The Australian cannabis sector must put clinical research and product innovation at its core as it enters a new phase of growth and maturity, according to senior business leaders.
But it must also tackle familiar issues that continue to hamper progress and frustrate local producers.
In a wide-ranging discussion at the GCI cannabis summit, industry executives identified different quality standards for local and imported products, and the promotion of cannabis as a “cure-all” medicine, as on-going issues that need addressing.
The need for clinical trials and new product was also imperative, with companies needing to demonstrate their potential to attract funds from increasingly savvy investors.
The days of over-eager fund managers jumping on the bandwagon appear over, the discussion heard.
Now, investors want details of when and how revenue will be generated, and “what the medicine may look like”.
Little Green Pharma (LGP) chief executive Fleta Solomon said the mindset of the investment community has changed “even in the short life span of LGP”.
“They are now looking at the revenue pathway, when and how long before a company might break even, when it will realise a profit and when they will see a return on their investment,” she said.
“And they are starting to realise the importance of manufacturing. Rather than cultivation, at that patient end they are asking what the medicine looks like, because a lot of the medicines offered at the moment are very similar.
“All of our medicines… there is nothing original about them, it’s an oil.
“In a couple of years we are going to see some fabulous product innovation and delivery technologies that need to be unique and are solving real patient problems.
“This is where the focus needs to be.”
While flower and oil “will exist for some time”, the rise of soft gel caps, suppositories, transdermal patches and other tech “will come into play”, she said.
“But to register those, and to have those in market, you need to do clinical studies and trials,” Solomon added. “That’s why we are not seeing that straight away, but we will in the coming years.”
Industry commentator and Cannabiz editor-at-large Rhys Cohen said relatively few organisations “are prepared to put their money where their mouth is” and conduct pharmacokinetic studies to “prove product is effective in the way companies think it is”.
But Australia is well placed to conduct such trials and could become a “petri dish” for delivery mechanisms and formulations.
The end result could see cannabis viewed as “just another medicine that people don’t have a particular feeling about”, Cohen added.
Yet according to financial analyst Sean Kennedy, real-world evidence, rather than clinical trials, is the likely way forward for the industry.
Kennedy, director of corporate finance at PAC Partners, told the summit that the time and cost of clinical trials is impractical.
“You run phase 1, 2 and 3 traditional clinical studies which take 12 years to get your label claim and costs a lot, or you can use a real-world evidence model,” he said. “That’s a big trend in the US and certainly in Australia it’s starting to emerge.
“You create a data package that is statistically significant and take that to a regulator… to get that label claim. I think that real-world evidence will be the future of the cannabis game.
“I don’t think it’s feasible to run phase 1, 2 and 3 studies… for every single indication and wait for those results in 2030.
“A lot of investment capital is looking at the R&D side of the value chain. There’s a massive prize there if you can undertake research and own that drug or label claim.”
Kennedy added that investors are more savvy than they were when medicinal cannabis was first legalised in Australia in 2016.
“Everyone saw a huge opportunity and they weren’t picky, but they are picky now,” he said. “They are asking ‘where is my ROI?'”
Sharlene Mavor, a medical scientist from Medical Cannabis Research Australia, agreed that real-world data was important but that clinical trials would also be necessary.
Australia is a “hot bed of research”, she added, with 70 patient studies either announced, in progress or recently completed.
“It’s the only way we will get products on the PBS and that will make it cheaper for patients. It’s a long road, but that is what we would really like to see with all these products,” Mavor said.
A combination of real-world data and clinical trials was also predicted by Cann Group chief operating officer Shane Duncan.
He said investors were starting to view medicinal cannabis as pharmaceutical production rather than aligned with the agricultural sector.
“A lot of the questions they ask now are around execution, and the path to revenue and profitability. When is this translating to revenue and profitability? It’s less blue sky, and a more focused range of questions around the commercial viability of what we are trying to execute,” Duncan explained.
“We are three years in so you get beyond the entrepreneurial story into a more P&L business-type approach from the investment community.”
Unlike pharmaceutical and biotech companies who need funds to navigate clinical trials, Duncan said medicinal cannabis firms are already monetising products.
That will enable the sector to invest in research, produce differentiated product, and “do some of the clinical work to get yourself a patent-protected, registerable product”.
- For more coverage from the GCI cannabis summit, click here.