10-K
1
form10-k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
For
fiscal year ended: December 31, 2020
OR
For
the transition period from _______________ to _______________
Commission
file number: 000-51353
Protagenic Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
149 Fifth Avenue
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (212) 994-8200
Securities
registered under Section 12(b) of the Exchange Act:
Title of each class Name of exchange on which registered
N/A N/A
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, $0.0001 par value
(Title
of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
[ ] No [X]
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ]
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes
[X] No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated file, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Emerging growth company [ ]
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate
by check mark whether the registrant has filed a report and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. Yes [ ] No [X]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
[ ] No [X]
The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2020, based
on a closing price as reported on the OTCQB of $1.17 was approximately $12,005,860.
As
of March 17, 2021, there were 10,521,506 shares of the registrant’s common stock, par value $0.0001, issued and outstanding,
and 872,766 shares of the registrant’s Series B Preferred Stock, par value $0.000001, issued and outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
PROTAGENIC
THERAPEUTICS, INC.
ANNUAL
REPORT ON FORM 10-K
FOR
THE YEAR ENDED DECEMBER 31, 2020
TABLE
OF CONTENTS
PART I 6
Item 1 Business 6
Item 1A Risk Factors 17
Item 1B Unresolved Staff Comments 41
Item 2 Properties 41
Item 3 Legal Proceedings 41
Item 4 Mine Safety Disclosures 41
Item 6 Selected Financial Data 44
Item 7A Quantitative and Qualitative Disclosures About Market Risk 48
Item 8 Financial Statements and Supplementary Data 48
Item 9A Controls and Procedures 48
Item 9B Other Information 49
PART III 50
Item 10 Directors, Executive Officers and Corporate Governance 50
Item 11 Executive Compensation 55
Item 14 Principal Accountant Fees and Services 69
Item 15 Exhibits and Financial Statement Schedules 70
SIGNATURES 73
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
report on Form 10-K contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals,
expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties
and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be
materially different from future results, performance or achievements expressed or implied by such forward-looking statements.
All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify
these forward-looking statements through our use of words such as “may,” “can,” “anticipate,”
“assume,” “should,” “indicate,” “would,” “believe,” “contemplate,”
“expect,” “seek,” “estimate,” “continue,” “plan,” “point to,”
“project,” “predict,” “could,” “intend,” “target,” “potential”
and other similar words and expressions of the future. The matters discussed in these forward-looking statements are subject to
risks, uncertainties and other factors that could cause our actual results to differ materially from those projected, anticipated
or implied in the forward-looking statements. As a result, you should not place undue reliance on any forward-looking statements.
Except to the limited extent required by applicable law, we undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Risk Factors Summary
Below is a summary
of material factors that make an investment in our securities speculative or risky. Importantly, this summary does not address
all of the risks and uncertainties that we face. Additional discussion of the risks and uncertainties summarized in this risk
factor summary, as well as other risks and uncertainties that we face, can be found under “Risk Factors” in Part I,
Item 1A of this Annual Report on Form 10-K. The below summary is qualified in its entirety by that more complete discussion of
such risks and uncertainties. You should consider carefully the risks and uncertainties described under “Risk Factors”
in Part I, Item 1A of this Annual Report on Form 10-K as part of your evaluation of the risks associated with an investment in
our securities.
Risks
Related to Our Financial Condition and Capital Requirements
Risks
Related to Clinical Development and Regulatory Approval
Risks
Related to Our Reliance on Third Parties
Risks
Related to Commercialization of Our Product Candidates
Risks
Related to Our Intellectual Property
Risks
Related to Our Business Operations and Industry
● Healthcare reform measures could adversely affect our business.
Risks
Associated to our Common Stock
● Our common stock is controlled by insiders.
PART
I
Item
1. Business.
Overview
Protagenic
Therapeutic, Inc. (together with its subsidiary, “Protagenic,” the “Company,” “we,” “our”
or “us”) are a biopharmaceutical company specializing in the discovery and development of therapeutics to treat stress-related
neuropsychiatric and mood disorders. Our proprietary, patent-protected, first-in-class lead compound, PT00114, is a synthetic
form of Teneurin Carboxy-terminal Associated Peptide (“TCAP”), an endogenous brain signaling peptide that can dampen
overactive stress responses. Our preclinical models have demonstrated efficacy of PT00114 in animal models of depression, anxiety,
substance abuse & addiction, and PTSD.
PT00114
leverages a completely novel mechanism of action. Protagenic owns exclusive, worldwide rights to PT00114 through its license agreement
with the University of Toronto and has an exclusive right to license additional intellectual property generated by Dr. David Lovejoy’s
lab at University of Toronto. Additionally, the company is engaged in the research & development of follow-on compounds in
the TCAP family. Extensive publications in peer-reviewed scientific journals underline the central role stress plays in the onset
and proliferation of neuropsychiatric disorders like depression, anxiety, substance abuse & addiction, and PTSD. The mechanism
of action of TCAP suggests that it counterbalances stress overdrive at the cellular level within the brain’s stress response
cascade. TCAP works to alleviate the harmful behavioral, biochemical, and physiological effects of these disorders, while simultaneously
restoring brain health. This mechanism has been corroborated in preclinical animal models of the psychiatric disorders listed
above. Preclinical experiments required for IND filing have been completed, and the company will seek to prove the safety and
efficacy of PT00114 in humans through its initial clinical studies to commence by midyear 2021.
