Item 1A. Risk Factors 26
Item 1B. Unresolved Staff Comments 60
Item 1C. Cybersecurity 60
Item 2. Properties 60
Item 3. Legal Proceedings 61
Item 4. Mine Safety Disclosures 61
Item 6. [Reserved] 61
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 71
Item 8. Financial Statements and Supplementary Data 71
Item 9A. Controls and Procedures 71
Item 9B. Other Information 72
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevents Inspections 72
PART III 72
Item 10. Directors, Executive Officers and Corporate Governance 72
Item 11. Executive Compensation 77
Item 14. Principal Accounting Fees and Services 93
Item 15. Exhibits and Financial Statement Schedules 94
In
this Annual Report on Form 10-K (this “Annual Report”), unless otherwise stated or as the context otherwise requires, references
to “Anebulo Pharmaceuticals,” “Anebulo,” “the Company,” “we,” “us,” “our”
and similar references refer to Anebulo Pharmaceuticals, Inc. The Anebulo logo, and other trademarks or service marks of Anebulo Pharmaceuticals,
Inc. appearing in this Annual Report are the property of Anebulo Pharmaceuticals, Inc. This Annual Report also contains registered marks,
trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing in this Annual Report
are the property of their respective holders. We do not intend our use or display of other companies’ trade names, trademarks or
service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject the
“safe harbor” created by those sections. These forward-looking statements about us and our industry involve substantial
risks and uncertainties and our actual results could differ materially from those anticipated in these forward-looking statements as
a result of various factors, including those set forth below under Part I, Item 1A, “Risk Factors” in this Annual
Report. All statements other than statements of historical facts contained in this Annual Report, including statements regarding our
future financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking
statements. In some cases, you can identify forward-looking statements by terminology such as “believe,”
“may,” “could,” “will,” “estimate,” “continue,”
“anticipate,” “intend,” “seek,” “plan,” “expect,” “should,”
“would,” “potentially” or the negative of these terms or similar expressions in this Annual
Report.
We
have based these forward-looking statements largely on our current expectations, beliefs, estimates and projections, and various assumptions,
many of which, by their nature, are inherently uncertain and beyond our control. In addition, statements that “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 Annual Report, 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 forward-looking statements include, but are not limited to,
statements about:
● the timing or outcome of any of our regulatory submissions;
● our expectations regarding future growth;
● the performance of our third-party suppliers and manufacturers;
● the impact on our business of economic or political events or trends; and
● the impact of governmental laws and regulations.
You
should not place undue reliance on these forward-looking statements. Unless required by law, we undertake no obligation to update or
revise any forward-looking statements to reflect new information or future events or developments. Thus, you should not assume that our
silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully
read this Annual Report, including the section titled “Risk Factors” and the documents that we reference in this Annual Report
and have filed as exhibits to this Annual Report completely and with the understanding that our actual future results may be materially
different from what we expect. We qualify all of the forward-looking statements in this report by these cautionary statements.
SUMMARY
OF RISK FACTORS
Our
business is subject to numerous risks and uncertainties of which you should be aware, including those described in the section entitled
“Risk Factors.” These risks include the following:
Risks
Related to our Business, Financial Condition and Capital Requirements
● We have limited operating history as a publicly traded company.
Risks
Related to Our Intellectual Property
Risks
Related to Product Development, Regulatory Approval, Manufacturing and Commercialization
● Our lead product candidate, selonabant, may have undesirable side effects.
Risks
Related to Our Reliance on Third Parties
Risks
Related to Government Regulation of our Industry
Risks
Related to Ownership of Our Common Stock
● We do not expect to pay any dividends on our common stock.
General
Risk Factors
● Inflation may adversely affect us by increasing our costs.
The
summary risk factors described above should be read together with the text of the full risk factors below, in the section entitled “Risk
Factors” and the other information set forth in this Annual Report, including our financial statements and the related notes, as
well as in other documents that we file with the Securities and Exchange Commission (the “SEC”). The risks summarized above or described in full below are not the only risks that
we face. Additional risks and uncertainties not precisely known to us, or that we currently deem to be immaterial may also materially
adversely affect our business, financial condition, results of operations and future growth prospects.
PART
I
Item
1. Business.
Overview
We
are a clinical-stage biotechnology company developing treatments for cannabis toxicity, such as unintentional cannabis poisoning, acute
cannabinoid intoxication (“ACI”) and the broader landscape of acute cannabis-induced conditions. Our lead product candidate,
selonabant (formerly ANEB-001), is intended to rapidly reverse the negative effects of cannabis toxicities and reduce time to recovery.
Unintentional cannabis poisoning primarily occurs in children. Pediatric patients accidentally exposed to cannabis are at risk of serious
and life-threatening outcomes including Central Nervous System (“CNS”) depression, respiratory depression, seizures, and
coma. ACI in adults is characterized by signs and symptoms that may include anxiety, panic attacks, agitation, psychosis, and tachycardia.
There is no approved medical treatment currently available to specifically treat unintentional cannabis poisoning or ACI, and we are
not aware of any competing products that are further along in the development process than selonabant in reversing the effects of cannabinoids
like delta-9-tetrahydrocannabinol, better known as THC, the principal psychoactive constituent of cannabis.
Unintentional
cannabis poisoning and ACI have become a widespread health issue in the United States, particularly in the increasing number of states
that have legalized cannabis for medical and recreational use. Unintentional or excessive ingestion of THC via edible products such as
candies and brownies, and intoxication from synthetic cannabinoids (also known as “synthetics,” including “K2”
or “spice”), are two potential causes of THC-related emergency room visits. Synthetic cannabinoids are analogous to fentanyl
for opioids insofar as they are more potent at the cannabinoid receptor than their natural product congener THC.
