30th August MD&A DecryptedFor the ones that have difficulties finding clarita.ca here a break down of the recent MD&A by claritasinvestors (https://claritasinvestors.com/index.php?/topic/1077-30-august-md-a-decrypted/):
As usual it's a real sleeper.
A confession all, I really don't do this boring stuff for the free drugs, rock and roll and certainly not for the glorious and plentiful s e x with models and Claritas groupies.
I do it for you guys - I really do. That's the only reason so, if I can weed through this entire thing to try to understand it to see if there is anything you need to be aware of then the least you should be able to fast forward through the summary.
And here we go .........
(Yawn)
CLARITAS PHARMACEUTICALS, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As of August 30, 2021 For the six and three months period ended June 30, 2021 This management discussion and analysis (“MD&A”) of Claritas Pharmaceuticals, Inc. (the “Company” or “Claritas”) is for the six and three months period ended June 30, 2021 and is performed by management using information available as of August 31, 2021. Claritas 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 interim consolidated financial statements as of June 30, 2021 (“Interim Financial Statements”) as well as the Company’s audited financial statements for the year ended December 31, 2020 and the related notes thereto (“Annual Financial Statements”).
The Company’s 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 Claritas’ experience and perception of historical trends, current conditions and expected future developments, as well as the factors Claritas 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 Claritas’ research and development programs, pre-clinical studies and clinical trials;
• Claritas’ ability to advance product candidates into, and successfully complete, clinical trials; • Claritas’ ability to recruit sufficient numbers of patients for Claritas’ future clinical trials;
• Claritas’ ability to achieve profitability;
• Claritas’ ability to obtain sufficient funding for Claritas’ operations, including funding for research and commercial activities;
• Claritas’ 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 Claritas’ third party collaborators will maintain their intellectual property rights in the technology Claritas’ licenses; • the implementation of Claritas’ business model and strategic plans;
• Claritas’ ability to develop and commercialize product candidates; • Claritas’ anticipated regulatory submissions and commercial activities;
• Claritas’ estimates of the size and characteristics of the potential markets for its product candidates; • Claritas’ commercialization, marketing and manufacturing capabilities and strategy; 39161-2001 27553992.1 - 2 - • Claritas’ ability to protect its intellectual property and operate its business without infringing upon the intellectual property rights of others; • Claritas’ 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 Claritas’ product candidates; • the rate and degree of market acceptance and clinical utility of Claritas’ future products, if any;
• the timing of, and Claritas’ ability and its collaborators’ ability, if any, to obtain and maintain regulatory approvals for its product candidates;
• Claritas’ expectations regarding market risk, including interest rate changes and foreign currency fluctuations; • Claritas’ 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;
• Claritas’ future financial performance and projected expenditures;
• developments relating to Claritas’ competitors and its industry, including the success of competing therapies that are or may become available; and
• estimates of Claritas’ expenses, future revenue, capital requirements and its needs for additional financing.
• Claritas’ ability to continue as a going concern. Such statements reflect Claritas’ 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 Claritas, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Claritas’ 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;
(iv) 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 Claritas’ 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 “Financial Instruments and Risks”. 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 Claritas does not intend, and does 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. OVERVIEW OF THE COMPANY Claritas is a clinical-stage specialty pharmaceutical company developing a portfolio of pharmaceutical products. Claritas currently has no product candidate that has received regulatory approval.
DID YOU GET ALL THAT? IT BASICLY SAYS THAT NOBODY IS PROMISING YOU ANYTHING AND S H I T CAN GO WRONG SO INVEST ACCORDINGLY AND LEAVE YOUR EMOTIONS IN YOUR PURSE.
Lead Programs to Develop and Commercialize R-107 for Treatment of Pulmonary Arterial Hypertension (“PAH”), Prevention and Treatment of Vaccine-Resistant COVID-19 Infection, and Certain Other Viral infections On July 16, 2020, Claritas entered into a License Agreement (the “COVID License Agreement”) with Salzman Group, under which Salzman Group granted to Claritas an exclusive, worldwide license to develop and commercialize Salzman Group’s proprietary drug, R-107, for the prevention and treatment of coronavirus, COVID-19 infection, and certain other viral infections. On April 13, 2021, Claritas announced that it has entered into a binding Letter of Intent with Salzman Group, under which Salzman Group will also grant to Claritas an exclusive, worldwide license to develop and commercialize R-107 for the treatment of pulmonary arterial hypertension (“PAH”). The Company expects that definitive agreements will be executed by June 15, 2021. Closing of the transaction is subject to receipt of all regulatory approvals, including approval of the TSX Venture Exchange. Claritas’ rationale for entering into both the COVID License Agreement and the PAH License Agreement was based on the following facts: (1) R-107 is a liquid prodrug of nitric oxide;
(2) nitric oxide gas has shown clinical evidence of antiviral activity against strains of coronavirus; (3) nitric oxide gas was being evaluated by both industry and academic groups as a potential treatment for coronavirus and COVID-19 infection; and (4) R-107 has demonstrated exceptionally positive date in a validated animal model of PAH. R-107 is a liquid prodrug of nitric oxide that can be administered by injection, unlike nitric oxide gas, which requires a special type of delivery device, and complex administration by trained respiratory therapists. When administered by injection, R-107 is slowly hydrolyzed, releasing its active moiety, R-100, which in turn steadily and slowly releases nitric oxide. Put simply, following injection, R-107 is metabolized, and releases R-100, which in turn releases nitric oxide. R-100 is the pharmaceutically active payload of R-107. R-107 in Treatment of PAH PAH is a critical unmet medical need, presenting both as an acute condition in critically ill hospitalized patients and as a chronic disease managed on an out-patient basis.
PAH is characterized by profound elevations in blood pressure that selectively present in the arteries of the lungs, without effect on systemic blood vessels, so that peripheral blood pressure is normal. It is a serious condition that makes it difficult for blood to flow through the lungs, which, in turn, forces the right side of the heart to work harder than normal. In its acute manifestation, life threatening PAH may appear abruptly, such as after an acute pulmonary embolus or in the perioperative setting following cardiac valve replacement.
In the chronic setting, PAH is a progressive disease that limits physical activity and ultimately results in right heart failure and death, typically taking place within five years after the initial presentation of symptoms. There is currently no cure for PAH, although there are several approved drugs that can transiently ease the symptoms of the disease and slow its inexorable progression. No marketed agents nor drugs in development however have been shown to durably reverse disease severity. Moreover, all of the currently approved drugs exhibit significant side-effects that limit their acceptability and negatively impact quality of life. Despite the major shortcomings of existing pharmaceutical agents, the current market for such drugs exceeds $6 billion per year, and the market is projected to grow to $9.8 billion per year by 2027. R-107 was tested in a classic and well-validated animal model of PAH, induced by administration of monocrotaline (“MCT”) to rats.
