Ligand Pharmaceuticals (NASDAQ: LGND) has issued an 8-K with the SEC this morning detailing a licensing and supply agreement with Vireo Health, which is licensed in Minnesota and New York to provide medical cannabis in extract form.
On November 19, 2015, Ligand Pharmaceuticals Incorporated (“Ligand”) entered into a License Agreement and a Supply Agreement with Vireo Health, LLC (“Vireo”) granting Vireo an exclusive right in certain states within the United States and certain global territories to use Captisol® in Vireo’s development and commercialization of pharmaceutical-grade cannabinoid-based products. Vireo operates in the medical-model cannabis industry with an established team of licensed physicians, pharmaceutical chemists, and personnel with appropriate legal, regulatory, financial and operational experience. Vireo has received state licenses to operate fully-integrated pharmaceutical-grade medical cannabis businesses in New York and Minnesota. Vireo is planning to expand as additional states conduct their licensure processes, and it also plans to seek appropriate federal or other pharmaceutical regulatory authorities approval for marketing products with Captisol in the United States and multiple other countries.
Under the License Agreement, Ligand will receive an upfront payment and could also potentially receive milestone payments, plus tiered royalties from 4% to 10% on net sales for products that use the Captisol technology. Ligand will also receive revenue from any shipment of Captisol to Vireo for clinical and commercial use.
The ability to use Captisol, a patented cyclodextrin solubilizing agent used in numerous drugs approved by the U.S. Food and Drug Administration (the “FDA”), may help scientists and physicians at Vireo overcome formulation hurdles unique to cannabinoid-based products. Vireo believes that peer-reviewed scientific literature supports the utility and potential for significant benefits of using cyclodextrins with cannabinoids, illustrating improved solubility, chemical stability and bioavailability. Vireo’s goal is to incorporate Captisol into cannabinoid-based medicines in order to design novel, patent-protected, FDA-approved dosage formats that have been previously unavailable to physicians, caregivers and patients. Possible methods of administration include oral, nasal, topical and nebulized delivery.
Vireo’s territories include states of the United States in which Vireo or its affiliates have a valid state license, certification or approval to produce and/or dispense cannabis included or derived medicines, and countries where Vireo is seeking or plans to seek federal pharmaceutical regulatory authority approval. Notwithstanding any state law, Ligand’s agreements with Vireo and its conduct pursuant to those agreements may be challenged under United States federal law. Defending such charges could involve significant legal expenses and any violation could result in substantial penalties and fines. Either party may terminate the agreements or key provisions or geographies thereunder for breach, bankruptcy of the other party, or convenience.
The filing included two exhibits as well detailing the agreement (licensing agreement, supply agreement). Ligand Pharma has a market cap of approximately $2 billion and recently projected 2016 sales of $107-111mm at an Analyst Day at which it stated about Captisol:
- Management gave an update on the progress of Captisol, highlighting that Captisol-enabled drugs are now marketed in 60 countries and that more than 45 partners have Captisol-enabled drugs in development. While most work with Captisol to date has been with intravenous formulations, partners are also beginning to focus on using Captisol to develop ophthalmic, oral, subcutaneous, intramuscular and nasal routes of administration.
- Management also highlighted recent Captisol licensing deals with new and existing partners including AiCuris, Avion Pharmaceuticals, Cuda Pharmaceuticals, Novogen and Sage Therapeutics.
It’s website states regarding Captisol:
Captisol® is a patent protected, uniquely modified cyclodextrin, whose chemical structure was rationally designed to enable the creation of new products by significantly improving solubility, stability, bioavailability and dosing of active pharmaceutical ingredients (APIs).
This is an exciting development for the cannabis industry, as a early leader in winning licenses in states that are highly regulated and that demand a medical marijuana product that is pharmaceutical in nature has teamed with a publicly-traded biotech company with patent-protected technology.
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