Hospital
emergency rooms across the United States have seen a dramatic increase in patient visits with cannabis-related conditions. Before the
legalization of cannabis, an estimated 450,000 patients visited hospital emergency rooms annually for cannabis-related conditions. In
2014, this number more than doubled to an estimated 1.1 million patients, according to data published in “Trends and Characteristics of Cannabis-Associated Emergency Department
Visits in the United States, 2006-2018,” Drug Alcohol Depend. 2022 Mar 1;232:109288. doi: 10.1016/j.drugalcdep.2022.109288.
Epub 2022 Jan 10. PMID: 35033959; PMCID: PMC9885359) by Roehler DR, Hoots BE, Holland KM, Baldwin GT, and Vivolo-Kantor AM, which provided a national estimate analyzing data from The Nationwide Emergency Department Sample (“NEDS”), the largest database
of U.S. hospital-owned emergency department visits. Based on our evaluation of a published analysis of the most recent NEDS data, we
believe that the number of cannabis related emergency department visits grew to approximately 1.8 million patients in 2021. We believe
the number of cannabis-related emergency department visits and health problems associated with unintentional cannabis poisoning and ACI
will continue to increase substantially as more states pass laws legalizing cannabis for medical and recreational use. Given the consequences,
there is an urgent need for a treatment to rapidly reverse the symptoms of unintentional cannabis poisoning and ACI.
Previous
clinical trials completed by a third party have shown that oral selonabant is rapidly absorbed, well tolerated and, when repeatedly
administered to obese subjects, leads to weight loss, an effect that is consistent with antagonism of the cannabinoid receptor
type-1 (“CB1”), the primary target of agonists like THC. In March 2021, our European clinical trial application
(“CTA”), which is equivalent to an investigational new drug application in the United States, was accepted in the
Netherlands to allow us to utilize oral selonabant in a randomized, double-blind, placebo-controlled Phase 2 human proof-of-concept
clinical trial for potential use as a treatment for ACI. The study (the “Netherlands Trial”) was designed to evaluate
the safety, tolerability, pharmacokinetics, and effectiveness of a single oral dose of selonabant in treating healthy adult subjects
challenged with THC. We announced on January 3, 2022, that the first patient had been dosed in the Netherlands Trial. On May 11,
2022, we announced the dosing of all 60 subjects in Part A of the Netherlands Trial. On March 28, 2023, we announced complete
results from Part A and Part B of the Netherlands Trial, in a total of 134 subjects. Dosing of an additional 20 subjects in an
open-label extension of the study (“Part C”) was initiated in July 2023 and the study was completed in August 2023. We
met with the Food and Drug Administration (the “FDA”) in July 2023 for a Type B meeting to discuss the Part A and B
Phase 2 data and the potential path forward for Phase 3 development of oral selonabant for the treatment of adult ACI and received
the minutes of the meeting in August 2023. The FDA indicated that a single well-controlled study of oral selonabant in ACI patients
presenting to the emergency department combined with a larger THC challenge study in volunteers could potentially provide
substantial evidence to support a new drug application. In addition, an observational study in patients presenting to emergency
departments with ACI is currently ongoing. The study is designed to determine concentrations of cannabinoids and metabolites in
plasma and gather information on signs and symptoms, patients’ disposition and selected assessments, where possible. We
believe the data generated from the Netherlands Trial provide support for our development pathway.
Rather
than proceeding directly with the Phase 3 studies of oral selonabant in adults with ACI, we are prioritizing the advancement of a selonabant
intravenous (“IV”) formulation as a potential treatment for pediatric patients with unintentional cannabis poisoning,
which we believe offers the potential for a faster timeline to approval relative to the adult oral product. We are currently scaling
up the IV formulation for initial clinical safety studies. On July 16, 2024, we were awarded the first tranche of $0.9 million of a two-year cooperative grant of up to a total
of approximately $1.9 million from the National Institute on Drug Abuse (“NIDA”), part of the National Institutes of Health
(“NIH”), to support the development of intravenous selonabant, for the potential use as an emergency treatment of acute cannabis-induced
toxicities, including cannabis-induced CNS depression in children. With the support of NIDA, Anebulo aims to complete IND-enabling activities
and the scale up of its formulation of intravenous selonabant around calendar year end 2024 as it prepares for clinical studies and the
Company expects to enroll the first healthy adult volunteer in the first half of calendar 2025.
The
recent decision by the United States Department of Justice to support the rescheduling of marijuana from a schedule I to a schedule
III-controlled substance is a move that we believe will ultimately lead to increased use of cannabis-containing products among US
households. This potentially includes edible products that are often the cause of unintentional cannabis poisoning in children. We
have evaluated the potential advantages of prioritizing a near-term solution for children with more serious symptoms over
progressing our plans for clinical studies to support an adult oral ACI treatment and have decided to focus current efforts on the
pediatric indication at this time. Our decision to prioritize the development of an intravenous treatment for children is driven by
multiple factors. Our recent development of a suitable IV selonabant formulation enables its use in the pediatric population. Our
prior discussions with the FDA have highlighted the need for an alternative formulation of selonabant for treating younger patients.
There is increasing recognition among clinicians that this is a growing, unmet medical need in a vulnerable population where there
are no approved treatments. Our belief is that the path to approval for an oral treatment for adult ACI may be facilitated by an
initial approval for intravenous treatment of unintentional cannabis poisoning in the pediatric population. Furthermore, with this
unprecedented change in cannabis regulation, Anebulo is uniquely positioned to become a provider of a rapid and clinically impactful
solution for Emergency Departments to treat pediatric patients suffering from unintentional cannabis poisoning. Research has shown
children are much more sensitive to the toxic effects of cannabis. Key factors such as underdeveloped endocannabinoid system with
more CB1 receptors in the brain than adults, and reduced ability to metabolize THC, contribute to a much greater risk to children.