The data from this study were exceptionally positive. In an acute setting, a single dose of R-107 was able to reverse severe pulmonary arterial hypertension back to a normal level of blood pressure for more than 24 hours, constituting a profound correction that is unprecedented in the scientific literature. In a chronic setting, daily administration of R-107 was able to entirely prevent the increase in pulmonary arterial blood pressure that triples in untreated animals exposed to MCT. Most importantly, a 2-week course of daily R-107 initiated 28 days after the onset of MCT-induced PAH surprisingly showed a 50% reduction in pulmonary blood pressure that persisted after the cessation of the course of R-107 therapy.
This durable amelioration of PAH, which constituted a true reversal of disease severity, has not been heretofore witnessed in this gold-standard PAH model system and represents therefore a potential paradigm shift in the management of PAH. Up to now, the objective of clinical PAH therapies is to slow progression of a terminal disease.
These new data, evidencing a reversal of disease severity, are qualitatively different and will allow the company to focus on a fundamental correction of underlying disease.
By comparison, in this same animal model, the currently approved drugs for PAH have been shown to slow the progression of the disease, but not the ability to completely block its progression. Claritas expects to complete a Phase 1 clinical study of R-107 by the first quarter of 2022, and to also complete a pilot Phase 2a clinical study of R-107 in hospitalized PAH patients in 2022. R-107 in the injectable formulation will be initially evaluated in a Phase 1 single ascending dose escalation study in healthy volunteers at CMAX in Adelaide, Australia this year.
Thereafter, a Phase 2a study will evaluate 12-15 patients with chronic PAH undergoing route cardiac catheterization. The Phase 2a clinical study of R-107 will be conducted at Royal Adelaide Hospital in Adelaide, Australia in order to establish proof-of-concept that the reduction in blood pressure is restricted to the pulmonary circulation, without a concomitant impact on peripheral hemodynamics.
Due to the short period of observation of each study participant (24 hours) and the relatively small number of patients under examination, the Company believes that the Phase 2a clinical trial may be readily conducted at a single site and completed within several months.
Demonstration of proof-of-concept could provide the scientific foundation for an immediate sale or strategic out-licensing of R-107 on highly favorable terms. If Claritas is able to demonstrate a selective reduction in blood pressure of a magnitude similar to what was demonstrated in the MCT induced rodent model of the disease, the Company believes that R-107 will be viewed as a significantly valuable pharmaceutical asset, given that achievement of the Phase 2a clinical trial endpoints should constitute a major inflection point in the value of the technology.
R-107 in Treatment of Coronavirus and COVID-19 Infection R-107 is a proprietary and novel molecule that acts as a nitric oxide donor.
Nitric oxide normally exists in a gaseous state, and is approved as such by the FDA for administration to patients via inhalation therapy requiring a special type of delivery device, and complex administration by trained respiratory therapists. R-107, in contrast, is a liquid that is readily administered by a single intramuscular injection. In addition to its clear advantages in simplicity of administration, R-107 does not lose its potency after prolonged periods of administration. In contrast, other nitric oxide donors in liquid form, such as nitroglycerin, rapidly induce tolerance and lose biological activity after more than a single dose.
Accordingly, R-107 is poised to be the first liquid nitric oxide donor that is easy and inexpensive to administer and provides sustained and biologically effective delivery. Gaseous nitric oxide is already approved by the FDA as an inhalation therapy for treating newborns with acute pulmonary hypertension and respiratory failure, and has shown clinical evidence of antiviral activity against strains of coronavirus. For example, inhaled nitric oxide has demonstrated an inhibitory effect on the replication of the SARS virus (“SARS-CoV2”).
The SARS virus is a coronavirus. Inhalable nitric oxide will also be evaluated in a Phase 2 clinical study sponsored by Massachusetts General Hospital in severe acute respiratory syndrome in COVID-19. Respiratory viruses, such as SARS-CoV-2 and COVID-19, can cause acute respiratory distress syndrome (“ARDS”), in which fluid leaks into the lungs, making breathing difficult or impossible.
The prognosis with COVID-19 can be poor if the patient develops respiratory disease. R-107 will be developed for COVID-19 associated lung disease, and, because there are no existing therapies or vaccines to effectively treat or prevent COVID-19, it is anticipated that the FDA will allow an expedited clinical development pathway for R-107 in this indication. Salzman Group has spoken with the U.S. Biomedical Advanced Research and Development authority (“BARDA”) regarding a new BARDA contract to support the development of R-107 for coronavirus and COVID-19 infection. If awarded, the new contract would support a clinical trial in intubated and mechanically ventilated patients with COVID-19 associated pulmonary failure. The goals of this treatment would be to reduce fluid congestion in the lungs, improve oxygenation, decrease length of mechanical ventilation and ICU care, and reduce mortality. Planned Phase 1 Clinical Study to Evaluate Safety and Pharmacokinetics of R-107
Given the data demonstrating the antiviral activity of nitric oxide against coronaviruses, as well as the even greater body of data demonstrating the potential activity of nitric oxide in treatment of viral-associated lung disease, Claritas and Salzman Group are working together to advance R-107 into Phase 1 clinical testing. Salzman Group intends to submit an Investigational New Drug Application (IND) to the Australian Therapeutic Goods Administration (TGA) and the U.S Food and Drug Authority (FDA) in support of a first-in-human Phase 1 clinical trial.
This Phase 1 safety and pharmacokinetic study of intramuscular R-107 using a single dose escalation design in 32 healthy middle-aged volunteers will be conducted at CMAX, a clinical contract research organization located at Royal Adelaide Hospital in Australia. The study is expected it to be completed by the first quarter of 2022.
Ok, that wasn't too too bad. Always good to get the info on PAH again .. and again .. and again but seriously, most of that was s h i t we already knew so if you didn't read it and know about R-107 and PAH move along, nothing to see here folks.
Product Development Program in Treatment of Acute and Chronic Pain Claritas is also developing a novel, proprietary cannabidiol (“CBD”) analogue for the treatment of acute and chronic pain.
A provisional U.S. patent application for this compound is pending, and Claritas had obtained an exclusive, worldwide license for this compound from Beetlebung Pharma, Ltd. (“BPL”). However, this program has not advanced beyond the preclinical research stage, and in order to conserve cash and eliminate expenses, Claritas has placed this program on temporary hold. Program Evaluating CBD in Prevention and Treatment of Graft Versus Host Disease During the first quarter of 2020, the Company determined that it did not have sufficient resources to continue research and development activities in its program evaluating cannabidiol (“CBD”) in the prevention of GVHD.
Ok, most of you probably never even heard of this one but, for all it's worth I highly recommend you take some time out at the earliest point to have a look at it. It 's a pretty interesting drug to tell the truth. It may make pain drugs, anesthesia and all obsolete.
