Editor’s note: This is the sixth in a series of articles examining regulatory hurdles facing cannabidiol (CBD) producers and marketers in the dietary supplement industry, and ongoing efforts to comply with federal regulations. Click the following links for parts 1, 2, 3, 4 and 5 of the series.
FDA has accepted for filing a New Drug Application (NDA) submitted by GW Pharmaceuticals plc, moving the biopharmaceutical company closer to marketing a drug containing CBD to treat two rare forms of epilepsy resistant to treatments: Lennox-Gastaut syndrome (LGS) and Dravet syndrome.
GW (Nasdaq: GWPH) divulged in a Dec. 28 news release that FDA is expected to complete its review of its CBD medicine, Epidiolex®, by the end of June. The NDA included safety data on roughly 1,500 patients, with about 400 patients having taken the medicine for more than one year.
Wall Street Weighs In
According to some Wall Street analysts, Epidiolex, if approved by FDA, could hit the U.S. market in the fourth quarter of 2018.
In a Dec. 14 equity research note upgrading its stock recommendation on GW from a “neutral” to a “buy,” three Goldman Sachs analysts projected 2025 worldwide sales of US$2.2 billion for Epidiolex, with more than half (56 percent) of the sales coming from off-label use.
Epidiolex’s launch would mark another revenue stream for CBD. Sales of CBD in the United States across the hemp-derived, marijuana-derived and pharmaceutical industries is projected to reach $1.1 billion by 2020, according to Hemp Business Journal.
Goldman Sachs analysts said the efficacy of Epidiolex observed in phase 3 studies of Dravet syndrome and LGS patients impressed physicians “given the patients had treatment refractory epilepsy … and were on multiple concomitant AEDs [antiepileptic drugs] and thus represent the severe spectrum of disease.”
The bullish assessment on Epidiolex isn’t unanimous. Ken Trbovich, an equities analyst with Janney, a financial services firm, noted evidence showed the efficacy of Epidiolex was improved by combining it with clobazam, the active ingredient in the prescription drug ONFI.
“We acknowledge that the novel mechanism of action from a new class of drugs is receiving much attention from physicians because it represents a new option for LGS and may be the first to actually be approved for Dravet,” wrote Trbovich, whose stock recommendation in a Nov. 22 report was a “sell.” “But, we simply do not think this is enough to ensure it has blockbuster status as others do.”
Most drugs that have recently been introduced for epilepsy, the analyst observed, have yielded annual sales of between $50 million and $250 million three to seven years after they were launched.
“From the outset,” Trbovich wrote in his report, “one of our biggest issues with Epidiolex has been management’s aversion to providing clear and convincing evidence that it independently provides statistically significant reductions in seizures when added to existing anti-epileptic drugs currently used to treat Dravet and LGS.”
Conditions Are Severe
In the United States, LGS affects between 14,500 and 18,500 children under the age of 18 and more than 30,000 children and adults, according to the LGS Foundation. Stephen Schultz, GW’s vice president of investor relations, said Dravet syndrome is estimated to impact between 5,000 and 8,000 patients in the United States.
The conditions are severe and resistant to many treatments, with patients suffering acute psychotic episodes, developmental delays, prolonged seizures, frequent falls and other hardships.
“There’s a motivation certainly for every employee in this company … [who] goes to work looking to try to help these kids out,” Schultz said in a phone interview before GW received word from FDA that its NDA was accepted for filing. “You watch movies of these children, and it’s heart-breaking … and it affects the entire family.”
If Epidiolex is approved, GW would have a marketing exclusivity period for up to 7.5 years for the indications that Epidiolex is awarded for, Schultz said.
Role of DEA to Schedule Epidiolex
Before Epidiolex could become commercially available, the Drug Enforcement Administration (DEA) would need to make a scheduling decision under the Controlled Substances Act (CSA) for the medicine following a recommendation by the Department of Health and Human Services (HHS). FDA is an agency within HHS.
In an “annual report for foreign private issuers” filed Dec. 4, 2017 with the Securities and Exchange Commission, GW noted its product candidates under development contain controlled substances, per the CSA.
If Epidiolex is approved by FDA, DEA would move it into one of the four medical schedules under the CSA, such as a Schedule II controlled substance, which would place it alongside such drugs as codeine, oxycodone (OxyContin®, Percocet®) and fentanyl. However, GW anticipates DEA would place Epidiolex in a less restrictive category, which includes Schedule III, IV and V controlled substances.
