AXIM Biotech: Building a Lower Cost Portfolio of Cannabinoid Therapeutics
January 31, 2017 12:52 pm ET
The pharmaceutical industry may be notorious for high drug prices, but that’s not surprising when the average cost to develop a drug exceeds $1 billion. While cannabinoid-focused pharma companies may have somewhat lower costs, many large companies in the space still spend hundreds of millions of dollars to bring drugs to market. This creates a big risk and opportunity cost for shareholders – especially when companies are relying on only a handful of candidates.
In this article, we will look at AXIM Biotechnologies Inc. (OTCQB: AXIM) and its plan to develop a broad portfolio of pharmaceutical drugs at a substantially lower cost.
Clinical Trial Costs
The average cost of developing a prescription drug is some $2.6 billion, according to the Tufts Center for the Study of Drug Development, which includes $1.4 billion in out-of-pocket costs and an estimated $1.2 billion in returns that investors forego during the 10+ year timeframe that a drug candidate spends in development. This analysis was drawn from 106 randomly selected drugs from 10 pharmaceutical companies between 1995 and 2007.
The cannabis industry is no exception to these high costs. In 2016, GW Pharmaceuticals plc (NASDAQ: GWPH) spent nearly £100 million (~$130 million) in research and development of its cannabinoid-based therapeutic pipeline, according to its latest 20-F SEC filing. Insys Therapeutics Inc. (NASDAQ: INSY) similarly spent approximately $55.4 million on R&D in 2015, including $16.3 million on cannabidiol (CBD) research, according to its latest 10-K filing.
The problem with these costly endeavors is that it forces many smaller development-stage pharmaceutical companies to concentrate their efforts on one or two clinical programs. A failure therefore typically results in a bankruptcy or significant loss for shareholders. The good news is that success in Phase II clinical trials can often result in partnerships that offload some of the risk or an outright acquisition that can provide shareholders with an exit.
AXIM Biotech is pioneering a low-cost approach to pharmaceutical development by focusing on cannabinoid compounds with prior ‘evidence of safety’ and leveraging its delivery system to differentiate itself from others. On January 19, the company announced that it has begun clinical trials at Wageningen University in the Netherlands for the treatment of irritable bowel syndrome (IBS) with its CanChew Plus® cannabidiol (CBD) gum.
The company has also developed a robust clinical pipeline targeting other conditions in various stages of clinical development, which helps diversify risk for shareholders:
Last quarter, the company spent less than $90,000 on research and development, according to its 10-Q filing, which amounts to about $360,000 on an annualized basis. While the company is in the early stages of these clinical trials, the near-term projected approvals (see chart above) suggest that the team is pursuing fast-track status for many indications. If successful, investors could benefit from commercial products at a low cost as early as 2018 or 2019.
Dr. George Anastassov, CEO of AXIM commented “Here at AXIM, through collaboration with leaders in their respective fields of expertise, we strive to drastically cut costs of R&D as well as to fast track to clinical confirmation of efficacy. By developing products for more reasonable cost we are increasing shareholder value and will pass savings to the consumer once the products are on the market.”
According to its investor presentation, the company has already developed strategic relationships with big-pharma and distributors for drug development, licensing, and sales, which could create valuable opportunities for an exit over the coming years. And, management has proven its ability to execute by developing a nutraceutical product that is already on the market in 50 U.S. states and over 40 countries.
AXIM Biotechnologies Inc. (OTCQB: AXIM) has pioneered a new way to develop cannabinoid-based therapeutics at a much lower cost. By doing so, investors have an opportunity to capitalize on an enormous market without incurring opportunity costs and taking on risk. The company’s clinical programs may be in the early stages, but the potential for fast-track status means that drugs could be on the market as early as next year.
For more information, visit the company’s website at www.aximbiotech.com.