Cannabis Investment Club

[JohnCM]

Outstanding Shares
176,185,221
05/30/2018

DESCRIPTION

Kalytera Therapeutics is a clinical-stage pharmaceutical company pioneering the development of a next generation of cannabinoid therapeutics. Through its proven leadership, drug development expertise, and intellectual property portfolio, Kalytera seeks to establish a leading position in the development of novel cannabinoid medicines for a range of important unmet medical needs, with an initial focus on Graft versus Host Disease ("GvHD"). Kalytera is also developing a new class of proprietary cannabidiol ("CBD") therapeutics. CBD is a remarkable compound that has shown activity against a number of pharmacological targets. However, there are limitations associated with natural CBD, including its poor oral bioavailability. Kalytera is developing innovative CBD formulations and prodrugs in an effort to overcome these limitations, and to target specific disease sites within the body. Kalytera has filed composition of matter and method of use patents covering its novel inventions, with the goal of limiting future competition.



KALYTERA THERAPEUTICS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
As of November 29, 2017

For the three and nine months ended September 30, 2017
This management discussion and analysis (“MD&A”) of Kalytera Therapeutics, Inc. (the “Company”
or “Kalytera”) is for the three and nine months ended September 30, 2017 and is performed by
management using information available as of November 29, 2017.

Kalytera has prepared this MD&A
with reference to National Instrument 51-102 “Continuous Disclosure Obligations” of the Canadian
Securities Administrators. This MD&A should be read in conjunction with the Company’s unaudited
condensed consolidated interim financial statements for the three and nine months ended September 30,
2017 and the related notes thereto (“Interim Financial Statements”), as well as the Company’s audited
consolidated financial statements for the year ended December 31, 2016 and the related notes thereto
(“Annual Financial Statements”). The Company’s Interim Financial Statements and Annual Financial
Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).
All amounts are expressed in United States dollars unless otherwise indicated.
This MD&A contains certain “forward-looking statements” and certain “forward-looking information”
as defined under applicable Canadian securities laws that may not be based on historical fact, including,
without limitation, statements containing the words “believe”, “may”, “plan”, “will”, “estimate”,
“continue”, “anticipate”, “intend”, “expect” and similar expressions. Forward-looking statements are
necessarily based on estimates and assumptions made by us in light of Kalytera’s experience and
perception of historical trends, current conditions and expected future developments, as well as the factors
Kalytera believes are appropriate. Forward-looking statements in this MD&A include but are not limited
to statements relating to:
• the initiation, timing, cost, progress and success of Kalytera’s research and development
programs, pre-clinical studies and clinical trials;
• Kalytera’s ability to advance product candidates into, and successfully complete, clinical trials;
• Kalytera’s ability to recruit sufficient numbers of patients for Kalytera’s future clinical trials;
• Kalytera’s ability to achieve profitability;
• Kalytera’s ability to obtain funding for Kalytera’s operations, including funding for research and
commercial activities;
• Kalytera’s ability to establish and maintain relationships with collaborators with acceptable
development, regulatory and commercialization expertise and the benefits to be derived from such
collaborative efforts;
• whether Kalytera’s third party collaborators will maintain their intellectual property rights in the
technology Kalytera licenses;
• the implementation of Kalytera’s business model and strategic plans;
• Kalytera’s ability to develop and commercialize product candidates;
• Kalytera’s anticipated regulatory submissions and commercial activities;
• Kalytera’s estimates of the size and characteristics of the potential markets for its product
candidates;
• Kalytera’s commercialization, marketing and manufacturing capabilities and strategy;
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• Kalytera’s ability to protect its intellectual property and operate its business without infringing
upon the intellectual property rights of others;
• Kalytera’s expectations regarding federal, provincial and foreign regulatory requirements;
• whether the Company will receive, and the timing and costs of obtaining, regulatory approvals in
the U.S., Canada, the European Union and other jurisdictions;
• the therapeutic benefits, effectiveness and safety of Kalytera’s product candidates;
• the rate and degree of market acceptance and clinical utility of Kalytera’s future products, if any;
• the timing of, and Kalytera’s ability and its collaborators’ ability, if any, to obtain and maintain
regulatory approvals for its product candidates;
• Kalytera’s expectations regarding market risk, including interest rate changes and foreign
currency fluctuations;
• Kalytera’s ability to engage and retain the employees required to grow its business;
• the compensation that is expected to be paid to employees of the Company;
• Kalytera’s future financial performance and projected expenditures;
• developments relating to Kalytera’s competitors and its industry, including the success of
competing therapies that are or may become available; and
• estimates of Kalytera’s expenses, future revenue, capital requirements and its needs for
additional financing.