“If and when any of our product candidates receive FDA approval, the DEA will make a scheduling determination and place the product in a schedule other than Schedule I in order for it to be prescribed to patients in the United States,” GW noted in its regulatory filing. “At the Annual Meeting of the American Epilepsy Society held in December 2017, we presented data from our human abuse liability study, which demonstrated that CBD has a low potential for abuse when compared to a Schedule III or Schedule IV drug product. If approved by the FDA, we expect the finished dosage form of Epidiolex to be controlled in Schedule IV or V.”
DEA has identified CBD as being found in parts of the cannabis plant that fall within the definition of marijuana, although the hemp industry has challenged a related marijuana extract rulemaking by DEA in a federal appeals court. Schedule I drugs, including marijuana, are defined as drugs with no accepted medical use and a high potential for abuse.
Last year, FDA granted drug approval for Syndros, a product consisting of dronabinol [a delta-9-trans-tetrahydrocannabinol (delta-9-THC)] oral solution. THC is the primary psychoactive substance in marijuana.
DEA then placed FDA-approved products of oral solutions containing dronabinol in Schedule II of the CSA, concurring with HHS’s recommendation that Syndros has potential for abuse similar to other Schedule II controlled substances. According to DEA, Schedule II controlled substances “have a high potential for abuse, which may lead to severe psychological or physical dependence.”
HHS made its scheduling recommendation to DEA on Dec. 28, 2016, about six months after FDA approved the NDA for Syndros.
Once new drugs are approved and HHS recommends control in Schedules II through V of the CSA, DEA has 90 days under the law to issue an interim rule scheduling the drug. The 90-day clock begins after DEA is notified of the drug approval or scheduling recommendation, whichever is later.
Drug Approval Impact on CBD Supplements?
For several years, CBD has been sold in marijuana dispensaries and as a dietary supplement in natural food stores and on the internet. Colorado-based Hemp Business Journal estimates the total CBD industry—including both hemp and marijuana-derived sources—grew to $360 million in U.S. sales in 2017, reflecting a 37 percent growth rate. Hemp-derived CBD sales reached $178 million in retail sales, while marijuana-derived sales totaled $182 million.
Sean Murphy, founder and publisher of Hemp Business Journal, attributed growth in the hemp-derived CBD market to internet sales and penetration into the natural products industry.
It remains to be seen whether GW’s entry into the CBD market will disrupt such growth. Some regulatory lawyers have speculated (see video above and story here) FDA approval of Epidiolex could prompt FDA to take enforcement actions against companies marketing CBD-containing products as dietary supplements. That could result in a prolonged battle in federal court over the legality of CBD in supplements.
In several warning letters, FDA has proclaimed CBD is excluded from the definition of a dietary supplement under federal law because, in part, it has been the subject of clinical trials by GW that have been made public. The agency, however, hasn’t moved in federal court to shut down the blossoming industry.
But Marc Ullman, a regulatory lawyer in New York who advises companies selling dietary supplements, said FDA approval of Epidiolex would represent a “sea change for the CBD trade.
“Once that happens, if you’re selling something you call CBD, and GW has an approval for what it calls CBD, FDA’s position will be you’re marketing a drug ingredient and will act on it,” said Ullman, Of Counsel to the law firm Rivkin Radler LLP, in a brief phone interview. “It has taken that position in any number of warning letters, but to date, there’s been a fairly generous enforcement discretion.”
Ullman stressed marketers of CBD in supplements will need to sufficiently distinguish their products—and the constituents therein—from Epidiolex.
In 2017, FDA sent several warning letters to marketers of CBD, reiterating CBD can’t be marketed to treat diseases like Alzheimer’s disease and cancer since it hasn’t been approved as a drug for such indications. The agency also maintained its long-held position that CBD is excluded from the definition of a dietary supplement.
GW’s Schultz declined to comment on FDA’s warning letters, other than saying the agency took enforcement actions on its own.
“Where possible, we believe it’s appropriate that drugs—especially those to treat vulnerable patients—be studied and evaluated through the FDA process, so that patients and health care professionals have reliable science-based evidence,” he said.
Garrett Graff, an associate attorney with Hoban Law Group in Denver, which specializes in cannabis law, said he would expect and hope that as part of its review of GW’s NDA, FDA would “affirm the legitimacy of” hemp-derived products, allowing them to co-exist alongside approved pharmaceutical formulations.
“Obviously, I think FDA has an opportunity here to create a co-existent economy and marketplace, similar to things like fish oil or red yeast rice,” he said in a brief phone interview.
However, if FDA approves Epidiolex and subsequently cracks down on CBD products being sold as supplements, the hemp industry has no plans of capitulating.
Said Graff: “Though we hope that we don’t have to do so, we stand prepared to defend [the] legitimacy of those hemp products and supplements.”