Ooops, looks like the 'BUH .. BUH .. MUH GVHD' boys get another kick at the cat for their ticket here;
In May 2019, the Company engaged Echelon Wealth Partners (“Echelon”) to assist with the review of potential out-licensing and divestment opportunities for the commercial rights to the its program evaluating CBD in the prevention and treatment of GVHD. In conjunction with Echelon, Claritas engaged in an extensive effort to out-license or sell this program. Claritas reached out to several dozen companies in the pharmaceutical and cannabis industries, and engaged in negotiations with several potential corporate partners, but did not receive an acceptable offer for either a license or sale of the program. Claritas’ wholly owned subsidiary, Kalytera Therapeutics Israel, Ltd. (“Kalytera Israel”) acquired the GVHD program through the acquisition of Talent Biotechs Ltd. (“Talent”) in 2017”), under the terms of a share purchase agreement (the “SPA”) between Claritas, Kalytera Israel, Talent and the former shareholders of Talent (the “Former Shareholders”). Under the terms of the SPA, Kalytera Israel is obligated to make certain milestone payments (the “Milestone Payments”) to the Former Shareholders. Kalytera Israel failed to pay certain Milestone Payments when they became due under the SPA, and issued a promissory note (the “Note”) in favor of the Former Shareholders evidencing such debt. Kalytera Israel is obligated to pay approximately $4.3 million to the Former Shareholders under the terms of the Note. Kalytera Israel is in default under the terms of the SPA and the Note, and has received a formal notice of default from the representative of the Former Shareholders. The obligations of Kalytera Israel under the Note are guaranteed by Talent, and both Kalytera Israel and Talent are parties to a Security Agreement, under which they have secured their obligations under the Note by pledging certain assets to the Former Shareholders as security for the Note (the “Pledged Assets’). The Pledged Assets are the assets of the Company’s program evaluating CBD in the prevention and treatment of GVHD.
The Pledged Assets are both tangible and intangible assets, consisting primarily of tangible assets, such as patient blood samples, and intangible assets, such as contract rights, clinical and preclinical data, know how, and intellectual property rights that are held under a license agreement between MOR Research Applications, Ltd. and Talent. The Pledged Assets also include all shares of the Company’s two subsidiaries, Kalytera Israel and Talent. On June 17, 2021, the Shareholders of the Company approved the transfer and sale to the former shareholders of Talent Biotechs Ltd. (“Talent”) of all assets of the Company’s program developing cannabidiol for the prevention and treatment of graft versus host disease (“GVHD”) in consideration for the release and discharge by the former shareholders of Talent of all existing obligations that the Company and its subsidiaries have to such former shareholders of Talent. According to the agreement, there are certain conditions for the closing:
• Former Talent shareholders' satisfaction with the ruling from the Israeli Tax Authorities; • Former Talent shareholders' confirmation that all required reporting have been performed, including reports to the Israeli Registrar regarding the Talent's pledges;
• Former Talent shareholders confirmation that all information set forth in section 1 regarding the share capital of Talent is accurate;
• The receipt by the Company of the required stock exchange and shareholders’ approval as applicable; As of August 31, 2021, certain conditions have not been fulfilled, therefore, closing of the transaction has not occurred.
Considering the FSHOT are pretty heavily invested in Claritas I'd say they will bend over backwards and then do a loop the loop to make sure those conditions are met so that we can carry on.
COVID
COVID-19 Public health epidemics or outbreaks could adversely impact our business. In late 2019, a novel strain of COVID-19, also known as coronavirus, was reported in Wuhan, China. While initially the outbreak was largely concentrated in China, it has now spread to several other countries, including in Israel, and infections have been reported globally. The extent to which the coronavirus impacts the Company’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required to contain the coronavirus or treat its impact.
In particular, the continued spread of the coronavirus globally, could adversely impact the Company’s operations and workforce, including other Company’s research and clinical trials and its ability to raise capital, which in turn could have an adverse impact on Company’s business, financial condition and results of operation. Corporate Developments during the three months period ended June 30, 2021
On April 1, 2021, the Company announced that it has completed GLP genotoxicity studies of R107. On April 2, 2021, the Company announced that it had changed its name to Claritas Pharmaceuticals, Inc. On April 8, 2021, the Company announced that, based on significantly positive results in a controlled large animal model of sepsis, the Company will now expand its R-107 development program to include the treatment of COVID-19 related sepsis, the leading cause of death in COVID-19 patients.
On April 14, 2021, the Company announced that it has entered into a binding Letter of Intent with Salzman Group, Inc. (a Delaware corporation), Salzman Group, Ltd. (an Israeli corporation), and Salzman Group Pty. Ltd. (an Australian corporation), (collectively, the “Salzman Group”), under which Salzman Group will grant to Claritas an exclusive, worldwide license to develop and commercialize R-107 for the treatment of pulmonary arterial hypertension.
The Company expects that definitive agreements will be executed by June 15, 2021. Closing of the transaction is subject to receipt of all regulatory approvals, including approval of the TSX Venture Exchange. During April 2021, the Company issued to Salzman Group 130,000,000 Common shares that the Company is obligated to issue to Salzman Group pursuant to the terms of the July 16, 2020 License Agreement, under which Salzman Group will be granted to the Company an exclusive, worldwide license to develop and commercialize Salzman Group’s proprietary drug, R-107, for the treatment of coronavirus and COVID-19 infection.
On April 18, 2021 the Company issued 369,518 Common Shares in exchange for March 2019 debentures conversion of the remaining accrued interest.
Hey, this is the one that myself and a few others participated in. Dam fine deal!
During April through June 2021, the Company signed with third party investors several subscription agreements for convertible debentures units at a price of CAD $183.75 thousands (USD $146.25 thousands) aggregate principal amount of convertible debenture units for an aggregate purchase price of CAD $147 thousands (USD $117 thousands) (representing an original issue discount equal to 25% of the purchase price).
The Debenture will entitle the investors to receive such number of common share upon conversion of the debenture at the initial conversion price equal to CAD $0.05.
The debentures’ maturity date is 12 months with an annual interest at a rate of 10% to be paid in cash along with the principal amount on the maturity date. During May and June 2021, the Company issued 6,820,060 Common Shares for services equal to CAD$258 thousands ($212 thousands). On June 17, 2021, the Shareholders of the Company approved authorizing the Company’s board of directors to affect a consolidation of all the Company’s issued and outstanding Common Shares on the basis of one post-consolidation Common Share for up to 20 pre-consolidation Common Shares, or such lesser number of pre-Consolidation Common Shares as may be accepted by the TSXV and approved by the Company’s Board, should the Board determine such consolidation to be in the best interests of the Company.
The dreaded reverse split. You know, the one where the examples everybody provided were of companies where their RS was geared towards getting on a higher exchange rather than acquiring financing like ours was for. (And did as we say by the three million we got)
The consolidation of all Company’s issued and outstanding Common Shares took place at July 23, 2021. Corporate Developments Subsequent to June 30, 2021 On August 18, 2021, the Company announced that, subject to TSXV approval, it will close the first tranche of a brokered private placement offering of convertible debentures with Obsidian Global Partners, LLC (“Obsidian”) for net proceeds of $930,000. On the same date, the Company also announced the receipt of a cash rebate of R&D expenses from the Australian Tax Office in the amount of AUD $879,000, and the initiation of the Phase 1 clinical study of R-107 with CMAX in Adelaide, Australia. OVERALL PERFORMANCE Dollar amounts in this section are specified in thousands unless otherwise specified.
