U.S. health authorities are signing off on human trials of CBD to treat opioid addiction.

The U.S. Food and Drug Administration gave the green light this week to Ananda Scientific to start human testing of its CBD drug Nantheia ATL5, the company announced.

The trials will be run out of UCLA and are funded by the U.S. National Institute on Drug Abuse.

The federal clearance for CBD opioid-addiction research “further re-enforces our vision of developing CBD as a therapeutic for a number of key indications.” Ananda Scientific CEO Sohail R. Zaidi said in a statement.

The clearance comes two years after the FDA issued a warning letter to Massachusetts-based Curaleaf for marketing its CBD product’s potential to treat opioid addiction. Curaleaf scrubbed its website, though national drugstore chain CVS Health dropped some Curaleaf products anyway.

Ananda Scientific is privately held and has offices in Los Angeles and Greenwood Village, Colorado. A company spokesman reached by Hemp Industry Daily did not immediately say where the CBD comes from or if it is naturally derived or synthetic.

The only plant-derived cannabinoid medicine approved for human use in the United States remains Epidiolex, a CBD drug that treats rare forms of epilepsy and is owned by Ireland’s Jazz Pharmaceuticals.

As research broke over the past two weeks that cannabis products including CBD, cannabinoid acids and even synthetic cannabis compounds may prevent or treat COVID-19 infections, excitement among hemp entrepreneurs spread.

Interest in the seemingly stagnant hemp biomass, CBD and CBG markets soared to highs not seen in three years. Prices are on the rise again and hemp producers are fielding calls from a slew of interested parties hoping to cash in on the news.

Considering the ups and downs the hemp industry has struggled through since it became a legal commodity in December 2018, it’s easy to understand the enthusiasm.

It’s good to see positive COVID-19 headlines for once, especially when they are about cannabis.

But is it too early for hemp entrepreneurs to profit from research that hasn’t yet been tested in human clinical trials?

And what are the compliance and legal risks for cannabinoid product makers peddling products as COVID cures?

Researchers and industry leaders have urged caution among consumers and industry alike.

“Science is not the result of one or two studies. It’s a long process based on peer review and the opportunity for replication of results,” said Hemp Industries Association executive director Jody McGinness.

“As much as we are encouraged by studies that open up people’s eyes to the possibilities, we want to caution anybody against extrapolating from the results of early studies to any type of claims about the efficacy of cannabinoids.”

Industry ramping up anyway

For Bend, Oregon-based hemp producer Wesley Ray, Oregon State University’s study showing cannabinoid acids can prevent COVID-19 from entering human cells has validated his own work growing and processing CBDA and CBGA over the past few years.

Since news broke about the research, Ray and his partner Shannon Little have been inundated with calls and emails from retailers, formulators, distributors, recreational marijuana businesses, and even government entities, looking for raw material, crumble and tinctures to produce white label products and more.

“And then you have the bigger companies that are wanting to do some pretty crazy numbers (like) 25 kilos every two weeks,” Ray said.

He’s selling CBGa and CBDa crumbles in bulk for $2,900 per kilo or $5,000 per single kilo.

“The prices on that are obviously up. And if farmers are smart, they would hold back their biomass and not just liquidate it,” Ray said.

“I would put $20 a pound on my CBG biomass right now, just because I know how many pounds are going to go in to make a kilo and I know the input costs, and I don’t think the lab should be the only one making margins.”

Prices haven’t seemed to go up across the board yet in response to recent research results, but it’s still early and the interest is clear, according to Julie Lerner, the founder and CEO of Denver-based commodity selling platform PanXchange.

“There is no doubt that demand and inquiries are picking up for several processors in the country, but so far activity has been mostly directed toward CBDA and CBGA products,” Lerner told Hemp Industry Daily in an email.

“Demand has not yet picked up in biomass; our January prices are on par with December. However, a late-month rally pushed winterized crude prices up $5/kg this month.”

Compliance matters

The research findings supporting the role of cannabis in human health “moves the scientific conversation forward” and show the industry is one step closer to “unlocking the many benefits of cannabis,” said Asa Waldstein, principal of Boulder, Colorado-based Supplement Advisory Group, which advises herbal products and cannabis entrepreneurs on federal compliance.

That said, “it is a prohibited act to promote non-drug products as a cure for any disease or virus,” Waldstein cautioned in an email to Hemp Industry Daily.

“I urge companies to fight the urge to exploit this news to sell products.”

As has been the case with all other claims that have prompted the U.S. Food and Drug Administration and the U.S. Federal Trade Commission to sanction cannabis product manufacturers, anything on a commercial website or social media is considered marketing, he pointed out.

“Although unadvisable, if a company must risk posting about (cannabinoid and COVID research), they should ensure there is no mention of their product or company in the post or blog,” Waldstein said.

“This includes removing any shopping cart-linked call to actions and product pictures.”

Waldstein added that FDA and FTC authorities consider the “reasonable consumer takeaway,” which means if consumers think a company’s blog or post is about its products, the authorities do, too.

“I asked a top FTC official about ‘educational’ blogs on commercial websites. He responded, ‘What is the purpose of posting an educational blog on a commercial website, if not to sell products?’” Waldstein said.

“This further demonstrates the authority’s position when posting about disease therapies on a supplement site.”

And with the number of “cringe-worthy product claims” aiming to cash in on scientists’ research, companies promoting COVID research with links to products should consider FDA and FTC enforcement “a given,” Waldstein said.

Waldstein pointed to 25 COVID-related warning letters that the FTC sent earlier this month, showing the regulator’s “renewed dedication” to stopping companies from making misleading claims.

“The FDA/FTC makes examples of companies not following the rules, especially in areas they want to highlight,” he explained in an email.

