BAT Invests $10 Million in CBD Company for Neurological Diseases Treatment

British American Tobacco (BAT) has invested $10 million to develop a drug for neurological diseases in partnership with CBD company Charlotte's Web as part of BAT's diversified business plan.

Establish A Joint Company

BAT subsidiary AJNA BioSciences PBC and Charlotte's Web have formed a joint company to apply to the U.S. Food and Drug Administration (FDA) to approve a treatment from cannabis extracts.

AJNA invested $10 million in the project. Under the agreement, Charlotte's Web and AJNA each own 40 percent of the entity, with the remainder going to BAT.

In the field of CBD, BAT has also invested in Canadian cannabis company OrganiGram and German cannabis company Sanity Group and joined Casa Verde Capital under Snoop Dogg.

Tobacco Company's First Foray into Drug Development

So far, few companies have applied for FDA authorization for CBD drugs. Only one similar drug has gained approval, which is GW Pharma's Epidiolex (an epilepsy treatment made from CBD). FDA also approved three synthetic marijuana-related drug products.

"This is a tobacco company's first foray into drug development," Jefferies analyst Owen Bennett said in a research stated, "This is a tobacco company's first foray into drug development. Given that Epidiolex had sales of $740 million last year, the outlook is attractive. "

The cooperation will begin clinical development this year and describes the drug candidate as a "new botanical medicine targeting neurological diseases." BAT declined to disclose further details about the drug's treatment.

Shares of Charlotte's Web jumped as much as 21 percent Thursday, while BAT shares rose as much as 1.5 percent.
 

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British American Tobacco Invests $10 Million in CBD Brain Drug