Since its inception in July 2014, Claritas has accumulated a deficit of approximately $59.2 million as at June 30, 2021.
Not a surprise
The Company did not generate any revenue from product sales during the three months period ended June 30, 2021. Claritas expects its operating losses to continue in the next fiscal year as it invests in its product development programs.
And no wonder, we're an R & D company, not a retail sales or manufacturing outfit and also, we ain't got no mine or oilfield!
Imagine, we ran a deficit and I'm willing to bet there are morons out that that think that's a big surprise. If we ran a profit then I'd wonder where all the money went. And, I'd wonder where the machinery, factories and material was that we were turning a profit with. Then I'd demand to be appraised as to why were were an R & D when in fact we were a manufacturing or some other profit making entity.
In any case, we run a deficit just like many countries, companies and governments the world over.
$59 million. Or, $1.68 per share.
COVID MARKET $88 Billion
PAH - $9 Billion
COSMOCEUTICAL - $9 Billion
Total - $106 Billion or ....... $3,000 per share.
So, we have a deficit of $1.68 per share with a potential (not probably but possible) SP of $3,000.
AND YOU KNOW WHAT? WERE AIN'T GOT NO DEBT SO CAN'T GO BANKRUPT SO CAN RUN THAT DEFICIT UP TO A BILLION DOLLARS IF WE HAVE TO FFS!!!!!
Who gives a s h i t. ONWARD!
The Company has funded its operations with proceeds from equity and convertible debt financings and expects to seek additional funding through equity financings and partnership collaborations to finance its product development, and corporate growth. However, if Claritas’ product development activities do not show positive progress, or if capital market conditions in general or with respect to the life sciences sector or development stage companies such as Claritas are unfavorable, its ability to obtain additional funding will be adversely affected. SELECTED UNAUDITED FINANCIAL INFORMATION Dollar amounts in this section are specified in thousands unless otherwise specified. The following table sets forth selected financial information for the three months period ended June 30, 2021 and the comparable three months period ended June 30, 2020.
The selected financial information set out below has been derived from the Interim Financial Statements and accompanying notes, in each case prepared in accordance with IFRS. The selected financial information set out below may not be indicative of the Company’s future performance. The following discussion should be read in conjunction with the Annual Financial Statements. Continued operations Three months ended June 30, 2021 Three months ended June 30, 2020 Unaudited Unaudited 39161-2001 27553992.1 - 10 - Net loss for the period from continued operations $1,264 $767 Basic and diluted loss and per share (in U.S. dollars) $0.00 $0.02 Total assets $11,155 $13,089 Total non-current financial liabilities $694 $40 Cash dividends declared per Common Share - -
Discussion of Operations - ok, if you're still awake, you can take a nap now for a bit .......
Claritas recorded a net loss of $1,264 ($0.00 loss per Common Share) in the three months period ended June 30, 2021, and net loss of $767 ($0.00 loss per Common Share) in the three months period ended June 30, 2020. The net loss in the three months period ended June 30, 2021 was due to $549 general and administrative expenses and from $715 finance expenses. The following table provides an overview of the financial results in the three months period ended June 30, 2021 as compared to those in 2020: Three months period ended June 30, 2021 Three months period ended June 30, 2020 General and administrative expenses $ 549 $ 368 Total operating expenses 549 368 Finance expenses 715 399 Finance income - - Tax benefit - - Net loss from continued operations $ 1,264 $ 767 Revenues Claritas did not generate any revenue from product sales in the three months period ended June 30, 2021. The time required for Claritas to have the ability to generate revenue and to become profitable depends upon the Company’s ability to complete the development, obtain regulatory approval for, and successfully commercialize product candidates that Claritas develops or acquires in the future, and a variety of other factors, including as set out under the heading “Financial Instruments and Risks – Additional risk factors –
Lack of Revenue”. General Administration Expenses Generally, general administration expenditures in three months period ended June 30, 2021 were $549 compared to $368 in the three months period ended June 30, 2020. The change in general and administration expenses in the amount of $181 is mainly due to increase in professional services of $336 which were mainly due to additional expenses related to research and development refund and IT expenses which were set off by a decrease in share-based payment expense of $106 and decrease in Board fees of $35 due to replacement of Company’s Board members in 2021.
The following table summarizes Company’s general and administration expenditures in the three months period ended June 30, 2021 compared to the three months period ended June 30, 2020:
Three months period ended June 30, 2021 Three months period ended June 30, 2020 Professional fees $ 413 $ 77 Salaries and benefits 94 94 Share-based payments 19 125 Board member fees 8 43 Other expenses 15 29 Total $ 549 $ 368 Finance expenses Finance expenses were $715 in the three months period ended June 30, 2021 compared to $735 in the three months period ended June 30, 2020.
The increase is immaterial. Finance income Non for the three months period ended June 30, 2021 and 2020. Year to Date Discussion The following table summarizes selected unaudited consolidated financial data for the six months ended June 30, 2021 and 2020, prepared in accordance with IFRS: Six months ended June 30, 2021 Six months ended June 30, 2020 Unaudited Unaudited (“Q2 2021”) (“Q2 2020”) USD In Thousands General and administrative expenses $ 708 $ 701 Total operating expenses 708 701 Finance expense 735 93 Finance income - (1,879) Income taxes benefit - - Net loss (income) for the period from continued operations 1,443 (1,085) Basic and diluted loss (earning) per common share 0.01 (0.01) Revenues 39161-2001 27553992.1 - 12 - Claritas did not generate any revenue from product sales in the first half of 2021 and 2020. The time required for the Company to have the ability to generate revenue and to become profitable depends upon the ability to obtain regulatory approval for, and successfully commercialize, product candidates that the Company develops or acquires in the future, and a variety of other factors, including as set out under the heading “Financial Instruments and Risks –
Additional risk factors –
Lack of Revenue”.
General Administration Expenses General administration expenditures were $708 in the six months period ended June 30, 2021 compared to $701 in the six months period ended June 30, 2020. The change considers immaterial. The following table summarizes the Company’s general administration expenditures in the six months period ended June 30, 2021 compared to six months period ended June 30, 2020: Six months period ended June 30, 2021 Six months period ended June 30, 2020 Professional fees $ 487 $ 153 Salaries and benefits 188 187 Share-based payments 8 252 Board member fees 10 86 Other expenses 15 23 Total $ 708 $ 701 Finance expenses Finance expenses were $735 in the six months period ended June 30, 2021 compared to $93 in the six months period ended June 30, 2020. The increase is mainly due to revaluation of Company’s convertible instruments. Finance income Finance income was Nil in the six months period ended June 30, 2021 compared to $1,879 in the six months period ended June 30, 2020. The decrease in finance income is mainly due to change in fair-value of convertible instruments.
