Building Australia's Psychedelics Industry: A New Joint Venture And Why It's Important

On May 1, new partners Canadian psychedelics developer PharmAla Biotech and Australian digital healthcare business Vitura Health (formerly Cronos Australia) announced the definitive establishment of a 50-50 joint venture Cortexa. 

On May 20, the CEOs of both PharmAla and Vitura hosted a webinar about the new business. 

The partners agreed on the fact that it is very tough for a company to thrive in a market it is unfamiliar with, which is the case for PharmAla facing the Australian market in general, and for Vitura regarding psychedelic compounds.

Vitura’s wholly-owned subsidiary CDA Health oversees both Burleigh Heads Cannabis (operator of prescriber, patient, pharmacy and supplier online platform CanView) and CDA Clinics (national telehealth consultations on medicinal cannabis through majority-owned Cannadoc Health among others.)

Cortexa is based in Aussie lands and, supported by Vitura in domestic distribution, will offer PharmAla’s MDMA and psilocybin products for clinical use within TGA-authorized physicians’ prescriptions (starting July 1) as well as academic or commercially approved trials.

Vitura’s Rodney Cocks said the company’s CanView distributes about 100,000 medicinal cannabis products monthly, “servicing tens of thousands of patients nationwide” through two distribution centers located in Melbourne and Queensland, and that the addition of psychedelics to the supply platform is both exciting and something the company is “very much able to do” with the current infrastructure.

A veteran himself, Cocks says all of Australia was surprised on this past February 3 the TGA announced the regulatory changes allowing physicians to lawfully prescribe MDMA for PTSD treatment and psilocybin for that of TRD. 

Expecting the market to scale in time and toward onshore manufacturing, the partners say they have already had discussions with Australian contract manufacturers and have “a number of contracts” in place with physicians and clinics providing the assisted therapy, including the Royal College of Psychiatrists.

They also noted that Cortexa has momentarily no plans to open its own clinics but rather focuses on “making sure that doctors authorized to prescribe and patients have access to high quality, well-regulated, well-manufactured GMP materials.” 

Initial Resources, Licenses And Expected Prices 

As for financing, the agreement entails profits of all product sale orders received by PharmAla from the date of signing the Letter Of Intent (this February) have been transferred to Cortexa, toward ensuring the joint business will generate revenues from the start.

Meanwhile, Vitura will advance loan funds of up to $1.43 (AU$2.2) million to provide sufficient initial working capital.

The agreement also states Cortexa would receive a license to PharmAla’s manufacturing technology and IP to produce GMP-compliant MDMA and psilocybin through local contract manufacturers in Australia. This license sets Cortexa to pay PharmAla $163,575 annually for three years, plus a royalty equal to 5% of the net profit generated.

PharmAla CEO Nick Kadysh says that the usual thought around import and export (going to a customs broker and putting something in a container that arrives a few weeks later) doesn't really apply for controlled substances like these types of molecules, which are subject to international treaties holding huge cost, regulatory and time burdens.

Cocks added psychedelics’ sales prices will not be as inexpensive for patients as cannabis, with an estimated $500 per treatment for MDMA and "maybe a little less for psilocybin" and, while the psychotherapy part will most likely hold the highest cost, he sees it will most likely be reimbursed “relatively quickly.” 

Both companies are publicly trading, one at the Canadian Stock Exchange (CSE) and the other at the Australian Securities Exchange (ASX,) so we should expect to hear from them again soon.

Photo: Benzinga edit with photo by Augusto Cabral, eskymaks and billion photos on Shutterstock.