The meteoric rise of the cannabis industry has seen the waning power of the prohibition era give way to multi-state dispensaries, sprawling cultivation operations, and hi-tech manufacturing facilities. However, one space remains off to a slow albeit deliberate start: cannabinoid-derived pharmaceuticals. With just four FDA-approved cannabinoid pharmaceuticals on the market – the CBD-based anticonvulsant known as Epidiolex™ and synthetic forms of THC Marinol (dronabinol), Syndros (dronabinol), and Cesamet (nabilone) – the space remains largely developmental or in the pre-clinical trial phase.
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However, despite the slow move toward cannabinoid-derived pharmaceuticals, the space is poised to be the fastest-growing sector in the entire industry. Market analysis from Grandview Research projects that the cannabinoid pharmaceutical space will grow from $943.5 million in 2021 to $68 billion in 2028, a massive compound annual growth rate of 104.3%. This growth presupposes further regulatory movement on pre-clinical and developmental cannabinoid medications.
To better understand the evolution of the cannabinoid-derived pharmaceutical sector, how it’s developing, and what it will take to realize the monumental growth that’s predicted, we spoke with Dr. Sean Hall, founder and CEO of Medlab Clinicals Ltd. (ASX:MDC).
Q: What are cannabinoid-derived pharmaceuticals and why is there such growth potential for the space?
A: Cannabinoid-derived pharmaceuticals are clinical-grade medications targeting certain receptors in the endocannabinoid system (ECS). They have their roots in cannabis and are based on the compounds found in the plant, although when we’re talking about clinical environments it’s really so far beyond the botanical products you can find in a dispensary. These are clinically evaluated and proven medications made in alignment with strict regulatory standards and subject to extreme scrutiny. They’re intended for clinical environments in which patients are receiving treatment for chronic or life-threatening diseases.
In short, cannabinoid-derived medications are about harnessing the therapeutic potential of cannabinoids and producing safe, effective, consistent drugs that can improve lives. And research suggests there are many potential applications for cannabinoids when it comes to treating serious conditions.
A: Pharma is a little bit slow. In our conversations, there are still some concerns around the cannabis [stigma] thing. One concern that comes up quickly is the gray or black market, these unregulated sales. I get that, but you can see the American market cleaning itself up. They’re well aware that historically the Department of Justice and Food and Drug Administration (FDA) have prosecuted for unsubstantiated health claims, so we’re seeing health-based CTAs removed from packaging. That’s all good in many ways and will help the space to grow.
Fortunately, there are already signs that the space is primed to really take off in the next couple of years. Everyone knows about the Jazz Pharmaceuticals PLC (NASDAQ:JAZZ) acquisition of GW Pharmaceuticals plc (NASDAQ:GWPH), which was worth more than $7 billion. And now Pfizer Inc. (NYSE:PFE) is getting into CB1 antagonists. And then there are small biotechs like us. There’s a lot of interest in the endocannabinoid system (ECS) and how it works.
Q: What have been the biggest challenges to pharmaceutical companies in developing clinical trial-ready medications?
A: Attaining that precision and accuracy on a consistent basis over time is always going to be the key in gaining regulatory approval. This is an evolution any biotech has to make if they want to gain approval for their products. This is a high bar to hit and it takes years of research and development work to find the right formulations, so you can imagine why pharma is a bit behind some of these other sectors in legal cannabis.
Our firsthand experience speaks to the sort of trial and error you need to do in order to get your precision and consistency to the level the FDA and other regulatory agencies around the world are going to demand. We started in botanicals with a formula that was 97% categorized but, in the regulatory world, that’s still a bit shy.
The feedback we received was to look at synthetics. Now, we have a neat CBD that is 100% identifiable to plant and we have a drug master file for a neat dronabinol, which is really unusual. When you’re working with neat synthetics, the whole manufacturing cycle gets simpler. A simpler manufacturing cycle makes it easier for regulatory agencies and also reduces final cost to the patient.
We’re not talking “GMP-like” or “pharma-grade”, that’s all rubbish. We’re talking current GMP standards under the FDA. Reaching that level is a challenge and only the biotechs that are committed to doing that, and finding new ways to drive precision and accuracy, are going to be the ones that survive long enough to realize the growth of the space. The good news is, despite the long runway, the pharma sector has really strong outlooks for growth in the next few years.
Q: What are the biggest opportunities for disruption you see open to cannabinoid-derived medications?
A: I think we should shift the conversation into what final drug approvals look like, and that’s where cannabinoid-derived medications represent effective treatments for conditions or symptoms that remain largely unaddressed right now. For me, the top of the list is central nervous system (CNS) pain, which directly relates to opioid abuse and the physician's push to prescribe less. We have the nabilones but they aren’t working; we’ve had them for years and they’re not arresting the problem. We need a new solution to come into place and you need small biotechs to take the risks needed to build new analgesics. I think that’s where some of the biggest growth opportunities exist right now.
And, of course, there is the mental health piece. We’ve seen such an explosion in occupational stress and burnout since the pandemic began, and now with economic pressures on top of everything people are more worn down than ever. Promising research into the ability of cannabinoids like CBD to address stress and anxiety point toward a pharmaceutical solution that doesn’t carry the same risks or challenges as benzodiazepines and antidepressants. So, that represents another big growth opportunity as well.
Q: How is Medlab moving forward in the next six months given these realities?
A: At Medlab, we have two synthetic cannabinoid-based therapies, both of which are delivered with our nanoparticle delivery platform NanoCelle. The first therapy, called NanaBis, is a combination of CBD and THC [as synthetics] intended for pain management, and we’re seeing that work particularly well for bone pain in cancer patients. The other we call NanoCBD, which relies on a pure CBD synthetic intended for the management of occupational stress and burnout, both of which have become ever more common in the wake of the COVID-19 pandemic.
So, recently we’ve continued our RWE work here in Australia and, at the last report, we had 1,100 Australians under clinical obs, a few hundred of them are past the six months point. That’s important because pharmaceutical drugs are predicated on two things from a regulatory point of view: precision and accuracy. We’re working to understand the safety and sustainability of these drugs. When we look at NanaBis we can attest to safety after 12 months of everyday use, and we can still show the benefit of reduction in pain and improvement in quality of life.
Through the end of the calendar year, we’re expecting regulatory readouts, primarily around Chemical Manufacturing and Controls (CMC). We’re also hoping to see more readouts as we move into the clinical programs — I think regulatory feedback on those two cannabinoid programs will be key as we move through the remainder of 2022.
On top of that, we’re working on a number of partnership agreements that should materialize during that time. These are partners who intend to take the product to market should we obtain regulatory approval.