Such statements reflect Kalytera’s current views with respect to future events and are subject to risks and
uncertainties and are necessarily based upon a number of estimates and assumptions that, while
considered reasonable by Kalytera, are inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies. Many factors could cause Kalytera’s actual results,
performance or achievements to be materially different from any future results, performance, or
achievements that may be expressed or implied by such forward-looking statements. In making the
forward looking statements included in this MD&A, the Company has made various material assumptions,
including, but not limited to: (i) enrollment in, completion of and obtaining positive results from clinical
trials; (ii) obtaining regulatory approvals; (iii) general business and economic conditions;the Company’s
ability to develop and commercialize, or otherwise monetize, its product candidates and in-license and
develop new products; (v) the assumption that Kalytera’s current good relationships with its
collaborators, licensors and other third parties will be maintained; (vi) the availability of financing on
reasonable terms; (vii) the Company’s ability to attract and retain skilled staff; (viii) the products and
technology offered by the Company’s competitors; and (ix) the Company’s ability to protect patents and
proprietary rights.
In evaluating forward-looking statements, current and prospective shareholders should specifically
consider various factors, including the risks outlined under the heading “Risk Factors” in the Company’s
management discussion and analysis in respect of the Annual Financial Statements that was filed on
SEDAR (www.sedar.com) on May 1, 2017. Should one or more of these risks or uncertainties, or a risk
that is not currently known to us materializes, or should assumptions underlying those forward- looking
statements prove incorrect, actual results may vary materially from those described herein. These
forward-looking statements are made as of the date of this MD&A, and Kalytera does not intend, and do
not assume any obligation, to update these forward-looking statements, except as required by applicable
securities laws. Investors are cautioned that forward-looking statements are not guarantees of future
performance and are inherently uncertain. Accordingly, investors are cautioned not to put undue reliance
on forward-looking statements.
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OVERVIEW OF THE COMPANY
Kalytera is a clinical-stage specialty pharmaceutical company developing a portfolio of cannabinoid,
cannabinoid-like, and endocannabinoid-like pharmaceutical products. Kalytera believes interest in
cannabinoid therapeutics has increased significantly over the past several years as preclinical and clinical
data has emerged highlighting the potential efficacy and safety benefits of cannabinoid therapeutics.
Kalytera is developing the following product candidates in the following programs: (1) cannabidiol
(“CBD”) therapeutics; (2) proprietary CBD prodrugs; and (3) cannabinoid-like and endocannabinoid-like
compounds, with an initial focus on CBD therapeutics and CBD prodrugs. Kalytera currently has no
product candidate that has received regulatory approval.
Kalytera’s lead clinical-stage program is focused on developing CBD formulations for both treatment and
prevention of acute graft versus host disease (“GVHD”). Kalytera’s lead program in GVHD has recently
completed three Phase 2a clinical studies evaluating the safety and efficacy of (1) short term use of CBD
in the prevention of acute GVHD, (2) prolonged use of CBD in the prevention of acute GVHD, and (3)
prolonged use of CBD in the of treatment steroid-refractory grades 3-4 acute GVHD. Kalytera’s GVHD
program was acquired pursuant to Kalytera’s acquisition of Talent Biotechs Ltd. (“Talent”), a formerly
privately held, Israeli-based developer of CBD therapeutics, as announced on February 16, 2017.
With its recent acquisition of Talent, Kalytera has transitioned from a pre-clinical stage company to a
clinical-stage pharmaceutical company pioneering the development of a next generation of cannabinoid
therapeutics. Through its experienced leadership, drug development expertise, and intellectual property
rights, Kalytera is seeking to establish a leading position in the development of cannabinoid medicines for
a range of important unmet medical needs, with an initial focus on GVHD.
On November 15, 2017, the Company announced that the United States Patent and Trademark Office has
issued a Notice of Allowance for US Patent Application 15/143,694 covering the use of CBD in the
treatment of GVHD. Securing a patent for this proprietary technology represents an important step forward
for the Company in its work focused on the treatment of this serious and life-threatening disease.