The risk is also evident in how cannabis effects this population; in contrast to adults who are exposed to acute cannabis toxicity,
children are at risk of serious and life-threatening outcomes such as CNS depression, respiratory depression, seizures, and
coma.
Our
Lead Product Candidate
Our
objective is to develop and commercialize new treatment options for patients suffering from cannabis toxicities. Our lead product
candidate is selonabant, a potent, small molecule antagonist of cannabinoid binding receptor type-1 (“CB1”), the primary
receptor involved in the psychotropic effects of cannabinoids, with the potential to address the unmet medical need for a therapy to
treat cannabis toxicity. Selonabant is orally bioavailable, rapidly absorbed, and has also been formulated for intravenous
treatment. Both oral and IV selonabant are being designed to rapidly reverse the symptoms
of cannabis toxicity and reduce the time to recovery. Our proprietary position in the treatment of cannabis toxicity is protected by two issued US patents and rights to six additional patent applications, two pending Patent Cooperation Treaty (PCT) applications and
additional international patent applications, covering various methods of use of the compound, aspects of selonabant, and delivery
systems. We began our Phase 2 trial in the Netherlands on December 2021 and announced complete data from Part A and Part B of the
Netherlands Trial in March 2023. Dosing of an additional 20 subjects in an open-label extension of the study (Part C) was initiated
in July 2023 and completed in August 2023. In July 2023, we met with the FDA for a Type B meeting to discuss the Part A and B Phase
2 data and the potential path forward for Phase 3 development of selonabant, and received the minutes of the meeting in August 2023.
The FDA indicated that a single well-controlled study of selonabant in cannabis toxicity patients presenting to the emergency
department combined with a larger THC challenge study in volunteers could potentially provide substantial evidence to support a new
drug application.
Cannabinoids
are a class of chemical compounds that are naturally occurring and are primarily found in cannabis plant extracts. The two major cannabinoids
found in cannabis plant extracts include THC and CBD. These compounds bind themselves to CB1 and CB2 cannabinoid receptors, which are
found throughout the body. Specifically, CB1 receptors are concentrated in the brain and central nervous system, while CB2 receptors
are found mostly in peripheral organs and are associated with the immune system. When the chemical compounds bind themselves to these
cannabinoid receptors, the process elicits certain physiological responses. Physiological responses to cannabinoids may vary among individuals.
Some of the effects of cannabinoids have been shown to impact nervous system functions, immune responses, muscular motor functions, gastrointestinal
maintenance, blood sugar management, and the integrity of ocular functions.
Individuals
can use or consume cannabinoids in natural or unnatural formulations, orally or by inhalation, and intentionally and unintentionally,
all of which can result in intoxication. Natural formulations include edibles and marijuana cigarettes; unnatural formulations include
synthetics. Individuals consume cannabinoids orally by ingesting edibles or synthetics and by inhalation through smoking marijuana cigarettes
or synthetics. Cannabinoids can also be ingested unintentionally through these same methods where, for example, children consume edibles
by mistaking them for common consumer items like candy that would not otherwise contain THC. Symptoms of ACI produced by edibles and
synthetics can include psychosis, panic and anxiety, feelings of paranoia, agitation, hallucinations, nausea, vomiting, cardiac arrhythmias,
seizures and death. Many of these symptoms can require emergency medical attention and can take hours to days to resolve depending on
the particular product and amount ingested. Currently, there is no specific treatment to reverse ACI and physicians have to rely on supportive
care, including benzodiazepines, and wait for the body to metabolize the THC or synthetic cannabinoid.
We
are relying on studies performed by a third party for a different indication, obesity, and the FDA or a foreign equivalent regulator
may disagree with our ability to reference the clinical data generated by such third-party trials in connection with the indication for
cannabis toxicity and addiction. See “Risk Factors —Risks Related to Product Development, Regulatory Approval, Manufacturing
and Commercialization —We are relying on clinical trials performed by our licensor Vernalis, a third party, for a different indication,
and the FDA or a foreign equivalent regulator may disagree with our ability to reference clinical data from third-party trials.”
Our
Market Opportunity
Cannabis
toxicity has become a widespread health issue in the United States as an increasing number of states have legalized cannabis for medical
or recreational use. As of June 30, 2024, cannabis was legal for recreational use in 24 states and the District of Columbia and for medical
use in 38 states.
We
believe that both the number of cannabis-associated emergency department visits and the unmet medical need will continue to grow due
to the increasing availability and consumption of edibles. In THC-containing edibles, the dose of THC can be as much as eight times more
potent than a rolled marijuana cigarette. Edibles are frequently manufactured as common consumer products, such as brownies, cookies,
candies and gummy snacks with brightly-colored packaging. THC concentrations in edibles peak after a delay of about two to four hours
from ingestion. This time to peak concentration contrasts with smoking cannabis, which causes THC concentrations to peak in about three
to 10 minutes from inhalation. Consumers possibly will approach edibles with the same serving size expectations as consumer products
without THC. Moreover, children are particularly at risk for accidentally consuming edibles due to the edibles’ brightly-colored
packaging and formulation into candies and sweets. The confluence of these factors can be dangerous and increases the risk of cannabis
toxicity. Emergency department visits were 33 times more likely for edibles as compared with other routes of cannabis consumption, according
to the recent article “Mental Health-related Emergency Department Visits Associated with Cannabis in Colorado,” published
in Academic Emergency Medicine (May 2018). Sales of edibles are rapidly growing, according to data collected by Statista, and are expected
to continue growing into the future.