As
Protagenic transitions into a clinical-stage company, we aim to complete certain key strategic and tactical milestones over the
coming two years;
Continue
with our strategy of strengthening our IP position in this important novel field of neuropsychiatry
IND
Submission
We
anticipate submitting an investigational new drug (IND) application in early 2021 to evaluate the safety, tolerability, and early
activity of PT100114 (TCAP) in healthy volunteers and patients with psychiatric illnesses. The IND enabling studies, including
the preclinical efficacy data generated, as well as the GLP toxicology study, and a summary of the Phase I clinical trial plan,
will be among the components of this key regulatory submission.
Clinical
Development
The
clinical development program will be led by Dr. Maurizio Fava, MD, PhD, a world-leader in psychiatric disorders, the Psychiatrist-in-Chief
of the Massachusetts General Hospital and Slater Family Professor of Psychiatry at Harvard Medical School. Dr. Fava was co-principal
investigator of STAR*D, the largest research study ever conducted in depression, has coauthored more than 800 medical journal
publications, and is one of the top enrolling psychiatry clinicians in the US. Protagenic’s Phase I/II clinical study was
designed by Dr. Fava, who will be the trial’s principal investigator.
We
will launch our clinical program with a basket trial designed first to evaluate the safety of TCAP in a small cohort of healthy
volunteers, immediately followed by the evaluation of safety, pharmacological and clinical activity in cohorts of patients with
stress-related neuropsychiatric disorders including, but not limited to depression, addiction, anxiety, and Post-Traumatic Stress
Disorder (PTSD). We will be using this study for both safety and preliminary efficacy to prioritize indications for later phase
development that would ultimately support a New Drug Application (NDA) and registration. The four indications were chosen for
multiple reasons, including the mechanism of TCAP in reducing biological stress signals, preclinical evidence of efficacy in animal
models of these disorders and the high unmet need in these patient populations, which creates significant market opportunity.
We believe the basket trial structure offers the most efficient use of capital in early-stage development and will give us insights
into which indication we should focus on in advanced clinical trials. Healthy volunteers will be the first cohort and subsequent
parallel cohorts will include patients with:
The
trial will use a classic sequential dose escalation design using cohort replication with initial doses estimated from non-clinical
data. The study will assess dose ranging through standard and small cohorts with a rules-based approach for dose, safety, efficacy,
and biomarkers. Trial participants will have a maximal 28-day exposure. As this will be the first in human study of TCAP, safety
and adverse events will be the primary endpoint. Key secondary endpoints were chosen to ascertain efficacy in individual conditions
and compare drug impact across disparate diseases. All disease cohorts will be measured for Strengths and Difficulties Questionnaire
(SDQ), which is a validated broad self-rated outcome measure that has outperformed the clinician-rated Montgomery–Åsberg
Depression Rating Scale (MADRS) scale in previous trials. Patients will also be assessed for stress biomarkers via pre-
and post-treatment systemic cortisol levels and skin conductance. Each disease cohort (anxiety, depression, PTSD and addiction)
will also have disease specific assessments.
Furthermore,
although patient populations and their responses to CNS agents can be highly variable in clinical studies, we attempt to mitigate
this by stratifying the initial series of cohorts to select for and control for corticosterone levels to enable the broadest window
of effect detection. Preclinical studies of TCAP demonstrate that its beneficial actions are most easily observed in stressed
animals, which show elevations of plasma corticosterone levels at baseline before TCAP treatment. Anxious or depressed patients
have elevated corticosterone levels, providing an opportunity to identify patients more likely to benefit pharmacologically and
potentially clinically. This also provides a useful translational bridge between preclinical behavioral models and human clinical
studies and enables flexibility in evaluating routes of administration.
Market
for Stress-Related Neuropsychiatric Disorders: Depression, Addiction, Anxiety, and PTSD
Humans
living in our modern world, in both developed and developing nations, are being exposed to a multitude of life stressors that
are progressively taking a toll on our mental health. The recent COVID-19 has exacerbated both near-term and long-term global
impacts of stress-induced disorders on modern society. Stress-related mental, mood and behavioral disorders include, but are not
limited to: treatment resistant depression (TRD), which is a subgroup of major depressive disorder (MDD); addiction or substance
use disorder (SUD); and anxiety, including generalized anxiety disorder (GAD) and post-traumatic stress disorder (PTSD). These
disorders are a leading cause of disability worldwide and also a major contributor to suicide. Yet, a majority of these patients
are inadequately served by current therapeutic options, which can have limited efficacy, significant side effects and high treatment
burden. We believe these stress-related disorders are suitable indications for the use of Protagenic Therapeutics neuropeptide-based
drug candidates.
