Avecho’s US$3M Upfront and US$16M Milestones Back CBD Insomnia Drug

Strategic Partnership with Sandoz

Avecho Biotechnology Limited (ASX: AVE) has taken a significant step forward in its commercial journey by signing an exclusive ten-year development and licensing agreement with Swiss pharmaceutical giant Sandoz Group AG. The deal grants Sandoz exclusive rights to Avecho’s pharmaceutical cannabidiol (CBD) capsule for insomnia within Australia, a market forecasted to generate over US$125 million annually. Avecho received an upfront licensing fee of US$3 million (approximately A$4.8 million), with potential development milestone payments of US$16 million and tiered royalties ranging from 14% to 19% on net sales.

This partnership aligns with Avecho’s ambition to bring the first pharmaceutical-grade CBD product to market as an over-the-counter medicine, registered with the Therapeutic Goods Administration (TGA). Under the agreement, Sandoz will purchase the finished product from Avecho and handle marketing and distribution in Australia, while Avecho retains commercialisation rights outside Australia, with Sandoz holding a right of first refusal on any international offers.

Advancing the Phase III Clinical Trial

Following the agreement, Avecho has intensified efforts to accelerate recruitment for its pivotal Phase III clinical trial targeting insomnia. The trial, which aims to enrol approximately 210 participants for an interim analysis in 2025, has expanded its footprint with three new clinical sites approved and set to commence recruitment imminently in Sydney and the Gold Coast. Adjustments to inclusion and exclusion criteria have broadened participant eligibility, reflecting lessons learned from 2024 recruitment challenges.

As of December 2024, around 70 participants had received study medication. The trial remains on track to complete dosing for the interim analysis within the year, a critical milestone that will inform regulatory submissions and commercial strategy.

Manufacturing Momentum and Financial Position

In parallel, Avecho completed a major manufacturing campaign for its U.S. partner Ashland LLC, delivering 5.4 tonnes of Vital-ET, a proprietary ingredient for the personal care market, generating approximately A$560,000 in revenue during Q1 2025. Additional manufacturing campaigns are scheduled to produce a further 3.6 tonnes later this year, underscoring Avecho’s operational capabilities and diversified revenue streams.

Financially, Avecho ended the quarter with a robust cash balance of A$6.6 million, bolstered by the upfront payment from Sandoz. The company invested approximately A$565,000 in research and development and incurred A$686,000 in employment, administration, and corporate costs during the quarter. CEO Dr Paul Gavin highlighted that the upfront licensing fee provides a solid foundation to accelerate ongoing research and commercial activities, enabling the company to focus on reaching the pivotal interim analysis milestone.

Looking Ahead

The Sandoz agreement marks a transformative moment for Avecho, positioning it to capitalise on the growing demand for pharmaceutical-grade CBD products in Australia. The coming months will be critical as the Phase III trial progresses toward its interim analysis and as Avecho prepares for regulatory submissions with the TGA. Meanwhile, manufacturing partnerships continue to contribute to the company’s revenue base, supporting its broader growth strategy.