FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains 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 sections 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 ability of any current and future funding to meet our capital requirements; · 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 the US and in non-US 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 regain compliance with applicable stock exchange listing requirements; · 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.
Details about risks, uncertainties and assumptions that could affect various
aspects of our business are included throughout our Annual Report on Form 10-K
for the fiscal year ended
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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 USD and all references to "common shares" refer to the common shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our" and "our company"
mean
General Overview
We incorporated in the
Our product candidate pipeline broadly leverages leading scientific methodologies, balances risk across mechanism of action, and stages of development. Our programs represent a comprehensive approach in utilizing the power and promise of lipid signaling to develop pharmaceuticals for patients with unmet healthcare needs. We are currently developing a cannabinoid agonist G protein-coupled receptor ("GPCR") targeting synthetic small molecule program, ART27.13, as a potential treatment for anorexia associated with cancer in a Phase 1b/2a trial, designated CAReS (Cancer Appetite Recovery Study). Our second program, ART26.12 is a small molecule platform of inhibitors of fatty acid binding proteins, notably Fatty Acid Binding Protein 5 ("FABP5"), being studied both as a cancer therapeutic and in anxiety-related disorders, including post-traumatic stress disorder. In addition, we are also advancing ART12.11, our patented solid-state composition of cannabidiol ("CBD cocrystal"). The COVID-19 pandemic has created uncertainties in the expected timelines for clinical stage biopharmaceutical companies such as us, and because of such uncertainties, we are unable to predict our expected timelines with any degree of certainty at this time.
We are currently developing two patent protected product candidates that we
obtained through our in-licensing activities. Our first program, ART27.13, is
being developed for cancer-related anorexia. ART27.13 and is a
peripherally-restricted high-potency dual CB1 and CB2 receptor full-receptor
agonist, which was originally invented at AstraZeneca plc ("AstraZeneca"). We
exercised our option to exclusively license this product candidate through the
We commenced enrollment and dosed the first patient in CAReS, our Phase 1b/2a
clinical study of cancer-related anorexia with ART27.13 in
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Our second in-licensed program is a platform of small-molecule inhibitors of
fatty acid binding proteins, notably FABP5 acquired from
In addition to our in-licensed programs, we have internal discovery research initiatives which resulted in the invention of ART12.11, a proprietary cocrystal composition of cannabidiol ("CBD"). The crystal structure of CBD is known to exhibit solid polymorphism, or the ability to manifest in different forms. Polymorphism can adversely affect stability, dissolution, and bioavailability of a drug product and thus may affect its quality, safety, and efficacy. Based upon our research, we believe our cocrystal exists as a single crystal form and as such is anticipated to have advantages over other solid 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 and improved bioavailability and may ultimately lead to improved safety and efficacy.
Presently, we have one US patent, one US patent application, and two foreign patent applications directed to our cocrystal composition of CBD. Composition claims are generally known in the pharmaceutical industry as the most desired type of intellectual property and are expected to provide for long lasting market exclusivity for our synthetic CBD cocrystal drug product candidate. In addition, due to the reasons outlined above, we believe that our synthetic CBD cocrystal will have superior pharmaceutical properties compared to non-cocrystal CBD products under development at other competing companies to treat cancer, Inflammatory Bowel Disease ("IBD"), PTSD, and other potential indications.
We are developing our product candidates in accordance with traditional
federally regulated drug development standards and expect to make them available
to patients 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 - Anorexia associated with Clinical Cancer anorexia Synthetic cancer
cachexia syndrome: Cannabinoid >$2 billion
Agonist
ART26.12 - FABP5 Prostate cancer and Breast Pre-clinical Prostate cancer: inhibitors cancer and Post-Traumatic$9 billion Stress Disorder (PTSD) Breast cancer:$18 billion PTSD:$7 billion ART12.11 - Inflammatory Bowel Disease Pre-clinical IBD:$7 billion Synthetic CBD (IBD), Post-Traumatic PTSD:$7 billion Cocrystal Stress Disorder (PTSD), and other potential indications including cancer 15 Table of Contents 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 and lipid-signaling 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 plants ("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: anxiety, pain, inflammation, anorexia, and cancer.
Business Strategy
Our objective is to develop and commercialize ethical pharmaceutical products that provide physicians access to the therapeutic potential lipid signaling of modulators, including modulating the ECS. We intend to pursue technologies and compounds that offer promising therapeutic approaches to known and validated signaling pathways, specifically lipid signaling and 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, and 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.
The following table provides selected financial data as ofNovember 30, 2021 , andAugust 31, 2021 . November 30, August 31, 2021 2021 Change (In thousands) Cash$ 14,047 $ 6,629 $ 7,418 Total Assets$ 29,004 $ 12,635 $ 16,369 Total Liabilities $ 718$ 593 $ 125 Stockholders' Equity$ 28,286 $ 12,042 $ 16,244 16 Table of Contents Balance Sheet Data
The increase in cash was primarily due to issuance of common stock in connection
with the Company's at-the-market equity program during the three months ended
For the Three Months EndedNovember 30, 2021 , Compared to the Three Months EndedNovember 30, 2020 Three months ended November 30, (In thousands) 2021 2020 Change Operating Expenses General and administrative expense$ 1,279 $ 841 $ 438 Research and development 1,273 595 678 Total Operating Expenses 2,552 1,436 1,116 Loss from Operations (2,552 ) (1,436 ) (1,116 ) Other income 4 1 3 Net Loss$ (2,548 ) $ (1,435 ) $ (1,113 )
We have not generated any revenues since inception through
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, (In thousands) 2021 2021 Change Current Assets$ 25,355 $ 10,317 $ 15,038 Current Liabilities 659 526 133 Working Capital$ 24,696 $ 9,791 $ 14,905
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