said clinical trials had proved the drug was effective to treat refractory epilepsy and multiple sclerosis, there wasn’t the evidence to prove it worked in the broad range of conditions claimed by industry. 

“Part of the problem with it is there is a huge range of conditions, many of which are chronic and difficult to treat, for which this drug is now said to be helpful,” Dr Miller said. 

“There is not backing in the form of clinical trials, despite having been around for a very long time, and these diseases being very common and very difficult.”

Dr Miller compared the industry with the mining sector. 

“Generally, if there’s something really promising, it’s picked up by the big miners; the big mining companies are all over it and investing in it and trying to acquire it.

“This drug is not being promoted by the big pharmaceutical companies. 

“This is a bunch of small startups, very similar to marginal mining territory.” 

Alistair Vickery, the medical director of Emerald Clinics, which is owned by ASX-listed company Emyria, said he was initially sceptical of medicinal cannabis. 

Dr Vickery was an associate professor of primary healthcare at the University of Western Australia and deputy chair of the Postgraduate Medical Council of WA when he was approached to develop Emerald Clinics’ clinical guidelines.

“I was an academic GP working at UWA and had a fair degree of scepticism on the effectiveness of a recreational drug,” Dr Vickery said.

“What I have learned is there is a big difference between recreational cannabis, which everybody has an opinion on, and medicinal cannabis, which is a highly-refined, regulated and known product with a known quantity of two of the specific cannabinoids [CBD and TCH].” 

He said the AMA was sensible to be cautious. 

“We need to be cautious because we don’t know how this works as a medicine in the same way we know how other medicines work,” Dr Vickery said. 

However, he acknowledged some patients found the drug transformative.  

“They don’t like taking some of the other pain medications, which interfere with their thinking and give them constipation and make it difficult for them to do the sorts of things they want to do,” Dr Vickery said. 

“They are able to reduce those medications and we have been able to show that quite effectively with medicinal cannabis.” 

Zelira Therapeutics’ Mr Hopkins said public support for medicinal cannabis was increasing, but the challenge was appealing to the medical community.  

“Now it’s about educating doctors, and what they are looking to see is data,” he said. 

“And that’s what we are starting to give.

“I think this is the last phase of that puzzle; educating them and getting them comfortable prescribing something they feel will change their patients’ lives.” 

Mr Hopkins said women around 55 years of age with chronic pain were the most regular customers. 

“The most conservative part of the population is the fastest-growing demographic for cannabis worldwide, that’s how fast things are changing,” he said. 

According to the Australian Institute of Health and Welfare, 43 per cent of people who use cannabis for medicinal reasons were over the aged of 50. 

Recently, WA health insurance fund HIF declared its support for the use of medicinal cannabis, offering rebates for treatments and partnering with Little Green Pharma to collaborate on research. 

Since the announcement in November, HIF said it had received more than 40 calls from members wanting more information about the rebate. 

The health insurance company will pay rebates for nearly all its extras policies, with eligible members receiving a return of up to $105 per prescription. 

As medicinal cannabis is not available under the Pharmaceutical Benefits Scheme, cost is a significant barrier to access. 

The Cannabis as Medicine 2018-19 study in the Harm Reduction Journal surveyed 1,388 people who used medicinal cannabis and discovered an average weekly spend of $82.27 on the drug. 

FreshLeaf Analytics’ Q3 2020 report found the wholesale price of all cannabinoids had dropped from 20 cents per milligram in the third quarter of 2017 to 5 cents in 2020. 

The report said while this was good news for patients, it was likely some companies had not forecast such a rapid drop in prices and would not have structured their businesses accordingly. 

Little Green Pharma, which grows, manufactures and distributes medicinal cannabis, is hoping a recent expansion into Germany will provide the economies of scale to reduce its prices. 

“We [Australia] only have 25 million people, and Germany has 82 million, the UK has 60 million. [When] you start looking at these numbers and realise that, if you’ve got patients over there suddenly our production costs in WA start to reduce, just because of economies of scale,” Little Green Pharma managing director Fleta Solomon told Business News

“Australia is great, but if we want to realise bigger profits and actually achieve our vision, then we need to go overseas.”

Little Green Pharma exported an initial shipment of 2,400 units of cannabis oils valued at more than $600,000 to German importer and distributor of pharmaceuticals, CC Pharma, in November. 

Germany legalised medicinal cannabis in 2017.

The industry received support from private and public health funds, and has reimbursed more than 62,000 people in 2020, according to Marijuana Business Daily

“It’s what makes Germany such a lucrative or a great opportunity, or a market that most medicinal cannabis companies or producers such as us are attracted to,” Ms Solomon said. 

“When you say you deliver to Germany, people take you as a serious player.”

Ms Solomon said the UK, South America and New Zealand presented other opportunities. 

MGC has already made moves in South America and completed initial shipments of its Mercury Pharma line to Brazil in October through a supply and distribution agreement with ONIX.

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