Major
depressive disorder (MDD) is highly prevalent and disabling. The lifetime prevalence is approximately 12% with a past year prevalence
of 7.8% of adults in the United States in 2019, translating to over 19 million adults each year. The World Health Organization
estimates 264 million people globally suffer from depression, which ranks depression as one of the highest causes of disability
and mortality in the world. Stress plays a significant role in this illness and affects as many as half of people diagnosed with
depression. MDD is characterized by multiple symptoms, potentially including depressed mood, loss of interest or pleasure, change
in appetite or weight, sleep disturbance, fatigue or loss of energy, neurocognitive dysfunction, psychomotor agitation or retardation,
feelings of worthlessness or excessive guilt, and suicidal ideation and behavior. MDD is highly treatment resistant, with 45-50%
of patients who receive initial treatment for MDD not achieving long term remission, generally referred to as Treatment Resistant
Depression (TRD). Patients suffering with TRD are at greater risk of hospitalization for their psychiatric illness and are more
likely to abuse drugs and alcohol. These patients have a lower long-term quality of life and are at increased risk of attempting
suicide. MDD is also highly recurrent and the estimated rate of recurrence over two years is over 40%, which rises to 75% after
two episodes within five years.
Treatment
guidelines recommend the combination of pharmacotherapy plus psychotherapy, but pharmacotherapy alone and psychotherapy alone
are frequently used. For initial pharmacotherapy with antidepressants, selective serotonin reuptake inhibitors (SSRIs) are recommended.
However, several classes of antidepressants are available, including serotonin-norepinephrine reuptake inhibitors (SNRIs), atypical
antidepressants, and serotonin modulators, with efficacy generally comparable across and within classes. Drug choice is based
on multiple factors, including side effect profile, comorbid illnesses, concurrent medications, patient preference, and cost.
Physicians typically cycle through multiple generics if the initial response is suboptimal or patients experience AEs. Efficacy
of therapy is challenged by non-compliance during the weeks to months required to achieve therapeutic benefit in combination with
daily dosing requirements. However, SSRIs can produce significant quality of life side effects that interfere with medication
adherence, including sexual dysfunction, gastrointestinal nausea and diarrhea, insomnia and weight gain. As a last resort, this
disease is currently managed by invasive treatment, primarily electroconvulsive therapy (ECT). However, the side effects and high
cost prevent widespread adoption.
Several
drugs that have launched in recent years validate the market for branded agents in this field, in spite of their marginal improvements
in safety or efficacy. Takeda’s Trintellix (vortioxetine hydrobromide) launched in 2014 and has grown to $837M 2019 sales,
largely due to studies added to the label after original approval showing cognitive function improvement and reduced incidence
of treatment emergent sexual dysfunction (TESD). Despite these label additions, sales have lagged original consensus analyst forecasts,
which at launch estimated 2019 worldwide sales of ~$1.1B.
Generalized
anxiety disorder (GAD) is one of the most common mental disorders in both community and clinical settings. In the United States,
the estimated lifetime prevalence of GAD is 5.7% with a past year prevalence of 2.7%, corresponding to 18 million and 9 million
individuals, respectively. GAD is characterized by excessive and persistent worrying that causes significant distress or impairment
on most days and is hard to control. Other symptoms can include apprehensiveness, irritability, increased fatigue and muscular
tension. GAD is also associated with increased rates of substance abuse, posttraumatic stress disorder, and obsessive-compulsive
disorder. GAD is a potentially chronic illness, with symptom severity fluctuating over time. A 12-year study of treated patients
showed approximately 60% of patients had symptoms resolve, but around one-half of those subsequently relapsed.
Pharmacotherapy
for GAD is primarily selective-serotonin reuptake inhibitors (SSRIs) and serotonin-norepinephrine reuptake inhibitors (SNRIs),
which are mildly efficacious. Clinical trials for different SSRIs and SNRIs have shown approximately the same effectiveness, with
response rates of approximately 60- 70% for the drug and 40% for placebo. However, SSRIs can produce significant quality of life
side effects that interfere with medication adherence, including sexual dysfunction, gastrointestinal nausea and diarrhea, insomnia
and weight gain. Thus, choice of agent is often dependent on the patient’s side effect profile for individual drugs. Benzodiazepines
are efficacious and can reduce emotional and somatic symptoms within hours. However, concerns about dependence risk has contributed
to a decline in their use. Buspirone has similar efficacy to benzodiazepines without the risk of dependence but has a time to
onset of approximately four weeks. As the majority of these agents are now available as generics, the worldwide market for GAD
therapies was only $483M in 2019 and consensus analyst forecasts expect it to decline to $222M in 2026.
Post-traumatic
stress disorder (PTSD) is one of the most common psychiatric disorders, with an estimated past-year and lifetime prevalence of
4.7% and 6.1 %, translating to 11.5M adults in the US each year. PTSD develops in some patients following exposure to a traumatic
event involving actual or threatened injury to themselves or others, such as war, natural disasters, rape or assault. Symptoms
can be severe, chronic and disabling, which can include intrusive thoughts, nightmares and flashbacks of past traumatic events,
avoidance of reminders of trauma, hypervigilance, and sleep disturbance, all of which lead to significant occupational and social
impairment. Currently, PTSD is treated with psychotherapy and/or pharmacotherapy, with psychotherapy as the recommended primary
intervention. Logistics and cost often limit access to psychotherapy, which results in many patients needing to rely on pharmacotherapy.