Over the next 12 months, Kalytera intends to advance the development of its CBD therapeutic for the
prevention of acute GVHD by conducting a late-stage clinical study in this indication.
Kalytera is also developing a pre-clinical stage pipeline of CBD prodrugs for the treatment of a variety of
disorders. CBD prodrugs are designed to specifically modify physiochemical properties and functionality
of CBD. These modifications are intended to enhance regional therapy and enable bifunctional therapy.
Over the next 18 months, through Q2 2019, Kalytera also expects to advance at least one of its CBD
prodrugs into Phase 1 human clinical testing.
Cannabidiol (“CBD”)
CBD is a non-psychoactive cannabinoid compound that has been shown to be an effective therapeutic
against a number of pharmacological targets. However, there are limitations associated with natural CBD,
including its poor oral bioavailability. Kalytera is developing CBD formulations and CBD pro-drugs in an
effort to overcome these limitations, and to target delivery of CBD to specific disease sites within the body.
Kalytera has filed composition of matter and method of use patents covering its inventions in the six major
markets (the U.S., the United Kingdom, France, Germany, Italy and Spain, as well as several other
jurisdictions, including Japan, Canada, Brazil and Australia).
Kalytera will also seek to advance a portfolio of synthetic, non-psychoactive cannabinoid-like compounds.
By modifying cannabinoid molecules, and molecules which regulate the endogenous cannabinoid signaling
system, Kalytera will seek to improve pharmacokinetics and increase potency, potentially allowing for the
development of drug candidates with improved activity.
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CBD – In Treatment and Prevention of Graft Versus Host Disease (“GVHD”)
GVHD is a multisystem disorder that occurs when the transplanted cells from a donor (“the graft”)
recognize the transplant recipient (“the host”) as foreign. This interaction initiates an immune reaction that
causes disease in the transplant recipient. This reaction can occur within days after the transplant (acute
GVHD) or months to years after the transplant (chronic GVHD).
GVHD commonly occurs following hematopoietic stem cell transplantation (“HCT”), a procedure
whereby the stem cells of the bone marrow or peripheral blood of a healthy donor are transplanted into a
new host after chemotherapy or radiation. This is a lifesaving procedure for many diseases of the blood and
bone marrow including leukemia, Hodgkin and Non-Hodgkin lymphoma, multiple myeloma, sickle cell
anemia, and thalassemia. According to a report prepared by GlobalData PharmaPoint, the Graft- VersusHost-Disease
Opportunity Analysis and Forecasts to 2023 Update (the “GlobalData Report”), there were
over 8,000 HCT procedures in the U.S. in 2014 and the use of HCT is expected to continue to increase at a
rate of 7% per year. Whereas HCT procedures can be lifesaving, they pose many dangerous side effects,
including infection and GVHD.
Acute GVHD is graded from grades 1 to 4, based on the severity of symptoms, and the degree to which
various organ systems are involved. In general, grade 1 can be described as mild, grade 2 can be described
as moderate, grade 3 can be described as severe, and grade 4 can be described as life threatening. Patients
with acute GVHD may suffer from rashes and blistering of the skin, nausea, vomiting, abdominal cramps
accompanied by diarrhea, and jaundice. Generally, acute reactions are more severe and life threatening.
Acute GVHD is a major cause of morbidity and mortality following HCT. As reported in the GlobalData
Report, it is estimated that even with intensive prophylaxis with immunosuppressive treatments, 30-50%
of patients transplanted from fully matched sibling donors and 50-70% of patients transplanted from
unrelated donors will develop some level of acute GVHD.
The first step in prevention of GVHD is the selection of donor cells that closely match the genetics of the
immune system of the transplant recipient, ideally a sibling donor. From there, the patient relies on drugs
that have been developed to prevent or treat GVHD. Medicinal prevention of acute GVHD is dependent on
immunosuppression of the donor cells, either pharmacologically or through T-cell depletion. Common
drugs include methotrexate, cyclosporine tacrolimus, sirolimus, mycophenolate mofetil and ATG.
Preventive measures and clinical practices vary by institution.
Treatment of GVHD involves pharmacologic suppression of the graft’s immune cell activation and reestablishment
of donor-host immune-tolerance. Most patients are prescribed corticosteroids, which directly
suppress the donor’s immune cell attack on host tissue, but also raise the risk of infection and cancer
relapse. As with prevention, the optimal drug strategy for GVHD is not well defined. As stated in the
GlobalData Report, only 30-50% of patients with moderate to severe GVHD respond to corticosteroids,
putting many at risk for fatal outcomes. Better treatment options are needed to improve the mortality and
morbidity outcomes for transplant recipients.
