Avecho Biotechnology (ASX:AVE) has signed a ten-year exclusive licensing agreement with Switzerland-based Sandoz Group AG for the commercialization of its cannabidiol (CBD) capsule aimed at treating insomnia in Australia, according to a Monday filing with the Australian bourse.
Under the deal, Avecho will receive an upfront payment of $3 million, milestone payments of up to $16 million, and royalties ranging from 14% to 19% on net sales, the filing said.
Avecho will continue funding the ongoing Phase III clinical trial and collaborate with Sandoz on regulatory approval from the Therapeutic Goods Administration, the filing added.
Once approved, Sandoz will market and distribute the product in Australia and Avecho will retain commercialization rights in all other territories, with Sandoz holding a right of first refusal, the company said.
Shares of the company fell 14% on market close.
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