Guidelines for pharmacotherapy recommend first-line treatment with sertraline and paroxetine, selective serotonin reuptake inhibitors
(SSRI) antidepressants, as these are the only approved medications for PTSD. However, these only treat one aspect of symptomology
and efficacy is limited, with fewer than 30% of patients experiencing remission. The side effect profile of these agents results
in significant rates of discontinuation, particularly the severe effects such as suicidality and sexual dysfunction. Serotonin-norepinephrine
reuptake inhibitors (SNRI) and second-generation antipsychotics are used off-label in some patients, but efficacy is sporadic,
and side-effects can make these undesirable therapeutic options. As all of these options are currently generic, branded commercial
sales for PTSD is almost non-existent. Given the size of the potential addressable population and limited therapeutic options
available, a therapy with a superior therapeutic index could achieve significant market penetration and sales.
Substance
use disorders (SUDs) are highly prevalent, with ~7.2% of individuals age 12 or over having a diagnosable SUD in 2017, translating
to ~20 million people in the United States. The majority of SUDs involve alcohol use disorder (14 million), followed by illicit
drug use disorder (8 million). Illicit drug use and nonmedical use of medications alone or in combination with alcohol are associated
with a substantial proportion of emergency department visits in the United States. Pharmacologic options to treat SUDs typically
have limited efficacy, high treatment burden, with suboptimal side-effect profiles, ultimately leading to limited uptake and high
remaining unmet medical need. 40- 60% of patients who receive SUD care experience chronic or relapsing disease course.
The
incidence of opioid use disorder (OUD) and overdose deaths have reached epidemic proportions. Opioid use disorder is typically
a chronic, relapsing illness, associated with significantly increased rates of morbidity and mortality. Opioid use disorder can
be related to misuse of pharmaceutical opioids, heroin, or other opioids such as fentanyl and its analogues. The prevalence of
heroin use and heroin use disorder nearly doubled between 2002 and 2018. In 2019, 2.1% of those 12 or older in the US were estimated
to have used heroin at some point in their lives, translating 5.7 million people, with 431,000 (0.2%) having reported use in the
last month. This resulted in an increase in heroin-related overdose deaths, with ~15,000 in the US in 2018. Approximately 65%
of people who primarily use heroin have been reported to additionally use prescription opioids and heroin use is increasing for
persons who begin by first having nonmedical use/abuse of prescription opioid analgesics. These prescription opioids can be obtained
from a relative, friend or directly from a clinician. In 2015, 3.8 million people aged 12 and older in the US reported past month
misuse of a prescription pain medication, 2 million of whom qualified for a disorder of opioid use or dependence.
Unmet
needs are particularly high in OUD. First-line treatment for most patients is medication-assisted treatment, consisting of pharmacotherapy
with an opioid agonist or antagonist in combination with psychotherapy. Pharmacotherapy can include an opioid agonist (methadone
or buprenorphine) and/or an opioid antagonist (e.g. naltrexone). Guidelines for mild opioid use disorder suggest first-line treatment
with long-acting injectable naltrexone (e.g. Vivitrol) administered monthly. Guidelines for moderate to severe opioid use disorder
suggest initial use of buprenorphine (e.g. Suboxone) due to the higher risk of lethal overdose with methadone. Treatment can allow
patients to return to a productive lifestyle but has low success rates and can be extremely burdensome. These therapies require
patients remain on maintenance treatment with an opioid agonist for many years as they are physically dependent upon the medications.
A minority may be tapered off after a few years, with the taper itself taking several months to years.
The
treatment burden and side effect profile of these therapies is substantial. Buprenorphine is classified as a schedule III controlled
substance in the United States, with use limited to certified and specially trained physicians. Side effects include sedation,
headache, nausea, constipation, insomnia, and sweating. Death is possible if buprenorphine is taken in combination with other
substances, especially benzodiazepines and alcohol. Methadone is highly regulated in the United States, where it is classified
as a schedule II drug. Only licensed opioid treatment programs or inpatient hospital units are permitted to dispense. Typical
side effects of methadone include constipation, drowsiness, sweating, peripheral edema, reduced libido, and erectile dysfunction,
with some patients experiencing severe adverse effects including cardiac arrhythmias, hyperalgesia, and overdose.
