FORWARD-LOOKING STATEMENTS
These statements contain forward-looking statements that are based on management's beliefs and assumptions and on information currently available to management. Some of the statements in the section captioned "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business," and elsewhere contain forward-looking statements. In some cases, you can identify these statements by terms such as "anticipate," "believe," "could," "estimate," "expects," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or the negative of these terms or other comparable expressions that convey uncertainty of future events or outcomes, although not all forward-looking statements contain these terms.
These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
our plans to obtain funding for our operations, including funding · necessary to develop, manufacture and commercialize our product candidates; · the expected timing of the initiation and completion of our clinical studies; · the size and growth of the markets for our product candidates; · our commercialization, marketing, and manufacturing capabilities and strategies; · any impact of the global COVID19 pandemic, or responses to the pandemic, on our business, clinical trials or personnel; · our ability to compete with companies currently producing alternative treatment methods; · the cost, timing and outcomes of any potential litigation involving our product candidates; · regulatory developments in theU.S. and in non-U.S. countries; · the development, regulatory approval, efficacy and commercialization of competing product candidates; · our ability to retain key scientific or management personnel; · the scope of protection we are able to establish and maintain for intellectual property rights covering our products and technology; the terms and conditions of licenses granted to us and our ability to · license additional intellectual property related to our product candidates, as appropriate; · our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates; · potential claims related to our intellectual property; · the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; · our ability to develop and maintain our corporate infrastructure, including our internal controls; · our ability to develop innovative new product candidates; and · our financial performance. 11 Table of Contents
In addition, you should refer to the "Risk Factors" section for a discussion of other important factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements will prove to be accurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
In addition, statements such as "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this filing, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
Our unaudited financial statements are stated in
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in
As used in this quarterly report, the terms "we", "us", "our" and "our company"
mean
General Overview
We are a clinical stage biopharmaceutical company focused on developing and commercializing treatments intended to modulate endogenous signalling pathways, including the endocannabinoid system (the "ECS"), a family of receptors and neurotransmitters that form a biochemical communication network throughout the body. Our board of directors and management team is highly experienced and has a successful history of development, regulatory approval and commercialization of pharmaceuticals.
Our product candidate pipeline broadly leverages leading scientific methodologies, balances risk across mechanism of action and stages of development and represents a comprehensive approach in utilizing the power of the ECS to develop pharmaceuticals for patients with unmet healthcare needs. We are currently developing a G protein-coupled receptor (GPCR) targeting synthetic small molecule program, ART27.13, as a treatment for anorexia associated with cancer in a planned Phase 1b/2a trial, ART26.12, which is a small molecule inhibitor of Fatty Acid Binding Protein 5 (FABP5), being studied both as a cancer therapeutic and in anxiety-related disorder, including post-traumatic stress disorder, and ART12.11, a solid-state composition of cannabidiol ("CBD cocrystal"). The global coronavirus pandemic, COVID-19 has created uncertainties in the expected timelines for clinical stage biopharmaceutical companies such as us, and because of such uncertainties, we are unable to accurately predict our expected timelines at this time.
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We are currently developing two patent protected product candidates that we
obtained through our in-licensing activities. Our first program is a synthetic,
small molecule GPCR agonist program, ART27.13, being developed for
cancer-related anorexia. ART27.13 is a peripherally-restricted high-potency dual
CB1 and CB2 receptor agonist, which was originally developed by AstraZeneca plc
("AstraZeneca"). We have exercised our option to exclusively license this
product candidate through the
Our second in-licensed program is a platform of small-molecule inhibitors of
fatty acid binding protein 5 ("FABP5"), based upon research conducted at
In addition to our in-licensed programs, we have internal discovery research initiatives which resulted in ART12.11, a proprietary cocrystal composition of CBD. The crystal structure of cannabidiol ("CBD") is known to exhibit polymorphism, or the ability to manifest in different forms. Polymorphism can adversely affect stability, dissolution, and bioavailability of a drug product and thus affect its quality, safety, and efficacy. We believe our cocrystal exists as a single crystal form and as such is anticipated to have advantages over other forms of CBD that exhibit polymorphism. Anticipated advantages of this single crystal structure include improved stability, solubility, and a more consistent absorption profile. We believe these features will result in more consistent bioavailability and may lead to improved safety and efficacy.