Discontinued operations The following table provides an overview of the financial results in the three months period ended June 30, 2021 as compared to those in 2020: Three months period ended June 30, 2021 Three months period ended June 30, 2020 Research and development expenses $ (669) $ 74 Loss from changes in fair value of contingent consideration 56 55 Loss (gain) from impairment (revaluation) of intangible assets 1,590 12,090 Total operating expenses 977 12,219 Tax benefit (297) (4,320) Net loss from discontinued operations $ 680 $ 7,899 Research and Development Expenses Claritas did not incur research and development expenses in the three months period ended June 30, 2021 as compared to loss of $74 in the three months period ended June 30, 2020. The income of $669 recorded in the three months period ended June 30, 2021 is due to a research and development tax refund for the year 2020 at the amount of AUD $879 thousands ($669) which was received in June 2021. The decrease in research and development expenses of $74 was primarily due to putting on hold all research activities for the prevention and treatment of GVHD; research and development activities for treatment of pain, and other research and development projects.
The following table summarizes the Company’s research and development expenditures in the three months period ended June 30, 2021 compared to three months period ended June 30, 2020: 39161-2001 27553992.1 - 14 - Three months period ended June 30, 2021 Three months period ended June 30, 2020 Salary and benefits $ - $ 56 Share based payment - 18 - 74 Research and development tax refund (669) - Total $ (669) $ 74 Loss from changes in fair value of contingent consideration The Company recorded a changes in fair value of contingent consideration in the amount of $56 in the three months period ended June 30, 2021 compared to $55 in the three months period ended June 30, 2020. The increase is immaterial. The expenses were recognized for the change in contingent liabilities in respect of the Talent acquisition due to interest expenses on the promissory note. Loss from impairment of intangible assets The Company recorded an expense during the three months period ended June 30, 2021 of $1,590 to account for the change in the fair value of In-process research and development and Goodwill. Year to Date Discussion
The following table summarizes selected unaudited consolidated financial data for the six months ended June 30, 2021 and 2020, prepared in accordance with IFRS: Six months ended June 30, 2021 Six months ended June 30, 2020 Unaudited Unaudited (“Q2 2021”) (“Q2 2020”) USD In Thousands Research and development expenses $ (669) $ 271 Loss (gain) from changes in fair value of contingent consideration 111 (12,283) Loss from impairment of intangible assets 4,133 12,151 Total operating expenses 3,575 139 Income taxes benefit (773) (4,331) Net loss (income) for the period from discontinued operations 2,802 (4,192) Revenues
Claritas did not generate any revenue from product sales in the first half of 2021 and 2020. The time required for the Company to have the ability to generate revenue and to become profitable depends upon the ability to obtain regulatory approval for, and successfully commercialize, product candidates that the Company develops or acquires in the future, and a variety of other factors, including as set out under the heading “Financial Instruments and Risks – Additional risk factors – Lack of Revenue”. Research and Development Expenses Claritas incurred total research and development income of $669 in the six months period ended June 30, 2021 as compared to $271 in the six months period ended June 30, 2020. The income of $669 recorded in the three months period ended June 30, 2021 is due to a research and development tax refund for the year 2020 at the amount of AUD $879 thousands ($669) which was received in June 2021. The decrease in research and development expenses of $271 was primarily due to putting on hold all research activities for the prevention and treatment of GVHD; research and development activities for treatment of pain, and other research and development projects. The following table summarizes the Company’s research and development expenditures in the six months period ended June 30, 2021 compared to the six months period ended June 30, 2020: Six months period ended June 30, 2021 Six months period ended June 30, 2020 Salary and benefits $ - $ 111 Share based payment - 32 Subcontract research costs - 128 - 271 Research and development tax refund (669) - Total $ (669) $ 271 Changes in fair value of contingent consideration The expenses recognized for the change in contingent liabilities in the six months period ended June 30, 2021 were in respect of the Talent acquisition due to interest expenses on the promissory note. Changes in fair value of contingent consideration and in-process research and development for the six months period ended June 30, 2020, in the amount of $12,283 were mainly due to putting on hold all research activities for the prevention and treatment of GVHD; research and development activities for treatment of pain, and other research and development projects. 39161-2001 27553992.1 - 16 - Loss from impairment of intangible assets The Company recorded an expense during the six months period ended June 30, 2021 and 2020 to account for the change in the fair value of In-process research and development and Goodwill. QUARTERLY FINANCIAL INFORMATION The following table summarizes selected unaudited consolidated financial data for each of the last eight fiscal quarters, prepared in accordance with IFRS (expressed in thousands): Quarter Ended 30-Jun-21 31-Mar-21 31-Dec-20 30-Sep-20 Unaudited Unaudited Unaudited Unaudited (“Q2 2021”) (“Q1 2021”) (“Q4 2020”) (“Q3 2020”) General and administrative expenses 549 159 348 822 Finance expense 715 59 26 152 Finance income - (39) 38 (1,032) Income taxes (benefit) - Net loss for the period from continued operations 1,264 179 412 (58) Net loss for the period from discontinued operations 680 2,122 242 471 Total net loss (income) and comprehensive loss (income) 1,944 2,301 654 413 Basic and diluted loss per common share from continued operations 0.00 0.00 0.00 0.00 Basic and diluted loss per common share from discontinued operations 0.00 0.00 0.00 0.00 39161-2001 27553992.1 - 17 - Quarter Ended 30-Jun-20 31-Mar-20 31-Dec-19 30-Sep-19 Unaudited Unaudited Unaudited Unaudited (“Q2 2020”) (“Q1 2020”) (“Q4 2019”) (“Q3 2019”) General administration expenses 368 333 481 1,140 Finance expense 42 51 391 40 Finance income 357 (2,236) 155 (633) Net loss for the period from continued operations 767 (1,852) 1,027 547 Net loss for the period from discontinued operations 7,899 (12,091) 7,457 429
Net loss for the period 8,666 (13,943) 8,484 976 Basic and diluted loss per Common Share from continued operations 0.00 (0.00) 0.00 0.00 Basic and diluted loss per Common Share from discontinued operations 0.15 (0.03) 0.02 0.00 Variations in the Company’s net losses and expenses for the periods above resulted primarily from the following factors: • In general, research and development expenditures trended upwards as Claritas continued to advance its lead product development program in prevention and treatment of GVHD.
• The general and administrative expenses remained similar in recent quarters. However, expenditures fluctuated more significantly in certain quarters due to the costs associated with legal expenses, the April/May 2019 financing and expenses related to obtaining 2018-2019 research and development tax refunds.