Alcohol
use disorder (AUD) is extraordinarily prevalent. Approximately 30% of adults in the United States use alcohol in an unhealthy
manner and may need some form of intervention. The 2019 United States National Survey on Drug Use and Health estimated that of
Americans over the age of 12 in the past 30 days, 24% reported binge drinking (five or more drinks on one occasion) and 6% reported
heavy drinking (five or more drinks on each of five or more days). The National Institute on Alcohol Abuse and Alcoholism (NIAAA)
reports 28% of US adults exceed thresholds for risky use alcohol consumption, with 19% exceeding the daily limit and 9% exceeding
both the daily and weekly limits. Rates of diagnosable AUD by DSM-5 criteria from the third National Epidemiologic Survey on Alcohol
and Related Conditions showed that 29% had met criteria for an alcohol use disorder in their lifetime and 14% met criteria for
a current alcohol use disorder. Worldwide, the World Health Organization estimates that 5% of adults (>283 million people)
had alcohol use disorder within the prior 12 months.
AUD
is responsible for significant mortality and morbidity. Excessive alcohol consumption is the third leading preventable cause of
death in the United States directly causing approximately 85,000 deaths per year, roughly 10% of deaths among working age adults.
Nearly 5% of all deaths worldwide (approximately three million each year) have been attributed to alcohol use with 5% of those
specifically due to AUD. The economic cost of excessive alcohol use in the United States is estimated to be $249 billion in 2010
by the CDC. Therapeutic unmet needs are significant for AUD and the condition is frequently untreated. Psychosocial interventions
can be effective for treatment but up to 70% of individuals return to heavy drinking. For patients who met DSM-IV criteria for
alcohol abuse, 46% were in remission, 24% continued to meet abuse criteria, and 30% met criteria for alcohol dependence in the
future. For patients who met DSM-IV criteria for alcohol dependence, 39% were in remission, 15% met criteria for abuse only, and
46% continued to meet dependence criteria.
Several
medications can be used to treat AUD, which can lead to reduced heavy drinking and increased days of abstinence. For most patients
treated with moderate to severe alcohol use disorder, guidelines recommend first-line treatment with naltrexone (e.g. Vivitrol),
an opioid antagonist. Vivitrol is an extended-release injectable naltrexone that allows for once monthly dosing that was approved
in 2006. Vivitrol is priced at $~1370/month and worldwide sales have grown to $335M. Consensus analyst forecasts for Vivitrol
project sales increasing to $419M in 2026, with patent expiry in 2028. Acamprosate (e.g. Campral) is recommended for those in
whom naltrexone is contraindicated, such as those taking opioids or with acute hepatitis. Campral (Acamprosate) was approved by
the FDA in 2004 and reached peak worldwide sales of $87M in 2008. Acamprosate is currently only available as generic in the US,
but is still sold as branded Campral ex-US. Given the overall prevalence of AUD, these relatively low sales numbers indicate the
vast majority of patients with AUD are not treated with pharmacotherapy.
Teneurin
Carboxy-terminal Associated Peptide (TCAP) as a Therapy
Our
approach to treating stress-related neuropsychiatric and mood disorders is based on research into brain mechanisms conducted over
the last 15 years in the laboratory of the company’s scientific founder, Dr. David Lovejoy, from the University of Toronto.
TCAP was discovered in a genome-wide search for proteins related to corticotropin releasing factor (CRF), an endogenous brain
peptide known to be the central mechanism coupling external stress to psychological, behavioral, and endocrine responses. Dr.
Lovejoy and his colleagues discovered and characterized Teneurin Carboxy-terminal Associated Peptide (TCAP); their further work
revealed that TCAP is of ancient evolutionary origin and plays a central role in maintaining healthy brain structure and function
in the face of the negative effects of stress. Although four TCAP peptides were discovered, only TCAP-1 is expressed independent
of a larger Teneurin protein and is the primary focus of our development (PT00114).
TCAP
reverses the impact of stress on the Hypothalamic-Pituitary-Adrenal (HPA) axis, the endocrine and behavioral control system which
connects environmental stress to behavioral responses via brain levels of Corticotropin Releasing Factor (CRF) and blood levels
of the stress hormone cortisol. Stress elevates CRF, which in turn elevates cortisol levels. Studies have demonstrated that TCAP
counteracts the effects of either endogenous or pharmacologically-administered CRF via a non-CRF receptor pathway in the brain,
that is believed to be evolved over millions of years as a homeostasis-related pathway. There has been strong interest in the
pharmaceutical industry for decades to develop drug candidates that block the negative effects of CRF by attempting to directly
antagonize the CRF receptor, however clinical results to date with prior CRF receptor antagonists have been disappointing. Because
TCAP counteracts the action of CRF by activating separate receptors instead of directly blocking CRF receptors, we believe it
is a superior approach to alleviating stress-related neuropsychiatric disorders; TCAP-1 acts by binding to Latrophilin-1 and Latrophilin-3,
G-protein-coupled receptors (GPCRs) expressed on nerve cells in the extended amygdala, the region of the brain involved in memory,
emotion, and fear. TCAP acts through these receptors to block the effects of CRF and potentially other stress mediators such as
Arginine-Vasopressin (AVP). Due to differences in the mechanism of action, TCAP is expected to be efficacious in clinical settings
in which earlier studies with CRF receptor antagonists were not. We believe this novel mechanism of action can provide an attractive
therapeutic profile for patients who are not fully responsive to currently available therapies.
Two
key effects of TCAP may contribute to its pharmacological activity in reversing or preventing stress-induced behavioral distortions.