We
believe that intoxication in adults due to synthetic cannabinoids is an area with particularly high unmet medical need. Synthetics
are among the fastest growing class of psychoactive drugs worldwide and can be as much as 85 times as potent as THC. This likely
reflects the structural promiscuity of the CB1 receptor. In addition, the negative effects of an intoxication from synthetics can be
longer lasting and more severe when compared with THC. These negative effects could include seizures and other dangerous outcomes.
Compared with natural cannabis products, synthetics have lower shipping weights and can more readily evade traditional drug
screening methods.
Our
Growth Strategy
Our
goal is to create a therapeutic to treat the underlying cause of cannabis toxicity in patients with ACI and unintentional cannabis poisoning. As noted above, there are currently no FDA
approved medical treatments on the market to specifically alleviate the negative neuropsychological effects of cannabis toxicity in adults and the serious and life-threatening effects in children.
The absence and growing unmet need for such treatments gives us the unique opportunity to create novel solutions and become a
leader in the cannabinoid treatment space. To achieve our goal, our strategy will be guided by the following principles:
Our
Clinical Trials and Milestones
We
are developing selonabant as an acute treatment to quickly and effectively combat the symptoms of cannabis toxicity. Selonabant was originally
under development by Vernalis as a potential chronic treatment for obesity and other metabolic indications.
Preclinical
Data
The
initial preclinical characterization of selonabant was performed at Vernalis’ internal laboratory in the United Kingdom between
2003 and 2006. The compound was tested as a displacer in established radioligand binding assays for the CB1 receptor. Selonabant displaced
the antagonist radioligand, [3H]-SR141716A from the human CB1 receptor with high affinity (0.55 nM) and was shown to be a competitive
antagonist in cAMP assays. In vitro testing as a displacer in 90 binding assays and 19 enzyme and functional assays, showed that selonabant
had >1000x selectivity with the human CB1 receptor over all other tested receptors. Further, Vernalis demonstrated that oral administration
of selonabant reduced THC-induced hypolocomotion in mice after 30 minutes, effectively reversing the action of THC. C57 mice administered
THC 3 mg/kg in 10 minutes pre-test exhibited reduced locomotor activity when placed in automated locomotor activity cages for 15 minutes.
Providing it orally at a dose of 30 mg/kg 30 minutes pre-test significantly reversed the action of THC on the total activity time parameter
(p<0.01 by one way ANOVA and Newman Keuls test, n=7 per group).
Historical
Clinical Studies
In
2006 and 2007, two Phase 1 studies for the treatment of obesity were conducted by Vernalis for selonabant. A third Phase 1 study, which involved four weeks of daily dosing in overweight and obese subjects, was also conducted
by Vernalis. The primary endpoint of this study was safety related to blood pressure, and also included weight loss as a secondary endpoint.
First
Phase 1 Trial
The
Phase 1 study (V24343-1Ob-01) administered single (Part A) and multiple (Part B) ascending doses of selonabant dosed daily for
up to 14 days in otherwise healthy overweight and mildly obese subjects.
Pharmacokinetic
measurements in Part A of the Phase 1 study demonstrated that selonabant was rapidly absorbed by the body following oral administration
and achieved blood concentrations anticipated to be sufficient to block the CB1 cannabinoid receptor.
Vernalis
also measured the impact of selonabant on anxiety and depression in Part B of the Phase 1 study. Vernalis measured anxiety by using the
Spielberger state score, a commonly used measure of trait and state anxiety. Vernalis found no significant impact on anxiety, except
for the 200/50 mg arm (which represents a loading dose of 200mg followed by a once daily (“OD”) 50mg dose), which showed
increased anxiety at all assessment times. The change was driven by a single subject and may be explained by somatic adverse events,
which contributed to the Spielberger score. For depression, HAMD21 was used and small increases were noted in the 75/15 mg and 200/50
mg dose, which we believe were likely driven by somatic symptoms.
Summarizing
the results from the Phase 1 study, selonabant doses between 1 mg and 150 mg were found to be well tolerated in both single and
multiple doses with an adverse events profile similar to placebo. There was no observed effect on the cardiovascular system, ECGs, labs
or physical exams and no significant effects on anxiety or depression scores.
With
regard to pharmacodynamics, a marked reduction in test meal energy intake was seen even at the lowest dose level in Phase 1 Part B (p<0.01
on Day 14 for OD 100 mg, p<0.05 on Day 7 for OD 100 mg, not statistically significant for all other cohorts). Further, Vernalis observed
statistically significant decreases in body weight (p<0.001 on Day 14 for OD 100 mg, p<0.05 for OD 50/5 mg and OD 200/50 mg, not
significant for OD75/15 mg) indicating that selonabant was able to cross the blood-brain barrier and antagonize central cannabinoid receptors.
P-value is the probability that the difference between two data sets was due to chance. The smaller the p-value, the more likely the
differences are not due to chance alone. In general, if the p-value is less than or equal to 0.05, the outcome is considered statistically
significant. The FDA’s evidentiary standard of efficacy generally relies on a p-value of less than or equal to 0.05.
Second
Phase 1 Trial
The
second Phase 1 study conducted by Vernalis (V24343-1Ob-02) compared the pharmacokinetics of a single oral dose (1 to 200 mg) of selonabant
between fed and fasted states in eight subjects that were lean and in eight subjects that were overweight. There were no apparent differences
in the tolerability of selonabant between the subjects that were in fed and fasted states or between subjects that were lean and overweight.
Total AUC (or area under the curve) was approximately 30% higher in subjects in the fed state compared to the subjects in the fasted
state, with similar systemic exposure for the lean and overweight subjects.
