A surprise announcement from a little known biotech Avecho Biotechnology Limited.

Avecho is a microcap ($24m market cap) in the pharmaceuticals and biotech sector. They are involved in the development of a proprietary drug delivery system (Tocopheryl Phosphate Mixture - TPM) for a range of human and animal health products. This is an encapsulation technology that increases the drugs or other molecules solubitity and subsequent absorption either intravenous, oral or transdermal. They do have their technology in some products in the market such as a topical anti inflammatory drug called Diclofenac.

Avecho have completed or are completing some early clinical trials such as a cannabidiol absorption trial, osteoarthrits after topical application a sleep related application. In December 2021 they signed an agreement with Medterra Pharma from the US to license and supply its cannabidiol soft gel product for the treatment of arthritis. They are currently undertaking a trial to examin the use of their TPM drug delivery system in products for weaner pigs.

There are so many hurdles to clear to get a product to market. Most fail to get there. Even then success is not guaranteed. This is a big problem I see with drug development. In order to convince doctors to use you product on humans you need a lot of expensive high quality trial data.

Which brings me to the interesting part of the announcement from today. Avecho has entered into a licensing and supply agreement with Team SAAS LLC for the use of TPM in recreational cannabis products in the US. This is a completely different market. Sales of cannabis related product in the US totaled US$17.5Bn in 2020, which was a 29% increase from the previous year. Edibles, which will be the focus of the production, accounted for 20% of sales but represents the most popular form of consumption across all age groups.

By entering the recreational market in the US, Avecho have potentially bypassed the last difficult step to getting success that exists with medical drugs. That is convincing the medical profession that this is a drug worth using.