In settings of stress and depression, the activity of specific neural circuits can be diminished compared to the levels of activity
observed in healthy brain tissue. After administration, TCAP crosses the blood brain barrier and concentrates in regions of the
brain associated with the regulation of mood disorders. Administered TCAP can lead to increases in activity in some of the neuronal
circuitry implicated in depression, demonstrated by increases in the utilization of glucose, a surrogate for cell activity. The
fact that the pharmacological effects of TCAP persist after the drug has been cleared aligns with findings that TCAP applied to
neurons in culture stabilizes dendritic spines, structures that sprout from the surface of neurons and can form synapses with
other neurons to create functional circuitry. Stress and the associated rise in CRF have been reported to cause loss of synapses
in animal models. The fact that the pharmacological actions of TCAP persist for weeks are consistent with its producing lasting
changes in neuronal function by changing patterns of gene expression and thus creating relatively stable changes in neuronal function.
In a number of these models, a single subcutaneous dose of TCAP will prevent the behavioral consequences of stress encountered
three weeks later. This is especially notable since the administered dose of TCAP is eliminated from the plasma within hours of
administration.
Our
lead compound is a 41-residue peptide synthetic TCAP-1, which we have designated PT00114. In addition, we have a portfolio of
earlier stage neuropeptides targeting the TCAP pathway that are in preclinical evaluation. The initial dosage form is intended
as a subcutaneous injection but is also amenable to other routes of administration including sublingually or intra-nasally. This
affords a range of target product profiles and opportunities for lifecycle management.
While
many of the initial studies of TCAP had been generated in the lab of Dr. David Lovejoy, we have designed several preclinical studies
over the last four years to validate the safety and efficacy of PT00114, for which we hired multiple independent contract research
organizations (CROs) to conduct these studies. In preclinical rodent models, administration of PT00114 results in reproducible,
dose-dependent reversal of a range of stress-induced behavioral distortions, including depression, stress-exacerbated anxiety,
excessive startle, drug seeking, and opioid withdrawal. Stress-induced anxiety was measured by an elevated plus maze, an open
field with stressed animals, and acoustic startle in CRF-treated animals. Depression was measured by tail suspension and forced
swim. Stress-induced changes in tube-restrained rodents were used as a well-validated model for sub-acute stress. Notably, PT00114
was found to be pharmacologically active in stressed rodents but relatively inactive in non-stressed rodents.
In
studies conducted with Charles River Laboratories in Kuopio, Finland, PT00114 showed beneficial effects in Chronic Social Defeat,
a murine model of stress-induced behavioral dysfunction that has features of depression. In this model, male mice are placed in
cages along with older, dominant male mice. This results in progressively more “resigned” behaviors in the mice experiencing
this domineering exposure. This results in a series of behaviors in the cowed mice, termed Chronic Social Defeat. PT00114 reverses
many of the component behaviors typically measured in this model, suggesting that it reverses the negative effects of stress in
the “defeated” animals.
PT00114
demonstrated efficacy in a variable chronic stress model that has features of anxiety and PTSD. In an open field assessment, mice
or rats are stressed by being placed in a tube for several hours, then placed in an open box where their movement is observed
for 20 minutes. Control animals exhibit stress response behavior by not moving around much and staying near the edges of the box.
Animal receiving PT00114 at the end of the stress condition moved around the open field. Animals receiving multiple administrations
of a control small molecule CRH antagonist did not venture into the open field, indicating they were stressed. These results are
also reflected in blood cortisol levels, where control mice had increased cortisol levels, which were reduced by treatment with
PT00114, but not by the small molecule CRF antagonist.
Stress
plays a central role in a broad range of addictions, including alcohol and opioids. The ability of PT00114 to blunt excessive
stress may be able to provide non-dependence forming treatment of addictions. A series of studies conducted at Porsolt Laboratories
in Lavel France support the potential utility of PT00114 as a treatment to help people defeat opioid addiction. In rats addicted
to opioids, administering CRF models environmental stress, causing them to frantically seek opioids. PT00114 reduces the opioid
seeking behavior in response to CRF administration. Further studies conducted by Porsolt following EMEA guidelines demonstrated
that on its own, PT00114 was not addictive and rats did not develop dependence to the peptide after chronic administration.
PT00114
has also demonstrated pre-clinical efficacy in a murine model of opioid withdrawal called the Saleens test. In this test, mice
are addicted to opioids and the animals are then administered the opioid antagonist naloxone, which immediately blocks opioid
action and triggers profound stress and opioid withdrawal. This manifests as a behavioral stress response with the mice jumping
up to six inches into the air over 70 times in a 20-minute observation period. Administering PT00114 at three different time points
within the experiment – before the naloxone-driven withdrawal, before the period of opioid addiction, or up to three weeks
before the induced withdrawal – results in a reproducible, dose-dependent restoration to non-stressed behavior and reduced
jumping. Significantly, this is not accompanied by any evidence of sedation or reduced activity. This effect appears independent
of the opioid used as PT00114 ameliorates this withdrawal-triggered jumping stress behavior in mice experiencing withdrawal from
both fentanyl and morphine.
