Avecho Secures $1.66M to Power Pivotal CBD Insomnia Drug Trial

Government Support Bolsters Avecho’s R&D Efforts

Avecho Biotechnology Limited (ASX: AVE) has confirmed the receipt of $1.66 million under the Australian Government’s Research and Development Tax Incentive Scheme for the year ended 31 December 2024. This funding milestone underscores the company’s ongoing investment in developing innovative cannabinoid formulations, particularly its proprietary cannabidiol (CBD) soft-gel capsule designed to treat insomnia.

The R&D Tax Incentive is a vital program aimed at helping Australian companies offset the costs associated with research and development. For Avecho, this injection of capital not only validates its scientific efforts but also provides tangible financial support to advance its clinical and commercial objectives.

Strategic Allocation of Funds

A significant portion of the funds, $1.04 million, will be used to repay advances made by Endpoint Capital, which had previously fronted the company’s R&D tax credits. The remainder will fuel the ongoing Phase III clinical trial for Avecho’s CBD TPM soft-gel capsule, support general company operations, and help push forward its commercialisation strategy aimed at bringing new medicines to market globally.

This Phase III trial is a critical step for Avecho. It is a large, multi-centre, randomized, double-blind, placebo-controlled study designed to evaluate the efficacy and safety of the CBD formulation in reducing insomnia severity. The trial’s design aligns with the requirements of major regulatory bodies including the Australian Therapeutic Goods Administration (TGA), the US Food and Drug Administration (FDA), and the European Medicines Agency (EMA).

Tapping into a Growing Sleep Health Market

Insomnia affects a substantial portion of the global population, with estimates suggesting up to 237 million people worldwide suffer from symptoms. In Australia alone, up to 60% of the population experience some form of insomnia, with the economic impact estimated at A$19.1 billion. The sleep aids market is projected to reach nearly US$1 trillion by 2032, highlighting the significant commercial opportunity for effective treatments.

Avecho’s CBD TPM soft-gel capsule aims to be a first-mover in Australia’s evolving regulatory landscape, where over-the-counter sales of CBD products from pharmacies are now possible following appropriate approvals. Success in this Phase III trial could position Avecho to capture a substantial share of the growing market, with initial projections estimating the Australian OTC CBD market could exceed US$125 million annually.

Innovative Technology and Future Prospects

Avecho’s proprietary Tocopheryl Phosphate Mixture (TPM) technology, derived from Vitamin E, enhances the solubility and absorption of drugs, including cannabinoids. This technology underpins the company’s lead asset and is also being developed for other human and animal health applications, potentially broadening Avecho’s product pipeline and market reach.

While the receipt of the R&D tax incentive is a positive development, the company remains subject to the usual risks associated with clinical trials and regulatory approvals. The outcome of the Phase III trial will be pivotal in determining the commercial viability of the CBD insomnia treatment and the company’s future trajectory.