In 2015, Professor Moshe Yeshurun, Kalytera’s Chief Medical Officer (“CMO”), and previously the CMO
of Talent and Head of the Bone Marrow Transplantation Department at the Rabin Medical Center in Israel,
published the results of a Phase 2a clinical trial evaluating the safety and efficacy of CBD in the prevention
of acute GVHD. These results were published in Biology of Blood and Marrow Transplantation, 21 (2015)
1770-1775. As reported in this peer-reviewed article, 48 patients undergoing matched unrelated donor
transplantation received oral CBD a week before and 30 days after HCT. The incidence of acute grades 2-
4 GVHD among these patients was 12%, compared to a rate of 48% in 102
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consecutive patients evaluated previously at the same unit at Beilinson Hospital in Petach Tikvah, Israel.
Based on the promising results of that study, a subsequent Phase 2a clinical study was undertaken to
evaluate the efficacy of prolonged administration of CBD following HCT. In that study, which enrolled 12
patients, participants were provided daily doses of CBD seven days prior to transplantation and for 100 days
following the procedure. With a median follow-up of 8.5 months following transplantation, 85% of patients
in the study did not develop significant (grades 2-4) acute GVHD, despite the fact that the majority of the
patients in the study (10) received stem cells from unrelated donors, including five patients who received
stem cells from non-fully matched donors. Only 15% of these patients developed grades 2-4 GVHD, versus
the predicted incidence of 60% in the scientific literature, potentially representing a more than four-fold
reduction. In a further Phase 2a study, Professor Yeshurun established that treatment of grades 3-4 steroidrefractory
acute GVHD with oral CBD resulted in a complete response in 7 of 10 patients and a very good
partial response in 2 of 10 patients. These findings contrast with the historical data seen in Dr. Yeshurun’s
unit at Beilinson Hospital, where since 2006, among 32 consecutive patients presenting with grades 3-4
acute GVHD, those with grade 3 GVHD had a mortality rate of 33%, and those with grade 4 GVHD had a
100% mortality rate.
Kalytera intends to carry out additional studies in GVHD to advance this program towards regulatory
approval and market authorization. These additional clinical studies may support U.S. Food and Drug
Administration (“FDA”) Breakthrough Therapy and Fast Track Designations, which could accelerate the
regulatory approval process.
Kalytera, through its wholly-owned subsidiary Talent, has the right to pursue the commercialization and
development of CBD for the prevention and treatment of GVHD as the licensee under a world-wide
exclusive license of certain technology (the “Mor License”) with Mor Research Applications Ltd. (“Mor”).
Under the Mor License, Kalytera (through Talent) has been granted exclusive rights under certain
applications of Mor for method of use patents for certain CBD formulations, and all documentation relating
thereto or created in connection therewith, in the field of cannabidiol compositions in the prevention and
treatment of the acute and chronic forms of GVHD. Under the Mor License, Mor is entitled to royalties
equal to a low single-digit percentage of the Net Sales (as defined in the Mor License) of products covered
by the Mor License received by or on behalf of Talent (or in the case of certain sublicenses that may be
granted by Talent), a low single-digit percentage of Net Sales of products covered by the Mor License
actually received by the sublicensee. Under the Mor License, Talent is required to achieve certain clinical
and regulatory milestones on timelines agreed with Mor, failing which Mor will have the right to terminate
the Mor License following the expiry of all applicable cure periods.
CBD Prodrugs
Kalytera is also developing a pre-clinical stage pipeline of CBD prodrugs for the treatment of a variety of
disorders. CBD prodrugs are designed to specifically modify physiochemical properties and functionality
of CBD. These modifications are intended to enhance regional therapy and enable bifunctional therapy.
Kalytera anticipates that, based on preclinical animal studies conducted by Kalytera to date, its prodrug
pipeline will be well tolerated.
Prodrugs are covalently-modified derivatives of a pharmacologically active agent and must undergo
transformation in vivo in order to release the active agent.
Kalytera’s product candidate portfolio includes a number of proprietary, synthetic, non-psychoactive CBD
prodrugs, all of which remain in preclinical testing. Kalytera’s CBD prodrugs are designed to improve the
bioavailability of CBD, as well as to permit targeted delivery of CBD to specific disease sites within the
body.