Preclinical
Safety and Toxicology
Preclinical
safety data for PT00114 demonstrates a robust profile in both rats and non-human primates. As the mechanism is unique and TCAP
is a part of healthy brain signaling, we believe PT00114 will have a differentiated side effect profile relative to existing antidepressant
and antipsychotic agents. A key aspect of the TCAP mechanism is that it does not completely block the perception of and responses
to stress; it rather protects against stress overload. Some perception of environmental stress and a proportionate response to
that stress is adaptive behavior and it is not desirable to completely block stress responses. Unlike benzodiazepines that can
cause sedation and are prone to dependence, TCAP prevents the maladaptive response to environmental stress without sedation and
without developing dependence.
We
have completed non-GLP Dose-Range-Finding (DRF) toxicology studies of PT00114 administered subcutaneously daily for five days
in rats and non-human primates. The doses tested were substantially above the anticipated clinical doses and were well tolerated
and safe, with no dose-limiting toxicities observed at doses at least 50-fold higher than anticipated clinical exposures. No major
changes in hematology or clinical chemistries were seen, including prolactin levels or testosterone levels, changes in which may
impact libido. Distinct from SSRI’s, there was no impact on ambulation, sedation or weight gain. Importantly, further studies
conducted following EMEA guidelines, demonstrated that on its own PT00114 was not addictive and rats did not develop dependence
to the peptide after chronic administration. The in life 28-day GLP toxicology testing in both the rats and non-human primate
have been completed. There have been no changes in clinical chemistries or pathology that would prompt a stop in the program and
the therapeutic margin if large. The final audited reports are currently being compiled.
Process
Development and Manufacturing
We
currently do not own any manufacturing facilities and rely on 3rd party contract manufacturers for synthesis of PT00114.
We have sufficient PT00114 synthesized under cGMP conditions to complete GLP toxicology studies and Phase 1 human clinical trials.
This material is currently undergoing requisite stability and accelerated stability testing. PT00114 is highly soluble and has
shown excellent preliminary stability in several storage conditions, with the material being stable for at least 12 months.
The
initial dosage form developed will be a subcutaneous injection. Because PT00114 is also amenable to other routes of administration
including sublingually or intra-nasally, we will be doing preliminary process work to develop these formulations, and anticipate
using one of these dosage forms in later stage clinical studies.
Technology
License Agreement
On
July 31, 2005, the Company had entered into a Technology License Agreement (“License Agreement”) with the University
of Toronto (the “University” or “UT”) pursuant to which the University agreed to license to the Company
patent rights and other intellectual property, among other things (the “Technologies”). The Technology License Agreement
was amended on February 18, 2015. Unless earlier terminated, the term of this License Agreement shall terminate on the expiration
or invalidity of the last issued Patent in the License Agreement
Pursuant
to the License Agreement and its amendment, the Company obtained an exclusive worldwide license to make, have made, use, sell
and import products based upon the Technologies, or to sublicense the Technologies in accordance with the terms of the License
Agreement and amendment. In consideration, the Company agreed to pay to the University a royalty payment of 2.5% of net
sales of any product based on the Technologies. If the Company elects to sublicense any rights under the License Agreement and
amendment, the Company agrees to pay to the University 10% of any up-front sub-license fees for any sub-licenses that occurred
on or after September 9, 2006, and, on behalf of the sub-licensee, 2.5% of net sales by the sub-licensee of all products based
on the Technologies. The Company had no sales revenue for the year ended December 31, 2016 and therefore was not subject
to paying any royalties.
In
the event the Company fails to provide the University with semi-annual reports on the progress or fails to continue to make reasonable
commercial efforts towards obtaining regulatory approval for products based on the Technologies, the University may convert our
exclusive license into a non-exclusive arrangement. Interest on any amounts owed under the License Agreement and amendment
will be at 3% per annum. All intellectual property rights resulting from the Technologies or improvements thereon will remain
the property of the other inventors and/or Dr. David Lovejoy at the University, and/or the University, as the case may be. The
Company has agreed to pay all out-of-pocket filing, prosecution and maintenance expenses in connection with any patents relating
to the Technologies. In the case of infringement upon any patents relating to the Technologies, the Company may elect, at its
own expense, to bring a cause of action asserting such infringement. In such a case, after deducting any legal expenses the Company
may incur, any settlement proceeds will be subject to the 2.5% royalty payment owed to the University under the License Agreement
and amendment.
The
patent applications were made in the name of Dr. Lovejoy and other inventors, but the Company’s exclusive, worldwide rights
to such patent applications are included in the License Agreement and its amendment with the University. The Company maintains
exclusive licensing agreements and it currently controls the six intellectual patent properties.