The
results of the historical Phase 1 studies demonstrate that selonabant was well tolerated among healthy and obese subjects. There were
no serious adverse events. The most commonly reported adverse event was gastrointestinal discomfort, which also occurred in subjects
that were administered placebos. Based on the promising results of the historical Phase 1 studies, we believe selonabant may offer the
following clinical and product benefits:
Anebulo
Clinical Studies
Phase
2 THC Challenge Study in Healthy Volunteers
We
commenced the Netherlands Trial (AN01AC11) in December 2021 at the Center for Human Drug Research (“CHDR”) to evaluate
the safety, tolerability, pharmacokinetics, and effectiveness of a single dose of selonabant in treating healthy adult subjects
challenged with THC.
Part
A of the study was a randomized, double-blind, placebo-controlled trial in 60 healthy adult occasional cannabis users randomized to three
treatment arms of 20 subjects per arm. All subjects were challenged with a single oral dose of 10.5 mg THC and then treated with single
oral doses of 50 mg selonabant, 100 mg selonabant, or placebo. Subjects were monitored for 24 hours to assess safety, tolerability, and
pharmacokinetics, and repeatedly tested to determine potential effects on endpoints related to ACI symptoms. The tests also included
a series of validated measures of subjective CNS symptoms using visual analog scale (“VAS”) assessments, as well as objective
measures of intoxication. Part B of the study was an adaptive design that included six cohorts of up to 15 healthy adults to examine
different doses of THC and selonabant, and the impact of delayed dosing of selonabant or placebo. Part B of the study was a randomized,
double-blind, placebo-controlled phase. A total of 74 subjects participated in Part B. On March 28, 2023, we announced complete results
from our Part A and Part B of the Netherlands Trial in a total of 134 subjects. Dosing of an additional 20 subjects in an open-label
extension of the study (Part C) was initiated in July 2023 and completed in August 2023. Part C of the study was an open-label phase
with 2 cohorts of 10 subjects. Pharmacodynamic outcomes were assessed by mixed-effect model repeated measures (“MMRM”) analysis
of covariance (“ANCOVA”) through 8 hours post-selonabant dosing. Safety was assessed by continuous observation for 24 hours
and followed up at 7 to 14 days after treatment. Selonabant was well tolerated in this study and there were no serious adverse events.
We believe the data generated from the Netherlands Trial provide support for our development pathway.
Data
from Part A of the study showed positive protective effects of a single oral dose of 50 or 100 mg selonabant when co-administered with
an oral challenge dose of 10.5 mg THC. Subjects challenged with 10.5 mg THC and treated with placebo showed substantial CNS effects including
feeling high, decreased alertness, increased body sway, and increased heart rate. Compared to placebo, treatment of subjects with selonabant
led to a significant, robust, and sustained reduction in the VAS feeling high score (p < 0.0001 at both dose levels) and improvement
in the VAS alertness scale (p < 0.01). In addition, the proportion of subjects reporting feeling high on the VAS was significantly
reduced by selonabant (p < 0.001). Although THC-induced effects on body sway and heart rate in Part A of the study were small, there
was also a trend towards statistical improvement of these parameters with selonabant treatment compared to placebo. The 50 mg and 100
mg doses had similar results, suggesting that lower doses should be explored.
These
data demonstrated a highly statistically significant reduction in key symptoms of ACI, with only 10% of subjects in the 50 mg selonabant
group and 30% in the 100 mg group reporting feeling high compared to 75% of subjects in the placebo group (p < 0.001). selonabant
was well tolerated in these healthy volunteers. Preliminary safety information showed all adverse events were mild and transient, except
in the case of one subject in the 50 mg selonabant group who experienced moderate nausea and vomiting.
Based
on the encouraging data from Part A, we initiated Part B of the study at CHDR on July 26, 2022. In total, Parts A and B of the Phase
2 study enrolled 134 healthy adult subjects. In Part B of the study, subjects were challenged with substantially higher oral doses of
THC (21, 30, or 40 mg) and treated with lower doses of selonabant (10 or 30 mg) or a matching placebo. Delayed dosing of selonabant was
also examined by introducing a one-hour pause between the THC challenge and treatment with the selonabant or placebo. The final cohort
of the study included the administration of a high-fat meal prior to the THC challenge.
Based
on the final data for Part B of the study, a single low oral dose of selonabant (10 mg) administered 1 hour after a THC challenge rapidly
and statistically significantly reversed key psychotropic effects of THC doses as high as 30 mg, including a reduction in the VAS for
feeling high (p=<0.0001) and improvement in VAS alertness (p=0.0042) and reduced body sway (p=0.0196). In a pre-specified pooled analysis
of data for the combined 21 mg or 30 mg THC dose levels, a single 10 mg of selonabant administered one hour after THC achieved statistical
significance on all primary outcomes, including a reduction in VAS feeling high (p=<0.0001), improvement in VAS alertness (p=0.0024),
reduced body sway (p=0.0014), and reduction in heart rate (p=0.0125). selonabant also reduced the time required for the THC effects to
normalize back to baseline.
At
the 30 mg THC dose, prior to dosing selonabant or placebo, subjects developed mild to moderate THC-related symptoms including moderate
euphoria, nausea, and/or vomiting, and mild bradyphrenia, dizziness, paresthesia, and/or feeling emotional. After delayed dosing of 10
mg selonabant or placebo following a 21 mg or 30 mg THC challenge dose, the adverse events considered possibly or probably related to
selonabant were mild except for one case of moderate nausea/vomiting at THC doses of 21 mg and 30 mg; the incidence of dizziness and
euphoria was greater in the placebo treated subjects. Administration of a high-fat meal delayed the absorption of THC resulting in blunted
effects of a 30 mg THC dose on many of the outcomes. However, delayed dosing of 10 mg ANB-001 still significantly reduced VAS feeling
high in fed subjects (p=0.0030).
