The acquisition by Bod Australia of a UK invention that aims to increase the therapeutic value of CBD has the potential to satisfy investor calls to deliver short term and sustainable revenue for the company, its chief executive has said.

Jo Patterson told Cannabiz it was time for Bod, and the wider industry, to start generating sustainable revenue after several years of building the foundations of the business.

She said the days of returning cap in hand to shareholders to shore up finances were nearing an end.

Jo Patterson: ‘You can’t keep going back for more’

Aqua Phase, which Bod is set to acquire for up to A$5 million from two British scientists, could deliver both short and long-term revenue, Patterson said.

“Investors want to see – and I am fully supportive of it – a revenue model that is sustainable because no matter if you’re a public company or a private company, you can’t keep coming back for more,” she said. “The last five years has been about building assets that could realise significant revenue value.

“You’ve then got to prove out the business model and that is why I’m so excited about Aqua Phase. Living the position of a drug-delivery company and product innovator will really start to play out.”

Bod’s own revenue took a hit in FY22, falling more than 30% as it struggled for sales in the UK through its global partner Health and Happiness Group (H&H).

Patterson admitted H&H had not “generated the momentum they would have liked”, but added the entire sector had been subdued as the UK Food Standards Agency worked through regulatory issues.

“A lot of firms playing in the CBD space are taking a hit right, left and centre. The novel food complexity of that market has really affected it,” she said.

While Bod will look for a marked improvement in FY23, its current focus is on the acquisition of Aqua Phase, a processing technology invented by UK scientists Peter Stabler and Gregory Stoloff.

The system, which is undergoing pharmacokinetics (PK) testing by Bod, is expected to deliver bioavailability of more than 30% through a methodology which creates a molecule which is “truly soluble”, according to Patterson.

“CBD and other cannabinoids are intrinsically poorly absorbed because they’re lipophilic, they’re water-hating molecules,” she explained. “From a therapeutic perspective, the drug-delivery device becomes incredibly important because if you can’t get enough cannabinoids into your system, you’re not going to get the therapeutic outcome you need.

“Most CBD oil is suspended in MCT oil and the scientific literature says the absorption is between 6% and 8%. We think that Aqua Phase, at a minimum, is going to be greater than 30%.”

Completion of the acquisition is conditional on bioavailability hitting that figure, Patterson said.

“We are very confident because we’ve done our own internal studies and I suspect it will be a lot more than 30%.

“The delivery technology has been tried and tested with CBD and we’re about to move into CBG and other cannabinoids, such as CBN, where we think it has great application.”

Results of the PK testing are expected within eight weeks, after which commercial discussions will begin over licensing the technology to the health and wellness sectors, including sports drinks manufacturers.

Bod’s research and development team will explore other actives and presentations

“We think it has enormous potential, not only in the pharmaceutical market where some therapeutic outcomes have not been possible because of cost and the lack of bioavailability, but also in the sports drinks and healthcare markets.

“Licensing gives us the opportunity to create revenue in the short term and that’s obviously what we’re looking for. We’re looking for revenue opportunities, and licensing is a less complex way of realising value from this product.”  

While competitors have looked to solve the bioavailability issue through emulsification, Patterson claimed such a process only improves absorption “by a few percentage points”.

“Ours is a solution, it takes the CBD through a unique and novel methodology that creates a new molecule that is truly soluble and delivers better bioavailability.”

Critically, the CBD Active Pharmaceutical Ingredient (API) that results from the process is tasteless, colourless and odourless, she added, making it suitable for beverages.

“That is so important when you’re adding it to your sports drinks,” Patterson said.

Equally, superior bioavailability will lower costs for patients as they will need to consume less CBD for the same therapeutic effect.

“In all products, CBD is the most expensive input,” the Bod chief said. “Aqua Phase will unlock therapeutic outcomes that have been prohibitive due to cost.”

She said Aqua Phase could even drive a bioequivalent medicine to Epidyolex.

Currently, Aqua Phase produces bulk powder for capsules, tablets and to mix with drinks, with other formats being explored.

“We have the opportunity to commercialise it with the formats that already exist, but there will be ongoing R&D work which will explore not just other actives but other presentations depending on what the market needs.”

The Aqua Phase process could also add weight to Bod’s ambitions to register an over-the-counter product with the TGA, while the technology could be expanded beyond medicinal cannabis.

“Our focus is exploring the therapeutic benefits of CBD and other cannabinoids, that’s our remit, but there are many other lipophilic compounds where people are trying to solve this bioavailability problem,” Patterson said.   

She added Bod’s ambition is to make Australia the central hub of the Aqua Phase manufacturing operation.

Steve has reported for a number of consumer and B2B titles over a journalism career spanning more than three decades. He is a regulator contributor to health journal, The Medical Republic, writing on...

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