Sales
and Marketing
We
currently have no sales, marketing or distribution capabilities. In order to commercially market PT00114 and any product candidates
we develop in the future, we would either need to develop an internal sales team and marketing department or collaborate with
third parties who have sales and marketing capabilities. As we enter the clinic in 2021, we anticipate working with a Market
Access expert or consultancy to better understand clinician and payor dynamics in the therapeutic areas we are focused on, so
that, as we begin later stage studies, we are working on a deeper commercial assessment in parallel. We have done some high-level
benchmarking of pricing based on the current landscape of approved and available therapies for psychiatric disorders we are targeting,
both in the generics and on-patent realms.
Competition
The
pharmaceutical and biotechnology industries are highly competitive and characterized by rapidly evolving technology and intense
research and development efforts. We expect to compete with companies, including major international pharmaceutical companies
and other institutions that have substantially greater financial, research and development, marketing and sales capabilities
and have substantially greater experience in undertaking preclinical and clinical testing of products, obtaining regulatory approvals
and marketing and selling biopharmaceutical products. We will face competition based on, among other things, product efficacy
and safety, the timing and scope of regulatory approvals, product ease of use and price.
Despite
a large patient population and current treatments that leave much room for improvement, the developmental pipelines are sparse
and few novel candidates are in development. The serendipitous discoveries of current drug classes, side effects and lack of efficacy
have led to shrinkage or extinction of many pharma or small biotech neuroscience research programs.
Set
forth below is a discussion of competitive factors for each of the current drug classes commercially available for TRD, and the
competitive advantages that we believe PT00114 may offer. The basis for our beliefs regarding the competitive advantages that
PT00114 may offer over its competitors is our own pre-clinical animal studies. We acknowledge that these beliefs and conclusions
about competitive advantages must be regarded as theoretical until such time as we have human clinical data that supports and
re-affirms the results seen in the pre-clinical animal studies.
Opioid
receptor modulators
Opioid
receptor modulators have the potential to be therapeutic drugs for TRD but have a high likelihood of abuse and thus regulatory
restrictions. We believe that our competitive advantage is that PT00114 targets a different receptor system therefore it is not
likely to have a clinical overlap with opioid receptor modulators.
Atypical
Antipsychotics with antidepressant effects (dopamine
receptor modulators)
Brexpiprazole
(Rexulti from Otsuka) is a dopamine (D2 receptor) partial stimulator (agonist) approved as an oral adjunctive TRD therapy.
Its side effects include suicidal risk, weight gain and restlessness. Cariprazine (Vraylar from AbbVie) is an oral dopamine
D2 and D3 receptor antagonist approved for schizophrenia and bipolar disorder in development for TRD. The most common side effects
reported were extrapyramidal symptoms, the urge to move (akathisia), indigestion (dyspepsia), vomiting, drowsiness (somnolence)
and restlessness. We believe that our competitive advantage is that PT00114, due to its low toxicity profile, will be clinically
preferable to these antipsychotic drugs.
Ketamine
and Esketamine
Ketamine
and Esketamine (Spratavo nasal spray from Johnson & Johnson) the S(+) enantiomer of the drug ketamine act primarily as a non-competitive
NMDA receptor antagonist, but is also a dopamine reuptake inhibitor. Although ketamine is used off-label and Esketamine was recently
approved for TRD, limitations and concerns around use limit uptake in a broader population. We believe that our competitive advantage
is that the toxicity profile is likely to be less favorable when compared with PT00114.
GABA
receptor modulators
GABA
receptors, when bound by inhibitory neurotransmitters found throughout the brain, act as a brake on nerve activity. Sage Therapeutics
is developing multiple compounds that target this mechanism and more candidates are expected to come from this therapeutic class
that may present a competitive challenge for PT00114.
NMDA
receptor modulators
The
N-methyl-D-aspartate (or “NMDA”) receptor is a molecule that appears on the surface of neurons. When “activated”
by a drug that binds with it, the NMDA receptor is a potential natural way to counteract TRD. More candidates are expected to
come from this therapeutic class that may present a competitive challenge for PT00114.
PT00114’s
Competitive Advantages
Our
preclinical data and the corroborated mechanism of action of PT00114 indicates its advantages as compared to current approved
therapies:
● PT00114 naturally crosses the blood brain barrier
Intellectual
Property
We
believe that patents, trademarks, copyrights and other proprietary rights are important to our business. We also rely on trade
secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain our competitive position.
We seek to protect our intellectual property rights by a variety of means, including obtaining patents, maintaining trade secrets
and proprietary know-how, and technological innovation to operate without infringing on the proprietary rights of others and to
prevent others from infringing on our proprietary rights. Our policy is to seek to protect our proprietary position by, among
other methods, actively seeking patent protection in the United States and foreign countries.
As
of December 15, 2020, we have four patents issued by the Governments of the United States, Canada, European Union (validated in
Germany, France and Great Britain) and Australia on our original platform technology. The patent applications were made in the
name of Dr. David A. Lovejoy and inventors, but the Company’s exclusive, worldwide rights to such patent applications are
included in the License Agreement with UT. We have three further issued patents and 8 pending patent applications in related technology
that the company has rights in or own.
Our
success will depend in part on our ability to maintain our proprietary position through effective patent claims and their enforcement
against our competitors. Although we believe our patent applications provide a competitive advantage, the patent positions of