Part
C of the study was an open-label phase with two cohorts of 10 subjects each. Subjects in Cohort 7 received a single oral dose of 40
mg of THC together with a single oral dose of 10 mg of selonabant. Subjects in Cohort 8 received a single oral dose of 60 mg of THC
together with a single oral dose of 20 mg of selonabant. In the earlier Part B of the study, a single oral dose of 40 mg THC without
selonabant was not well tolerated due to overt THC-related effects. However, the use of even higher THC challenge doses was
considered acceptable by an independent institutional review board (“IRB”) provided that all subjects would also receive
selonabant. Part C of the study was therefore conducted as an open-label design without a placebo arm. Subjective and objective
assessments performed during the open-label Part C of the study were similar to those used in Parts A and B, with the addition of
several new outcome measures intended to explore further evidence of clinically meaningful effects. Based on preliminary safety
observations, THC challenge doses of 40 mg and 60 mg were well-tolerated when dosed in combination with selonabant, and all
treatment-related adverse events were mild and transient. A single dose of 19 mg selonabant administered with 40 mg THC or 20 mg
selonabant administered with 60 mg THC mitigated the major effects of these high THC doses when compared to pooled placebo data at
20 mg or 30 mg of THC in Part B of the study. Selonabant significantly decreased visual analog scale (“VAS”)
“Feeling High,” significantly increased VAS “Alertness,” significantly reduced body sway, and significantly
reduced heart rate when compared to the pooled placebo data. A publication on the full results of Part C is in progress, and submission to the Annals of Emergency Medicine is
expected by the end of calendar 2024. In total, 189
subjects have been dosed with selonabant in the various Phase 1 and Phase 2 studies.
Enrollment
in our observational pharmacokinetic study in the United States is ongoing. The purpose of the study is to gather data on plasma levels of
cannabinoids and metabolites in subjects with cannabis toxicity in the emergency department setting, and where possible, to assess their condition. The data from the study are expected to further support selonabant development.
We
believe the completed Phase 2 study provides support for our continuing discussions with the FDA and potential future discussions
with comparable foreign regulatory authorities, and allows us to design and conduct future clinical trials with the goal of
generating additional clinical data that could ultimately enable us to file a marketing application with the FDA.
Vernalis
License Agreement
On
May 26, 2020, we entered into an exclusive license agreement (the “License Agreement”) with Vernalis Development
Limited, formerly Vernalis (R&D) Limited (“Vernalis”). Pursuant to the License Agreement, Vernalis granted us an
exclusive worldwide royalty-bearing license to develop and commercialize a compound that we refer to as selonabant, as well as
access to and a right of reference with respect to any regulatory materials under its control. The License Agreement allows us to
sublicense the rights thereunder to any person with similar or greater financial resources and expertise without Vernalis’
prior consent, provided the proposed sublicensee is not developing or commercializing a product that contains a CB1 antagonist or is
for the same indication covered by the trials or market authorization for selonabant. In exchange for the exclusive license, we
agreed to pay Vernalis a non-refundable signature fee of $0.2 million, total potential developmental milestone payments of up to
$29.9 million (of which $0.4 million has been paid), total potential sales milestone payments of up to $35.0 million and low to mid-single digit royalties on net
sales.
We
have the sole discretion to carry out the development and commercialization of selonabant, including obtaining regulatory approvals,
and we are responsible for all costs and expenses in connection therewith. We have access to certain regulatory materials, including
study reports from clinical and non-clinical trials, under Vernalis’ control. We agreed to use commercially reasonable efforts
to (i) develop and commercialize selonabant in the United States and certain European countries and (ii) dose a patient as part of a Phase 2 clinical trial within two years of the commencement date of the License Agreement (which obligation we have met), and dose a patient as part of a Pivotal Trial (as such term is defined in the License Agreement) within four years
of commencement of the License Agreement, which period was in accordance with the terms of the License agreement extended for a nominal
fee. We also agreed to provide Vernalis with periodic
reports of our activities and notice of market authorization within specified timeframes.
With
respect to intellectual property, both parties agreed to retain sole ownership over their respective intellectual property as of the
date of the License Agreement. In addition, we retain the sole right over certain patent rights (including patent applications) and know-how
controlled by us that are necessary or reasonably useful to developing and commercializing selonabant during the term of the License
Agreement.
The
License Agreement continues for an indefinite term unless and until it is terminated or until such time as all royalties and other sums
cease to be payable thereunder. Our obligations to pay royalties commence upon the first commercial sale of our product and cease upon
the later to occur of: (i) the tenth anniversary of the first commercial sale of our product, or (ii) the expiration date of the regulatory
exclusivity of our product. We may terminate the License Agreement in its entirety at any time by providing 60 days’ prior notice
to Vernalis. Moreover, a party may terminate the License Agreement for cause (i) upon written notice when the other party commits a material
breach not remedied within the specified timeframes and defaults on its obligations thereunder, or (ii) when the other party is insolvent
as more particularly described therein. In the event of termination, all rights and licenses granted by Vernalis will revert immediately
to Vernalis; all outstanding sums as of the termination date will be immediately due and payable to Vernalis; and we will return or destroy,
at Vernalis’ request, any regulatory materials, information pertaining to selonabant, and any unused API purchased from Vernalis.
If Vernalis terminates the License Agreement due to our material breach or insolvency, or if we terminate the License Agreement at will,
both parties will negotiate in good faith to grant Vernalis a license to such intellectual property and regulatory materials needed to
develop and commercialize selonabant and provide appropriate compensation to us within six months of the termination date.