• Changes in fair value of contingent consideration and loss from impairment of intangible assets results from valuation analysis performed each period
• In Q1 of 2020 The Company putt on hold all research activities for the prevention and treatment of GVHD; research and development activities for treatment of pain, and other research and development projects. LIQUIDITY AND CAPITAL RESOURCES Dollar amounts (other than per share amounts) in this section are specified in thousands unless otherwise specified. The Company has not yet generated revenues and has incurred losses from operations since its inception. As of June 30, 2021, the Company has a working capital of $3,448 and an accumulated deficit of $59,252. Continuation as a going concern is dependent upon obtaining additional capital. The Company will require a substantial amount of additional funds to complete the development of its products, to build a sales and marketing organization, and to fund additional losses, which the Company expects to incur over the next few years. The management of the Company intends to seek additional funding through private placements and public offerings, which will be utilized to fund product development and continue operations. The Company recognizes that, if it is unable to raise additional capital, it may find it necessary to substantially reduce or cease operations. At June 30, 2021, the Company’s cash and cash equivalents increased to $282 from $5 at December 31, 2020. Working capital at June 30, 2021 decreased to $3,448 as compared to $1,541 at December 31, 2020. The increase in working capital is mainly due to increase in prepaid expenses related to R-107 prepayments and a decrease in convertible debentures. The Company will not be able to continue to operate beyond year-end 2021 unless it is able to raise at least $2.2 million to fund its R&D and G&A expenses for a period of twelve months, because there is not currently sufficient working capital to continue to further fund the Company’s operations without raising additional capital in the near term. Management also plans to raise additional capital through equity or debt financing in the near term to finance at least six months of working capital, which amount will also be sufficient to pay off the 2017 Debenture.
A disclaimer again. You know, the s h i t you're supposed to read so you don't come off as a dumb a s s when you say you were promised something.
The Company’s future cash requirements may vary materially from those expected now due to a number of factors, including costs associated with product development and strategic opportunities. As a result, it may be necessary to raise further additional funds sooner than currently expected. These funds may come from sources such as the issuance of shares from treasury, or alternative sources of financing. However, there can be no assurance that the Company will successfully raise such funds.
More History Channel Stuff
Transaction with the Salzman Group On May 19, 2020, Claritas announced that it had signed a Letter of Intent dated May 12, 2020 (the “LOI”) to acquire Salzman Group, Inc. (“Salzman Group”), a privately held company located in West Tisbury, MA (the “Acquisition”). Salzman Group is the owner of R-107, a proprietary drug with issued and pending composition of matter and method of use patents in approximately 40 countries, including the U.S., Australia, Brazil, China, Europe, India, Japan, Russia and South Korea.
Claritas has decided not to proceed with the acquisition of Salzman Group. Instead, the Company will proceed to develop R-107 for the treatment of coronavirus and COVID-19 infection under the Company’s exclusive world-wide license for the development and commercialization of R-107. Highlights of the License Agreement
• R-107 is a liquid prodrug of nitric oxide. Based on the fact that nitric oxide is an approved treatment for acute respiratory failure in newborns, and the clinical evidence of nitric oxide’s antiviral activity against strains of coronavirus, Salzman Group will develop R-107 for treatment of coronavirus and COVID-19 associated lung infection. 39161-2001 27553992.1 - 19 -
• Following completion of a Phase 1 clinical safety and pharmacokinetic study, Claritas intends to apply for funding from the U.S. Department of Health and Human Services for the costs of Phase 2 and Phase 3 clinical studies of R-107 in coronavirus and COVID-19 infection.
• If the application for a new BARDA contract for development of R-107 for treatment of coronavirus and COVID-19 infection is successful, Salzman Group may receive an additional USD $20 million under this BARDA contract. • Claritas expects the Phase 1 clinical safety and pharmacokinetic study to be completed in the first half of 2021. • Under the terms of the License Agreement, Claritas will pay a $1.2 million cash license fee to Salzman Group, and also issue to the former shareholders of Salzman Group 130 million Claritas common shares. As of June 30, 2021, Claritas had made partial payments of the $1.2 million cash license fee to the former shareholders of Salzman Group in the total amount of approximately $1.1 million and issued during April 2021, 130,000,000 common shares. Sources and Uses of Cash Sources and Uses of Cash Six months ended June 30, 2021 Six months ended June 30, 2020 Cash used in operating activities $ (188) $ (92) Cash used in investing activities - 3 Cash provided by financing activities 465 68 Net decrease in cash and cash equivalents $ 277 $ (21) Cash used in operating activities was comprised of net income (loss), add-back of non-cash expenses, and net change in non-cash working capital items. Cash used in operating activities increased to $188 in the six months period ended June 30, 2021 compared to $92 in the six months period ended June 30, 2020. This increase was primarily due to change in fair-value of convertible instruments. Cash used in investing activities decreased to Nil in the six months period ended June 30, 2021 compared to $(3) in the three months period ended June 30, 2020. This decrease considers immaterial. Cash provided by financing activities increased to $465 in the six months period ended June 30, 2021 compared to $68 in the six months period ended June 30, 2020.
This increase was mainly due to increase in net proceeds from issuance of shares due to warrant exercise and from a receipt of convertible debentures in 2021. 39161-2001 27553992.1 - 20 - OUTSTANDING SHARE CAPITAL (*) As of August 30, 2021, there were 35,410,859 Common Shares issued and outstanding, and other securities convertible into Common Shares as summarized in the following table: Number Outstanding as of August 30, 2021 Common Shares issued and outstanding 35,410,858 Options (1) 3,534,308 2017 Convertible debentures principal amount (2) C$453,000 August 2018 Investors Warrants(3) 1,123,147 February 2019 Talent Warrants(4) 235,959 April/May 2019 Investors Warrants(5) 8,359,750 September 2019 Investors Warrants(6) 547,321 September 2019 Broker Warrants(6) 33,789 October 21, 2019 Investors Warrants(6) 98,722 October 25, 2019 Investors Warrants(6) 140,556 October 25, 2019 Compensation Warrants(6) 11,244 July 2020 Investors Warrants(6) 515,718 July 2020 Broker Warrants(6) 66,667 (*) All amounts were updated to reflect 20:1 Common share consolidation which took place at July 2021. Notes: (1) Out of the 3,534,308 options outstanding, 2,068,148 are vested and exercisable at a weighted average price of C$2.04 per Common Share. The remaining 1,466,160 options are not vested and have a weighted average price of C$0.58 per Common Share. (2) The convertible debentures issued in the Company’s December 2017 private placement are convertible by the holder into Common Shares at a conversion price of CDN$0.13 per Common Share. (3) Each warrant issued to investors in the August Offering entitles the holder to acquire one Common Share at a price of C$0.155 per Common Share. (4) Each warrant issued to the Talent Sellers in February 2019 bears the same terms as the August Warrants and entitles the holder to acquire one Common Share at a price of C$0.155 per Common Share.
(5) Each warrant issued to investors in the April Offering entitles the holder to acquire one Common Share at a price of C$0.065 per Common Share.