“I predict we should see a batch of CBDA and COVID warning letters coming out in the next couple of months.”

Universities could push back, too

It’s not just government compliance companies need to consider.

Cannabis entrepreneurs that are openly promoting products in the name of university research may also be violating intellectual property laws provided to researchers, said Jay Noller, director of the Global Hemp Innovation Center at Oregon State University.

“There’s this presumption that because it was published, it’s theirs to use,” Noller told Hemp Industry Daily.

“International and U.S. patent law is such that to not check in with the publisher or that institution, we’ve seen that in other industries where the presumption leads to downstream reaches for violation of that IP.”

Even in cases of publicly financed research, scientists and universities have IP rights on findings that can produce results such as inventions, scholarly publications, new plant varieties, confidential information and more – even if they are proof-of-concept or laboratory-scale prototypes that require additional research and development before they can be commercialized.

Hemp entrepreneurs therefore need to do due diligence that they aren’t violating prior IP, Noller said.

Perhaps because the makers of the only CBD drug sanctioned by the FDA, Epidiolex, aren’t in headlines suing over-the-counter CBD makers, some cannabis operators may assume they are safe to market their own CBD products.

But that’s a risky assumption, Noller said, pointing out that such cases can take years to build, as in the seven-year patent battle over smart phones between Apple and Samsung.

Further, cannabis companies should consider that investment in research could yield faster industry development than investments in marketing, Noller said.

“We saw that for three years: branding, marketing. And then you have one science paper come out on a very, very limited budget. …That’s how it’s going to work.”

“So I think we’ve we’ve been able to demonstrate, if not shame, the industry into its disproportionate attention to fantasy versus reality, and that’s truth in science.”

Laura Drotleff can be reached at laura.drotleff@hempindustrydaily.com

(A version of this story originally appeared at Marijuana Business Daily and will be updated.)

An Irish pharmaceutical firm, Jazz Pharmaceuticals, has agreed to purchase United Kingdom-based GW Pharmaceuticals, one of the largest medical cannabinoid companies in the world, for $7.2 billion, the drug companies said Wednesday.

The proposed cash-and-stock deal would be the largest acquisition in the cannabis industry to date and a key move by a pharmaceutical company into cannabis. GW created the only plant-derived cannabis medicine approved by the U.S. Food and Drug Administration, Epidiolex.

It could also could spur increased research and development into the burgeoning field.

Under the terms of the transaction, each GW shareholder would receive $200 in cash and $20 in Jazz ordinary shares for each GW American Depositary Share, resulting in an aggregate consideration of $7.2 billion.

“What we’ve been able to demonstrate at GW over the last 20 years is that the cannabinoid platform is a real and compelling science,” Justin Gover, CEO of GW Pharmaceuticals, told analysts during a conference call.

“There is very significant growth potential within the approved indications.”

GW’s main product is Epidiolex, which the company said achieved approximately $510 million in annual sales within two years of its launch.

Epidiolex has been approved in certain countries for the treatment of certain seizure disorders.

Jazz Pharmaceuticals CEO Bruce Cozadd sees opportunity to expand sales in Europe.

“This product is not that far into its launch. The GW team has done an excellent job, but there is lots of room to grow in the existing indications, including THC, which was fairly recent,” Cozadd told analysts.

“Similarly, there is lots of room in Europe. If you look at other product launches in this space, that’s what we’ve seen over time, as physicians get more and more comfortable with the use of these agents in these patients that really need a different therapy to get additional benefit.”

Gover said there is unlocked opportunity beyond Epidiolex.

“It’s not just Epidiolex. For each one of the pipeline assets, we’ve been very thoughtful about the exclusivity approach,” he said. “We understand and appreciate good medicine needs to primarily be transformative for patients, but it also needs to … return value to investors.

“There is still more to come, even with Epidiolex itself. This is an IP estate that is going to continue to build.”

The proposed deal has already been approved by the respective companies’ boards and is expected to close in the second quarter of this year.

Before the GW deal, Jazz Pharmaceuticals had said it expected to report revenue between $2.32 billion to $2.38 billion in 2020.

Diverging strategies

The Jazz-GW transaction highlights diverging strategies by some large companies when it comes to deploying capital in medical cannabinoids.

GW differentiated itself in the field of medical cannabis by developing a suite of products via traditional regulatory-approval pathways, including through expensive clinical trials. GW became the largest medical cannabinoid company in the world in the process.

The UK company’s R&D spending amounted to $290.5 million in 2019 and the first three quarters of fiscal 2020.

GW employs 278 people in research and development, more than the 192 people involved in manufacturing and operations.

The company has exported its products to more than 30 countries, according to financial disclosures, for either commercial or research purposes.

GW’s intellectual-property portfolio includes 767 issued patents outside the United States and 57 issued patents in the U.S., according to the company’s annual disclosure.

Additionally, the company said it has 259 pending patent applications worldwide.

Issued or pending claims cover:

• Plants.
• Plant extracts.
• Extraction technology.
• Pharmaceutical formulations.
• Drug delivery.
• The therapeutic uses of cannabinoids.
• Plant-variety rights.

GW leases three growing facilities in the United Kingdom, measuring a combined 2.1 million square feet in size.

In December, Canopy initiated a lawsuit against GW in U.S. federal court, alleging that the U.K. company knowingly infringed upon Canopy’s intellectual property.

According to a complaint, GW uses a Canopy-patented method to extract the CBD that’s the active ingredient in its Epidiolex medication.

In a statement emailed to Marijuana Business Daily that month, GW said that, “based on our preliminary review of the complaint, we are confident in our position and will vigorously defend against this lawsuit.”

GW trades on the Nasdaq as GWPH. Jazz trades on the Nasdaq as JAZZ.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].