Competition
The
clinical biotechnology industry is a competitive industry characterized by technological innovation and growth. Our competitors include
other biotechnology and pharmaceutical companies, academic institutions, and public and private research institutions. These entities
engage in efforts to research, discover and develop new medicines and treatments for substance use. These entities also seek patent protection
and licensing revenues for their research results and may compete with us in recruiting skilled talent. Some of these entities are larger
and better funded than us. Our management can make no assurances that we can effectively compete with these competitors. Potential current
competitors include Aelis Farma, which is developing a medication based on a pregnenolone derivative to treat cannabis use disorders
in collaboration with Indivior PLC. We also may be unable to keep pace with technological developments and other market factors. Technological competition
from medical device, pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the
field is intense and is expected to increase. These entities represent significant competition for us.
Research
and Development
We
are making, and expect to continue to make, substantial expenditures to fund proprietary research and development of our selonabant product
candidate and to support preclinical testing and clinical trials necessary for regulatory filings. Our research and development team,
including a third-party CRO, is continually undertaking efforts to advance research and development goals. During the fiscal years ended
June 30, 2024 and June 30, 2023, we incurred research and development expenses of approximately $3.5 million and $5.6 million, respectively.
Regulation
Government
Regulation and Product Approval
We
operate in an extensively regulated industry. Governmental authorities at all levels in the United States and in other countries regulate
aspects of bringing therapeutics, drugs, and other biologics to market, including research, testing, safety, product approval, development,
manufacture, efficacy, quality control, packaging, storage, record-keeping, promotion, labeling, advertising, marketing, distribution,
sales, imports and exports of our products.
As
a therapeutic product for human use, selonabant will be subject to regulation in the United States by the FDA under the Federal Food,
Drug and Cosmetic Act (“FDCA”) and similar regulatory requirements in other countries. Regulatory requirements include, among
other things, rigorous preclinical and clinical testing. The processes obtaining regulatory approval, commercializing our product and
maintaining compliance with applicable statutes and regulations require the substantial expenditure of time and financial resources and
play a significant role in our research and development, production, and marketing activities. Failure to comply with these regulatory
processes and other requirements could delay our ability to receive regulatory approvals, adversely affect the commercialization of our
product, and hinder our ability to receive royalties or revenues.
In
the United States, the FDA regulates drugs under the FDCA and its implementing regulations. Failure to comply with such regulations during
and after the product development and approval process could result in administrative or judicial sanctions. Such sanctions include the
FDA’s refusal to approve pending applications, withdrawal of an approval, placement on a clinical hold, untitled or warning letters,
product recalls, seizure of products, partial or complete suspension of production or distribution, injunctions, fines, refusal of government
contracts, restitution, disgorgement, civil penalties and criminal penalties. The FDA generally requires the following before a drug
can be marketed in the United States:
● Preparation and submission of a New Drug Application (“NDA”);
● FDA review and approval of the NDA.
Given
that the testing and approval process requires a substantial commitment of time, effort and financial resources, we cannot ensure that
our product will be granted approval on a timely basis.
As
part of the IND, an IND sponsor must submit the preclinical test results, along with manufacturing information, analytical data and any
available clinical data or literature, to the FDA. The sponsor must also include a protocol detailing the objectives of the initial clinical
study, the parameters for monitoring safety, and the effectiveness criteria to be assessed (among other things) if the initial clinical
study lends itself to an efficacy evaluation. Some preclinical testing may continue after submission of the IND. The IND becomes automatically
effective 30 days after receipt by the FDA, unless the FDA raises questions or concerns in response to a proposed clinical study and
places the study on a clinical hold within the 30-day timeframe. In such a case, the IND sponsor and the FDA must resolve any outstanding
issues before commencing the clinical study. The FDA may impose clinical holds due to safety concerns or non-compliance on all product
candidates within a certain pharmaceutical class at any time before or during clinical studies. In addition, the FDA can impose partial
clinical holds prohibiting the initiation of clinical studies for a certain dose or of a certain duration.
In
accordance with GCP regulations, all clinical studies must be conducted under the supervision of one or more qualified investigators.
These regulations require informed consent in writing from all research subjects before their participation in any clinical study. An
IRB must review and approve the plan for any clinical study before it commences at any institution, and the IRB must continuously review
and re-approve the study at least annually. Among other things, the IRB considers whether the risks to individual participants in the
clinical study are minimal and reasonable in relation to the anticipated benefits. The IRB also approves the information regarding the
clinical study and the consent form that must be given to each clinical study subject or his or her legal representative. The IRB must
also monitor the clinical study until completed. Each new clinical protocol and any amendments thereto must be submitted to the FDA for
review, and to the IRB for approval. The protocols detail the objectives of the clinical study, dosing procedures, subject selection
and exclusion criteria, and the parameters to be used to monitor subject safety (among other things). Study sites are subject to inspection
for compliance with GCP.
Information
about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, for public dissemination
on the ClinicalTrials.gov website.
Human
clinical studies are typically conducted in three sequential phases that may overlap or be combined:
Progress
reports explaining the results of the clinical studies must be submitted to the FDA at least annually. Safety reports must be submitted
to the FDA and the investigators for serious and unexpected suspected adverse events. There is no guarantee that Phase 1, Phase 2 and
Phase 3 testing will be completed successfully within any specified period, if at all. The FDA or the sponsor may suspend or terminate
a clinical study at any time for various reasons, including a finding that the research subjects or patients are being exposed to an
unacceptable health risk. Likewise, an IRB can suspend or terminate approval of a clinical study at its institution if the clinical study
is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm
to patients.
U.S.
Review and Approval Processes
Upon
the successful completion of the required clinical testing, an NDA is submitted to the FDA requesting approval to market the product.
The NDA reports the results of product development, preclinical and clinical studies, descriptions of the manufacturing process, analytical
tests conducted on the drug, proposed labeling and other relevant information.
In
connection with the submission of an NDA, the payment of a substantial application user fee is required (although a waiver is available
under limited circumstances, including, for the first human drug application submitted by a small business or its affiliate). The sponsor
of an approved NDA is also required to pay annual program user fees.