(6) Each warrant issued entitles the holder to acquire one Common Share at a price of C$0.05 per Common Share. OFF-BALANCE SHEET ARRANGEMENTS The Company has no undisclosed off-balance sheet arrangements that have or are reasonably likely to have, a current or future effect on its results of operations, financial condition, revenues or expenses, liquidity, capital expenditures or capital resources that is material to investors. 39161-2001 27553992.1 - 21 - RELATED PARTY TRANSACTIONS [a] Transactions with related parties Related parties include members of the Board and officers of the Company, and enterprises controlled by these individuals. The following table summarizes compensation to key management personnel and transactions with related parties which were incurred in the normal course of business (expressed in thousands): Six months ended June 30,
Three months ended March 30, 2021 2020 2021 2020 Board Member Fees(1) 10 86 8 43 Officer Salaries & Benefits(2) 188 298 94 149 Share based payments(3) 8 284 19 143 TOTAL 206 668 121 335 Notes: (1) Board member fees for the six months period ended June 30, 2021 are in respect of Salvatore Cuzzocrea $7 and Perenlei Enkhbaatar which was less than $3. (2) Officer Salaries & Benefits for the six months period ended June 30, 2021 are in respect of Robert Farrell $150 and Victoria Rudman $38. (3) Share-based compensation for the six months period ended June 30, 2021 are in respect of the Company's officers Company Robert Farrell $44 and Victoria Rudman $2 and Company’s former directors and employees - Ron Erickson $(30) and Rob Hutchison $(8). PROPOSED TRANSACTIONS There are at present no transactions outstanding that have been proposed but not approved by either the Company or regulatory authorities. CHANGES IN OR ADOPTION OF ACCOUNTING POLICIES None
Pay attention here, there will be a quiz (just kidding, go back to sleep)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of the financial statements to which this MD&A applies requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. 39161-2001 27553992.1 - 22 - Revisions to accounting estimates are recognized in the period in which the estimate is revised and also in future periods when the revision affects both current and future periods. Below is a list of the critical accounting estimates and judgments applied in this MD&A which may have a significant effect on the figures recognized in the financial statements. Derivatives Warrants issued that are exercisable in cash or on a cashless basis, that contain non-standard antidilution protection provisions, or that are denominated in a foreign currency resulting in a variable number of shares being issued are considered a liability and therefore measured at fair value. The Company uses the Black-Scholes option pricing model to estimate fair value at each reporting date. The key assumptions used in the model are the expected future volatility in the price of the Company's shares and the expected life of the warrants. Fair value measurement of financial instruments and intangible assets When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model.
The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial instruments. Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured to fair value at each reporting date.
The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability of meeting each performance target and the discount factor. FINANCIAL INSTRUMENTS AND RISKS Dollar amounts in this section are specified in thousands unless otherwise specified.
The Company’s financial instruments at June 30, 2021 and December 31, 2020 consist of the following: June 30, 2021 December 31, 2020 39161-2001 27553992.1 - 23 -
Financial Liabilities Derivative liability 694 40 Conversion option *) *) Earn-Out and contingent liability related to the acquisition of Talent 4,334 4,223 Convertible Debenture 542 925 *) Less than $1. The Company has designated its cash and cash equivalents as fair value through profit or loss, which is measured at fair value. Amounts receivable are classified as loans and receivables, which are measured at amortized cost. Accounts payable and accrued liabilities are classified as other financial liabilities, which are measured at amortized cost. Fair value IFRS 13 establishes a fair value hierarchy for financial instruments measured at fair value that reflects the significance of inputs used in making fair value measurements as follows: Level 1 - quoted prices in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liabilities, either directly (i.e. as prices) or indirectly (i.e. from derived prices); and Level 3 - inputs for the asset or liability that are not based upon observable market data. The fair value of cash and cash equivalents is based on Level 1 inputs. [a] Credit risk Credit risk is the risk of a financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises for the Company from its cash on deposits and amounts receivable. The Company has adopted practices to mitigate against the deterioration of principal, to enhance the Company’s ability to meet its liquidity needs, and to optimize yields within those parameters. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its obligations as they come due. The Company’s exposure to liquidity risk is dependent on its purchasing commitments and obligations and its ability to raise funds to meet commitments and sustain operations. The Company manages liquidity risk by continuously monitoring its actual and forecasted working capital requirements, and actively managing its financing activities.
As of June 30, 2021, the Company had working capital of $3,448, December 31, 2020 - $1,541. [c] Market risk Liquidity Interest rate risk Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in the market interest rates. During the six months period ended June 30, 2021 and 2020, fluctuations in the market interest rates had no significant impact on its interest income. 39161-2001 27553992.1 - 24 - [ii] Currency risk The Company is exposed to the financial risk related to the fluctuation of foreign exchanges rates.
The Company has a portion of its operating expenses in Canadian dollars and in Israeli new shekels (NIS). The Company has not entered into foreign exchange derivative contracts. A significant change in the currency exchange rate between the Canadian dollar or the NIS relative to the U.S. dollar could have an effect on the Company’s results of operations, financial position or cash flows. As at June 30, 2021 and December 31, 2020, the Company had the following assets and liabilities denominated in Canadian dollars (in thousands): June 30, 2021 December 31, 2020 USD USD Cash 1 - Other payables and accrued expenses - - Convertible debentures (542) (925) Total (541) (925) Based on the above net exposure as at June 30, 2021, assuming that all other variables remain constant, a 5% appreciation or deterioration of the Canadian dollar against the US dollar would result in a change of $27 in the Company’s net loss and comprehensive loss in US dollars. As at June 30, 2021 and December 31, 2020, the Company had the following assets and liabilities denominated in NIS (in thousands): June 30, 2021 December 31, 2020 USD USD Cash - 3 Other receivables and prepaid expenses 4 5 Other payables and accrued expenses (126) (483) Total (122) (475) Based on the above net exposure as at June 30, 2021, assuming that all other variables remain constant, a 5% appreciation or deterioration of the NIS against the US dollar would result in $6 change in the Company’s net loss and comprehensive loss in US dollars. [d] Additional risk factors Should one or more of these risks or uncertainties, including the risks listed below, or a risk that is not currently known to us materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described above. Volatility of Market Price Securities markets have a high level of price and volume volatility, and the market price of securities of many companies has experienced substantial volatility in the past. This volatility may 39161-2001 27553992.1 - 25 - affect the ability of holders of Common Shares to sell their securities at an advantageous price. Market price fluctuations in the Common Shares may be due to the Company’s operating results failing to meet expectations of securities analysts or investors in any period, downward revision in securities analysts’ estimates, adverse changes in general market conditions or economic trends, acquisitions, dispositions or other material public announcements by the Company or its competitors, along with a variety of additional factors. These broad market fluctuations may adversely affect the market price of the Common Shares. Financial markets historically at times experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of companies and that have often been unrelated to the operating performance, underlying asset values or prospects of such companies.
Accordingly, the market price of the Common Shares may decline even if the Company’s operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There can be no assurance that continuing fluctuations in price and volume will not occur.