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Kalytera has invented and applied for composition of matter patent protection for four CBD prodrugs: K1012,
K-1022, K-1032, and K-1052.
These programs have not advanced beyond the preclinical research stage, and are currently on hold, though
Kalytera may pursue further development in the future.
K-1032
K-1032 is a prodrug invented by Kalytera, intended for the treatment of chronic inflammatory skin diseases,
such as Atopic Dermatitis and Acne Vulgaris. K-1032 is the L-valine-ester derivative of CBD. Acne
Vulgaris is a chronic inflammatory disease of the sebaceous-pilosebaceous unit and is the most common
skin disease, affecting 45 million people in the USA, according to the American Academy of Dermatology.
Progressive acne is closely linked to activation of inflammation.
Despite the existence of numerous topical products and systemic drugs that have being applied to treat
acne, all possess significant side effects or have limited efficacy. Therefore, Kalytera believes there remains
an unmet need for an effective, safe, and well-tolerated treatment for Atopic Dermatitis and Acne Vulgaris.
K-1012
K-1012 is a patent pending prodrug invented by Kalytera, intended for the treatment of Acute Respiratory
Distress Syndrome (“ARDS”). Designed as a bi-phosphate derivative of CBD, K-1012 is intended to be
administrated intratracheally via a formulation expected to increase the bioavailability of CBD.
Direct exposure to the lungs is a prerequisite in ARDS therapy, thus Kalytera has developed an aerosolized
formulation. In contrast to CBD, K-1012 is soluble in aqueous solution, allowing the development of an
isotonic solution for an aerosolized formulation. Due to the fixed negative charge of the phosphate groups
at physiological pH, K-1012 is predicted to be entrapped in the lung lumen until undergoing cleavage by
various intraluminal phosphatases. Given the increased levels of lung alkaline phosphatase (“ALP”) in the
bronchoalveolar fluid as a result of pulmonary damage, Kalytera predicts ALP will liberate bioactive CBD
in ARDS disease models. Progressive ARDS is closely linked to activation of inflammation. The benefits
of CBD are expected to be augmented via regional targeting of K-1012 to the lung by means of the
phosphate additions.
In vivo efficacy studies conducted by Kalytera in rodent models of E. coli LPS induced ARDS have been
utilized to determine appropriate dosing and exposure time. Kalytera expects to carry out detailed
ADME/PK analysis in rats as well as a non-clinical safety assessment of K-1012 in rats and dogs that are
expected to include safety pharmacology and toxicologic IND-enabling studies.
Kalytera believes that no effective therapy currently exists for ARDS, thus there remains an urgent need
for a new first-line therapeutic to improve the survival of patients suffering from ARDS. If successful, the
development of K-1012 would provide the first pharmacological treatment for patients with ARDS.
K-1022
K-1022 is a patent pending prodrug invented by Kalytera, intended for the treatment of Ulcerative Colitis
or Crohn’s Disease, chronic conditions characterized by inflammation of the colonic mucosa extending
from the rectum proximally to varying portions of the large intestine. The increase in pro-inflammatory
factors promotes inflammation and facilitates damage to intestinal tissues. Understanding the
pathophysiology of colitis has provided us an opportunity to identify potential new targets for this disease.
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Designed as a bi-sulfate derivative of CBD with a formulation that Kalytera designed, K-1022 is intended
to be administered orally to maximize the anti-inflammatory effect of CBD. The rationale for constructing
a sulfate-derivatized prodrug of CBD (K-1022) lies in expected augmented delivery to the colon, where K1022
is expected to be converted to the active compound via the activity of colon-specific microbial
sulfatases. In contrast to CBD, the disulfated derivative is water soluble, enhancing the probability of
developing a successful oral formulation of K-1022. Given the safety profile and anti-inflammatory
properties of CBD, it is expected that K-1022 could potentially serve as a potent and tolerated treatment
for UC.
In vivo efficacy studies conducted by Kalytera have been used to determine suitable dosing and exposure
time. Kalytera is currently performing detailed ADME/PK analysis in rats, as well as non-clinical safety
assessment of K-1022 in rats and dogs that are expected to include safety pharmacology and toxicology
studies, to complete IND-enabling studies.
K-1022, by virtue of the favorable safety profile of CBD, is intended to occupy a position as a first-line
therapeutic for UC, if development is completed successfully.
