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ASX:BDA Cannabidiol (Cannabis) Product to Treat Insomnia

September 22, 2021 | Price:$0.275

It might not be long before Aussies can pop into their local pharmacy to buy cannabidiol (CBD) products to help them sleep better.

Our cannabis and healthcare investment, Bod Australia (ASX:BDA) has plans to help customers achieve better sleep with news today that it has entered into an agreement to undertake a Phase IIB clinical trial with Australia’s leading respiratory and sleep institute.

BDA announced that the Woolcock Institute will undertake a Phase IIB clinical trial for the development of a new CBD product to treat insomnia that it hopes to make available in Australian pharmacies, as well as other key international markets.  

This follows the Therapeutic Goods Administration’s (TGA) landmark decision in December 2020 that down-scheduled CBD to a Schedule 3 from a Schedule 4 (Prescription Only Medicine). This paved the way for CBD products to be purchased as over-the-counter treatments at pharmacies from July 2021.  

Since that decision, there are still no TGA-approved CBD products that pharmacists can prescribe. But BDA hopes to pioneer change in this area.

ASX:BDA

So far, BDA is one of only two companies with clinical trials in the works, with Ecofibre Ltd also undertaking clinical studies to evaluate the efficacy of CBD on sleep disturbance.

We think that BDA might have the edge because its capsule uses a higher dosage than Ecofibre’s 15mg soft gel solution.

Phase IIB clinical trials will identify the ideal dosage level of CBD to improve a person’s quality of sleep, and we think that BDA’s higher dosage solution, coupled with its encapsulation technology, will maximize the efficiency of delivering the drug.

We like that BDA is developing pharmaceutical grade products as they are generally more valuable, and deliver higher margins to companies that sell them. 

For BDA, the prize of a successful clinical trial is substantial. The domestic Schedule 3 cannabis market is worth $250M, while the unregulated market is estimated to be worth some ~$3.5BN. 

Furthermore, the potential opportunity worldwide is huge. The global market for insomnia solutions is estimated to reach $5.48BN by 2023 — growing at an annual rate (CAGR) of 4.2% from 2017. 

The Phase IIB clinical trial design has now been finalised to test the efficacy of BDA’s unique CBD formulation among adults aged 18 to 65 years old who experience insomnia. 

As we mentioned above, the study will be performed at the Woolcock Institute of Medical Research — the top specialist sleep and respiratory health research centre in the world. The trial will run for a total of 12 weeks with approximately 200 participants. 

BDA CEO Jo Patterson is confident that the successful completion of the study will lead to major commercial opportunities for the company. This comes down to BDA’s “existing distribution networks, established partnership with H&H, relationships with other groups, and a rapidly developing market for Schedule 3 products with fewer side effects than existing offerings”.

Following product registration through the TGA, BDA will leverage its established relationship with Swisse Vitamins parent company, H&H Group, Swisse Wellness and other parties to drive sales growth. 

And while focusing on the Australian market initially, BDA is chasing additional commercial opportunities via product registration with the European EMEA Union and the US FDA. 

ASX:BDA

For those new to the story, BDA is an Australian medicinal cannabis, cannabidiol (CBD), and hemp healthcare company that delivers products for the consumer and medicinal markets. It operates under two core businesses: 

  1. Medicinal Cannabis — focused on sales of its established MediCabilis product in Australia and the UK; and 
  2. CBD Wellness under which all of BDA’s 30+ products are licenced to Swisse Vitamins’ H&H Group. These products are sold and distributed in the UK, Italy, Netherlands, Australia and the USA. 

Unlike a lot of small cap cannabis stocks, we like that BDA is already generating decent and growing revenues.

Another of BDA’s points of difference is their established relationship with H&H and Swisse Wellness. Think of BDA as creating new products through research and development, with H&H and Swisse Wellness providing distribution, sales and marketing.

Science led product innovation and development is core to the BDA strategy, and we look forward to seeing if BDA can capitalise on the new TGA rules and commercialise this new product application.

What we are watching out for next: 

Research & Development

[NEW] Insomnia Study (Schedule 3 CBD Australia)

Partnership with Woolcock Institute of Medical Research
✅ Phase IIB Trial Design Finalised
🔲 Ethics Approval for Study
🔲 Patient Recruitment Commenced
🔲 Phase IIB Trials
🔲 Phase IIB Trial Results
🔲 Submission of data to TGA
🔲 Product Registered
🔲 Product Licence / Commercialised

Our investment strategy for BDA

While it’s still very early in our investment journey, we have been impressed with BDA’s product development progress since our investment in March 2021, even though its shares have been regularly sold down since then. 

However, today’s news appears to have been well received by the market, and we expect a recovery once BDA starts making a profit and medical cannabis stocks come back into investor favour.

Our investment followed extensive due diligence on the company and the sector and we remain confident of earning a solid return on our investment. There’s still a long way to go in our 4 to 7 year investment time frame:

Initial Investment: @ 50.5c
🔲 Increase Investment 1
🔲 Increase Investment 2
🔲 Price increases 250% from initial entry
🔲 Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
🔲 12 Month Capital Gain Discount
🔲 Free Carry
🔲 Take Some Profit
🔲 Hold remaining Position for next 2+ years

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this report is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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