If such increase levels of volatility and market turmoil continue, the Company’s operations could be adversely impacted and the trading price of the Common Shares may be materially adversely affected. Positive Return in an Investment in the Common Shares of the Company is Not Guaranteed There is no guarantee that an investment in the Company will earn any positive return in the short term or long term. A purchase of the shares involves a high degree of risk and should be undertaken only by purchasers whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity in their investment. An investment in the Common Shares is appropriate only for purchasers who have the capacity to absorb a loss of some or all of their investment. Dilution The Company may issue additional securities in the future, which may dilute a shareholder’s holdings in the Company. The Company’s articles permit the issuance of an unlimited number of Common Shares. The Company’s shareholders do not have pre-emptive rights in connection with any future issuances of securities by the Company.
The directors of the Company have discretion to determine the price and the terms of further issuances. Moreover, additional Common Shares will be issued by the Company on the exercise of stock options under the Company’s stock option plan and upon the exercise of outstanding warrants. Negative Cash Flow from Operations During the six months period ended June 30, 2021 and June 30, 2020, the Company had negative cash flows from operating activities. To the extent that the Company has negative cash flow in any future period, proceedings from equity, debt or alternative financing sources may be used to fund such negative cash flow from operating activities. 39161-2001 27553992.1 - 26 - Development Costs and Timing Claritas may be unable to initiate or complete development of its product candidates on Claritas’ currently expected timeline, or at all. The timing for the completion of the studies for Claritas’ product candidates will require funding beyond the Company’s existing cash and cash equivalents.
In addition, if regulatory authorities require additional time or studies to assess the safety or efficacy of a product candidate, Claritas may not have or be able to obtain adequate funding to complete the necessary steps for approval for its product candidates. Additional delays may result if the FDA or other regulatory authority recommends non-approval or restrictions on approval. Studies required to demonstrate the safety and efficacy of Claritas’ product candidates are time consuming, expensive and together take several years or more to complete. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.
Claritas has not obtained regulatory approval for any product candidate and it is possible that none of its existing product candidates or any product candidates it may seek to develop in the future will ever obtain regulatory approval. Delays in regulatory approvals or rejections of applications for regulatory approval in Canada, the United States, Europe, Japan or other markets may result from a number of factors, many of which are outside of Claritas’ control. The lengthy and unpredictable approval process, as well as the unpredictability of future clinical trial results, may result in Claritas’ failure to obtain regulatory approval to market any of its product candidates, which would significantly harm Claritas’ business, results of operations and prospects. Change in Laws, Regulations, and Related Issues The Company's operations are subject to a variety laws, regulations and guidelines including relating to the manufacture, management, transportation, storage, and disposal of controlled substances as well as laws and regulations relating to health and safety, the conduct of operations and the protection of the environment.
Approval policies, laws, regulations and guidelines may change during the course of a product candidate’s clinical development and may vary among jurisdictions. Any delays in obtaining, or failure to obtain regulatory approvals, including at the pre-clinical, clinical or marketing stage, would significantly delay the development of markets and products and could have a material adverse effect on the business, results of operations and financial condition of the Company. Dependence on Key Personnel The Company strongly depends on the business and technical expertise of its key management and service providers and it is unlikely that this dependence will decrease in the near term. Loss of the Company’s key personnel or service providers could slow the Company’s ability to innovate, although the effect on ongoing operations would be manageable as experienced key operations personnel and other service providers could be put in place. As the Company’s operations expand, additional general management resources will be required. 39161-2001 27553992.1 - 27 - If the Company expands its operations, the ability of the Company to recruit, train, integrate and manage a large number of new employees is uncertain and failure to do so would have a negative impact on the Company’s business plans. Intellectual Property Our success depends on our ability to protect our proprietary rights and operate without infringing the proprietary rights of others; we may incur significant expenses or be prevented from developing and/or commercializing products as a result of an intellectual property infringement claim. Our success will depend in part on our ability and that of our corporate collaborators to obtain and enforce patents and maintain trade secrets, both in the United States and in other countries. The patent positions of biotechnology and biopharmaceutical companies, including us, is highly uncertain and involves complex legal and technical questions for which legal principles are not firmly established.
The degree of future protection for our proprietary rights, therefore, is highly uncertain. In this regard there can be no assurance that patents will issue from any of the pending patent applications. In addition, there may be issued patents and pending applications owned by others directed to technologies relevant to our or our corporate collaborators’ research, development and commercialization efforts. There can be no assurance that our or our corporate collaborators’ technology can be developed and commercialized without a license to such patents or that such patent applications will not be granted priority over patent applications filed by us or one of our corporate collaborators. Our commercial success depends significantly on our ability to operate without infringing the patents and proprietary rights of third parties, and there can be no assurance that our and our corporate collaborators’ technologies and products do not or will not infringe the patents or proprietary rights of others. There can be no assurance that third parties will not independently develop similar or alternative technologies to ours, duplicate any of our technologies or the technologies of our corporate collaborators or our licensors, or design around the patented technologies developed by us, our corporate collaborators or our licensors. The occurrence of any of these events would have a material adverse effect on our business, financial condition and results of operations. Litigation may also be necessary to enforce patents issued or licensed to us or our corporate collaborators or to determine the scope and validity of a third party’s proprietary rights.
We could incur substantial costs if litigation is required to defend ourselves in patent suits brought by third parties, if we participate in patent suits brought against or initiated by our corporate collaborators or if we initiate such suits, and there can be no assurance that funds or resources would be available in the event of any such litigation. An adverse outcome in litigation or an interference to determine priority or other proceeding in a court or patent office could subject us to significant liabilities, require disputed rights to be licensed from other parties or require us or our corporate collaborators to cease using certain technology or products, any of which may have a material adverse effect on our business, financial condition and results of operations.
Lack of Revenue The ability to generate revenue depends upon the ability to obtain regulatory approval for, and successfully commercialize, product candidates that Claritas develops or acquires in the future. There is no assurance that Claritas can generate revenues even if regulatory approvals are achieved for its product candidates. The ability to generate revenue depends on a number of factors, including:
• successful completion of development activities, including the additional preclinical studies and planned clinical trials for the product candidates;
• completion and submission of applications for regulatory approval in select jurisdictions, including New Drug Applications to the FDA in the United States, Marketing Authorization Applications to the European Medicines Agency, and New Drug Submissions to Health Canada;
• obtaining regulatory approval from the FDA, European Medicines Agency and Health Canada for indications for which there is a commercial market;
• completion and submission of applications to, and obtaining regulatory approval from, other foreign regulatory authorities; • raising substantial additional capital to fund operations;
• manufacturing or acquiring CBD and approved products and in commercial quantities and on commercially reasonable terms;
• developing a commercial organization, or finding suitable partners, to market, sell and distribute approved products in the markets in which Claritas have obtained commercialization rights;
• achieving acceptance among patients, clinicians and advocacy groups for any developed products; • obtaining coverage and adequate reimbursement from third parties, including government payors; and • selling approved products at a commercially viable price in countries subject to price controls. ADDITIONAL INFORMATION Additional information about the Company, including the Annual
If you have been checking in on CI or the CI Facebook page once a month then all the above is old news and simply a cover our a s s formality to the OSC BCSC and TSXV.
Lots of old, Nothing new, lots of borrowed and nothing blue.
Just a formality guys.