The
FDA may also require a Risk Evaluation and Mitigation Strategy (“REMS”) to mitigate any identified or suspected serious risks.
The REMS typically includes risk minimization tools, medication guides, assessment plans, physician communication plans, and elements
to ensure safe use, including restricted distribution methods, and patient registries.
The
FDA reviews all NDAs submitted to ensure they are sufficiently complete for substantive review before it accepts them for filing. Rather
than accept an application for filing, the FDA may request additional information. In such a case, an applicant must re-submit the application
along with the additional information, which remains subject to further FDA review. Once an application is accepted for filing, the FDA
performs an in-depth substantive review to determine whether the product is safe and effective for its intended use.
The
FDA may refer the NDA to an advisory committee consisting of experts for review, evaluation and recommendation regarding its approval
and any conditions that may apply thereto. The FDA, while not bound by the recommendation of an advisory committee, considers such recommendations
when making decisions. Before approving an NDA, the FDA will also inspect one or more clinical sites to ensure clinical data supporting
the submission comply with GCP.
The
FDA may refuse to approve an NDA if regulatory requirements are not satisfied or additional clinical data and information is required.
Even after such data and information is furnished, the FDA may refuse to approve an NDA for failure to satisfy regulatory requirements.
Data from clinical studies may not always be conclusive. Moreover, the FDA may disagree with the applicant’s interpretation of
the data.
After
evaluating an application, the FDA may issue an approval letter or a complete response letter indicating completion of the review cycle.
A complete response letter typically sets forth specific conditions that must be satisfied to secure final approval of the application
and may require additional clinical or preclinical testing for the FDA to reconsider the application. The FDA may identify minor deficiencies,
such as requiring labeling changes, or major deficiencies, such as requiring additional clinical studies. The complete response letter
may also recommend actions to ready the application for approval. An applicant can respond to a complete response letter by correcting
all deficiencies and re-submitting the application, withdrawing the application or requesting a hearing.
Even
after additional information is submitted, the FDA may determine that an application does not satisfy regulatory requirements and reject
it. Once all conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter authorizing commercial
marketing of the drug with specific prescribing information for specific indications.
Even
after regulatory approval is obtained, approval may be restricted to specific diseases and dosages or limited indications for use. Such
limitations could affect the commercial value of the product. On the product labeling, the FDA may require certain contraindications,
warnings or precautions. In addition, the FDA may require post-approval studies, including Phase 4 clinical studies, to further evaluate
safety and effectiveness. The FDA may also require testing and surveillance programs to monitor the safety of approved commercialized
products. After approval, certain changes to the approved product remain subject to additional testing requirements, FDA review and approval.
Such changes to the approved product include adding new indications, manufacturing changes, and additional labeling claims.
Approved
products manufactured or distributed in accordance with the FDA regulatory process remain subject to continuing FDA oversight post-approval.
Continuing regulatory requirements include periodic reporting, record-keeping, product sampling, product distribution, and advertising
and reporting on adverse experiences, deviations, and other issues with the product. In addition, most post-approval changes to the approved
product, including adding new indications or other labeling claims, remain subject to prior FDA review and approval. There are also continuing
obligations to pay annual user fees for marketed products, as well as new application fees for supplemental applications with clinical
data.
The
FDA strictly regulates the information presented on products on the market, including information on labeling, advertising, and promotion
of products. Products may only be promoted for the approved indications and in accordance with the provisions of the approved label.
The FDA and other agencies actively enforce the rules prohibiting the promotion of off-label use. A company that improperly promotes
off-label use may be subject to significant liability. Manufacturers must also continue to comply with extensive CGMP regulations, which
requires a commitment of time and financial resources. FDA review and approval is generally required for post-approval changes to the
manufacturing process and other changes to the approved product, including the addition of new indications and additional labeling claims.
Manufacturers
and others involved in the manufacturing and distribution of approved products must register their establishments with the FDA and certain
state agencies. The FDA and state agencies may periodically inspect these establishments, sometimes without prior notice, to ensure compliance
with CGMP regulations and other obligations. CGMP requirements apply to all stages of the product manufacturing process, including processing,
production, sterilization, packaging, labeling, storage and shipment.
Prior
FDA approval is often required for changes to the manufacturing process to be implemented. FDA regulations require investigation and
correction of departures from CGMP requirements. The FDA may also impose reporting and documentation obligations upon the sponsor and
any third-party manufacturers used by the sponsor. As a result, to remain compliant with CGMP regulations, manufacturers must continue
to commit time, effort and financial resources to production and quality control.
The
FDA may impose other post-approval requirements as a condition to approving an application, such as post-marketing testing (including
Phase 4 clinical trials) and surveillance to monitor and assess the product’s safety and effectiveness upon commercialization.
The
FDA may withdraw approval of a product if an applicant fails to maintain compliance with regulatory requirements or if certain issues
arise after the product is introduced to the market. For instance, a subsequent discovery of previously unknown issues, including adverse
events of unexpected frequency or severity, problems with the manufacturing process, or failure to comply with regulatory requirements,
could result in restrictions on the product or a complete withdrawal from the market.
In
such cases, potential consequences include revisions to the approved labeling to include new safety information; post-market studies
or clinical trials to evaluate new safety risks; and imposition of restrictions under a REMS program. Other potential consequences include:
● Warning letters or holds on post-approval clinical trials;
● FDA’s refusal to approve pending NDAs or supplements to approved NDAs;
● Suspension or revocation of product license approvals;
● Product seizures or detentions;
● FDA’s refusal to allow imports or exports of products; or
● Civil penalties, criminal penalties or injunctions.
Pharmaceutical
Coverage, Pricing and Reimbursement
In
the United States, commercial sales of pharmaceutical products subject to regulatory approval could be conditioned on whether third-party