Exclusive License and Development Agreement Signed by Avecho and Sandoz for the Commercialized Use of CBD for Insomnia in Australia

Image | adobe.stock/MysteryShot

In a recent press release, Avecho Biotechnology Limited (Avecho) disclosed that they have entered into a 10 year license and development agreement with Sandoz Group AG (Sandoz) for the “commercial rights to Avecho’s Phase III cannabidiol (CBD) capsule for insomnia in Australia,” (1). Through the agreement, Avecho is able to retain the rights to commercialize the CBD capsule in “all other territories”. Sandoz has received a “first right of refusal” in these markets. Avecho hopes their CBD capsule could be the first pharmaceutical CBD product to be registered with the Therapeutic Goods Administration (TGA) as an over-the-counter medicine (2). Fresh Leaf Analytics in their Australian Medicinal Cannabis Market Report estimated that sales could potentially surpass more than $125 million per annum in Australia (1,3).

Out of this agreement, Sandoz will have exclusive commercial rights to Avecho’s CBD capsules to be used for insomnia within the country after an upfront licensing fee estimated at $3 million (2). Avecho will still be working on the products’ Phase III clinical trial, as well as funding the research. Once the trial is completed, Avecho and Sandoz will work together to obtain TGA regulatory approval. From there, Sandoz will pay for the finished product from Avecho and take over handling it’s commercialization which will include both distribution, as well as marketing in Australia. According to the press release, Avecho will be eligible for development milestone payments estimated at $16 million before commercialization and will then be receiving tiered royalties which could range between 14% to 19% on net sales once the product has hit the market (2).

“We are excited to announce this partnership with Sandoz, which underscores the commercial potential of Avecho’s drug delivery platform and our shared commitment to deliver innovative insomnia treatments,” Dr Paul Gavin, CEO of Avecho, said (1,2). “Sandoz’s extensive reach and expertise in the Australian market will ensure our products are widely accessible to insomnia patients across Australia. This partnership provides Avecho with a strong commercial foundation for success.”

As mentioned in the press release, the agreement between the two companies is set for 10 years but will have automatic extensions for two renewal terms of two years each (1). The agreement will not renew if it is terminated by both companies.

References

1. Avecho and Sandoz enter exclusive license and Development Agreement to commercialise CBD for insomnia in Australia https://avecho.com.au/investor-centre/news/2025/03/03/avecho-and-sandoz-enter-exclusive-license-and-development-agreement-to-commercialise-cbd-for-insomnia-in-australia/ (accessed Mar 3, 2025).
2. Avecho and Sandoz enter exclusive license and development agreement to commercialise CBD for insomnia in Australia https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02920239-3A663194 (accessed Mar 3, 2025).
3. Fresh Leaf Analytics, Australian Medicinal Cannabis Market, H1 2021.