Presently, we have one
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We are developing our product candidates in accordance with traditional drug
development standards and will make them available to the general public via
prescription or physician orders only after obtaining marketing authorization
from a regulatory authority, such as the
Product Candidate Pipeline: Product Candidate Target Indications Development Phase Market Size ART27.13 - Synthetic Anorexia associated Entering Phase 1b/2a Cancer anorexia GPCR Agonist with cancer cachexia syndrome:$2 billion ART26.12 - FABP5 Prostate cancer and Pre-clinical Prostate cancer:$9 inhibitor Breast cancer and billion Post-Traumatic Breast cancer:$18 Stress Disorder billion (PTSD) PTSD:$7 billion ART12.11 - Synthetic Inflammatory Bowel Pre-clinical IBD:$7 billion CBD Cocrystal Disease (IBD) and PTSD:$7 billion Post-Traumatic Stress Disorder (PTSD) Background
The ECS is composed of cannabinoid receptors, endogenous receptor ligands ("endocannabinoids") and their associated transporter mechanisms, as well as enzymes responsible for the synthesis and degradation of endocannabinoids, and has emerged as a considerable target for pharmacotherapy approaches of numerous human diseases. As a widespread modulatory system, the ECS plays important roles in the CNS, development, synaptic plasticity, and the response to endogenous and environmental factors.
The modulation of the ECS can be affected by using selective or non-selective agonists, partial agonists, inverse agonists, and antagonists of the cannabinoid receptors, CB1 and CB2. The CB1 receptor is distributed in brain areas associated with motor control, emotional responses, motivated behavior and energy homeostasis. In the periphery, CB1 is ubiquitously expressed in the adipose tissue, pancreas, liver, gastrointestinal tract, skeletal muscles, heart and the reproductive system. The CB2 receptor is mainly expressed in the immune system regulating its functions and is upregulated in response to tissue stress or damage in most cell types. The ECS is therefore involved in pathophysiological conditions in both the central and peripheral tissues.
The actions of endogenous ligands can be enhanced or attenuated by targeting mechanisms that are associated with their transport within the cellular and extra cellular matrix as well as their synthesis and breakdown. Small molecule chemical modulators of the ECS can be derived from the cannabis plant ("phytocannabinoids"), can be semi-synthetic derivatives of phytocannabinoids or endocannabinoids, or can be completely synthetic new chemical entities. We plan to develop approaches within our portfolio that address receptor binding and endocannabinoid transport modulation using only synthetic new chemical entities. Future approaches may also involve targeting synthesis or breakdown enzymes.
ECS targeting cannabinoid-based medicines are already approved and used to treat numerous medical conditions. The ECS is further implicated in many disease states within the peer reviewed literature including conditions which involve the regulation of food intake, central nervous system, pain, cardiovascular, gastrointestinal, immune and inflammation, behavioral, antiproliferative and reproductive functions. These areas of ECS pathophysiology are aligned with our therapeutic areas of focus: pain, inflammation, anorexia, and cancer.
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Our objective is to develop and commercialize ethical pharmaceutical products that provide physicians access to the therapeutic potential of modulators of the ECS and related signaling pathways for their patients. We intend to pursue technologies and compounds that offer promising therapeutic approaches to known and validated signaling pathways, including compounds that promote the effectiveness of the ECS.
Results of Operations
The following summary of our results of operations, for the three months ended
We do not have any revenue. We classify our operating expenses into research and development, professional fees, and selling, general and administrative expenses. Research and development expense consists of expenses incurred while performing research and development activities to discover and develop our product candidates. This includes conducting preclinical studies and clinical trials, development efforts and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily consists of costs incurred in research and development partnerships, preliminary studies, development of potential intellectual property, and research initiatives.
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities, but we cannot guarantee that we will be able to achieve same.
The following table provides selected financial data as ofNovember 30, 2020 andAugust 31, 2020 . November 30, August 31, 2020 2020 Change Cash$ 7,388,686 $ 2,142,072 $ 5,246,614 Total Assets$ 9,539,343 $ 4,376,862 $ 5,162,481 Total Liabilities$ 485,617 $ 502,177 $ (16,560 ) Stockholders' Equity$ 9,053,726 $ 3,874,685 $ 5,179,041 Balance Sheet Data
We have not generated any revenues since inception through
15 Table of Contents For the Three Months EndedNovember 30, 2020 Compared to the Three Months EndedNovember 30, 2019 Three months ended November 30, 2020 2019 Change Operating Expenses General and administrative expense$ 395,875 $ 403,159 $ (7,284 ) Professional fees 444,652 266,227 178,425 Research and development 594,625 666,938 (72,313 ) Depreciation 60 124 (64 ) Total Operating Expenses 1,435,212 1,336,448 98,764 Loss from Operations (1,435,212 ) (1,336,448 ) (98,764 ) Other income 567 586 (19 ) Change in fair value of derivative liabilities - 29,501 (29,501 ) Net Loss$ (1,434,645 ) $ (1,306,361 ) $ (128,284 )
Our operating expenses, for the three months ended
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis.
We incurred a net loss of
As of
Working Capital November 30, August 31, 2020 2020 Change Current Assets$ 7,499,741 $ 2,337,199 $ 5,162,542 Current Liabilities 485,617 502,177 (16,560 ) Working Capital$ 7,014,124 $ 1,835,022 $ 5,179,102 16 Table of Contents
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