K-1052
K-1052 is a patent pending prodrug invented by Kalytera, intended for the treatment of sepsis-induced
Acute Renal Failure (“ARF”) and Traumatic Brain Injury (“TBI”). Designed as an inducible Nitric Oxide
Synthase (“iNOS”) inhibitor derivative of CBD, Kalytera is developing K-1052 to improve the long-term
outcome of ARF and TBI patients.
As defined by the National Institute of Diabetes and Digestive and Kidney Diseases (the “NIDDKD”),
ARF is a syndrome characterized by rapid loss of kidney function, specifically the glomerular filtration
rate, measured by increases in serum creatinine and limited or lack of urine output. ARF is a common
complication of acute illness. Despite advances in treatment and prevention, ARF continues to be associated
with high rates of mortality and morbidity, particularly for patients admitted to the intensive care unit.
Various types of injury lead to ARF. Common to all these injuries is an inflammatory response due to the
kidney insult.
According to data and statistics compiled by the National Center for Health Statistics of the U.S. Center for
Disease Control, TBI is a highly complex multi-factorial disorder, which involves primary and secondary
injury cascades that underlie delayed neuronal dysfunction and death. Following head injury, TBI is a
consequence of neuroinflammation caused by an increase in reactive oxygen species production and a
concomitant increase in levels of inflammatory cytokines.
Kalytera anticipates that a combination of CBD and a potent iNOS inhibitor, joined together in a single
prodrug form, will yield an effective therapy for diseases where inflammation and iNOS-derived nitric
oxide play prominent roles. Kalytera’s formulation would be administered intravenously to hospitalized
patients, in order to avoid first-pass metabolism of CBD and to improve the pharmacokinetic (“PK”)
profile.
Cannabinoid-Like and Endocannabinoid-Like Compounds
Kalytera has also investigated endocannabinoid-like compounds, KAL671 and KAL 436/439, to assess
their potential in treatment of bone disease and disorders. These programs have not advanced beyond the
preclinical research stage, and are currently on hold, though Kalytera may pursue further development in
the future.
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Clinical Development Timeline
In order to obtain regulatory approval in treatment of acute grades 3 and grade 4 GVHD, and prophylaxis
of GVHD, the Company will be required to carry out at least one Phase 2 pharmacodynamics (“PK”) and
safety/dosing study, to be followed by a Phase 3 pivotal registration study in each of these indications.
These studies are expected to take approximately 18 - 24 months to complete.
Corporate Developments During the Three Months Ended September 30, 2017
On September 7, 2017, the Company announced that it had received approval from the Institutional Review Board
at one of the two clinical sites in Israel to commence a Phase 2 study to evaluate cannabidiol (“CBD”) for the
prevention of GVHD.
Corporate Developments Following the Three Months Ended September 30, 2017
On October 8, 2017, the Company granted 7,717,671 stock options to its officers, directors and consultants. The
options have an exercise price of CAD 0.12. The options vest over a period of 3 years from date of grant, except
for 539,879 options granted to consultants, which vested immediately upon grant.
On October 10, Robert Farrell, J.D. was appointed as the Company’s Chief Executive Officer. Mr. Farrell
previously held the position of Interim Chief Executive Officer. Mr. Pini Ben-Elazar, who served as a member of
the Company’s Board of Directors since March 2017, submitted his resignation from the Board of Directors, and
the Company also accepted the resignation of Mr. David Bassa as the Company’s Chief Operating Officer.
On November 15, 2017, the Company announced that the United States Patent and Trademark Office had issued a
Notice of Allowance for U.S. Patent Application 15/143,694 covering the use of CBD in the treatment of GVHD.
On November 23, 2017, the Company announced that it has entered into an agreement with a wealth management
and capital markets firm to lead a brokered best efforts private placement of up to $5,000,000 aggregate principal
amount of convertible debenture units (the “Convertible Debenture Units”) at a price of $1,000 per Convertible
Debenture Unit. Each Convertible Debenture Unit will consist of: (i) $1,000 principal amount of 9.0% secured
convertible debentures (the “Convertible Debentures”); and (ii) 3,846 common share purchase warrants of the
Company (representing 50% warrant coverage on each Convertible Debenture).
On November 27, 2017, the Company announced that it had received a Notice of Allowance for U.S. Patent
Application 14/787,515 covering the use of CBD in prevention of GVHD.