British American Tobacco invests $10 million in CBD drug

British American Tabacco has invested heavily in cannabis. This time in collaboration with the CBD company Charlotte's Web to develop a drug for a neurological disorder.

A joint venture between BAT's subsidiary AJNA BioSciences PBC and Charlotte's Web, in which BAT invested last year, plans to seek approval from the US Food and Drug Administration for a hemp extract-based treatment. AJNA invested $10 million in the deal. Charlotte's Web and AJNA each own 40% of the entity, with BAT controlling the remaining stake, according to a statement.

Investing in CBD as an alternative to tobacco

Although the cannabis industry faces hurdles, tobacco companies are increasingly investing in the industry to move away from legacy tobacco products, such as cigarettes. BAT has also put money into OrganiGram, a Canadian cannabis company, and German cannabis company Sanity Group to join Snoop Dogg's Casa Verde Capital.
Until now, despite marijuana's medicinal potential, few companies have made specific efforts to pursue FDA-approved drugs. Only one such drug has been approved by the agency, GW Pharma's Epidiolex. (However, the agency notes that it has also approved three synthetic cannabis-related drugs).

Jefferies analyst Owen Bennett: “The outlook is attractive given that the drug Epidiolex, which is made from cbd, a treatment for epileptic seizures, generated sales of $740 million last year.” The influx of heavy tobacco money is a boon to an industry that otherwise struggles with low wholesale prices, political challenges and a crowded competitive landscape, including illegal marijuana growers.

The joint venture will begin clinical development this year and describes the new CBD drug as a "botanical medicine to address a neurological condition." BAT declined to provide more details about which condition can be specifically treated. Shares of Charlotte's Web gained as much as 21% on Thursday. BAT's share rose no less than 1,5%.

Source: Bloomberg.com (EN)