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Kalytera pioneers use of cannabidiol to treat bone marrow patients

Peter Kennedy Peter Kennedy, Stockhouse Featured Writer
0 Comments| February 6, 2018

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The lessons of history can be instructive when it comes to picking stocks.

History tells us that when biotech companies hit certain key stages in their development, investors tend to assign higher valuations to the share price.

That is especially true when companies in the sector enter Phase 3 clinical trial development.

So if history is to be our guide, it might be time to take a serious look at Kalytera Therapeutics Inc. (TSX:V.KALY, KALTF, Forum), a clinical stage pharmaceutical company that is pioneering the use of cannabidiol (“CBD”) , first for the treatment and prevention of Graft versus Host Disease (GvHD), before expanding into other larger market areas.

This time last year, Kalytera shares were trading at $1.20. But unexpected delays in the company’s bid to obtain a patent allowance in the United States for the use of CBD in the prevention and treatment of GvHD sent the shares tumbling to a low of 9 cents in November 2017.

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The shares rebounded after Kalytera finally received the notice of allowance from the U.S. Patent and Trademark Office.
In an interview, Kalytera President and Chief Executive Officer Robert Farrell said he expects the shares to move even higher as the company progresses through Phase 2 and Phase 3 clinical trials.

“We expect to have a very nice inflection point in terms of the company’s market valuation when the Phase 2 is complete, and we are then positioned to begin Phase 3,” said Farrell. At that stage we would be just one step away from applying for approval to the U.S. Food and Drug Administration and other regulatory bodies.”

Symptoms of GvHD

Kalytera is in this situation almost a year after it acquired Talent Biotechs Ltd., a privately-owned Israeli- based developer of proprietary cannabidiol CBD therapeutics.

Talent Biotechs was focused on research involving the use of CBD for the prevention (and treatment) of GvHD, a life-threatening disease that occurs when a blood cancer patient receives a bone marrow transplant.

The symptoms of GVHD include a nasty body rash and lesions in the skin, which can lead to infections that all too often prove fatal.

The research has been led by Talent’s Chief Medical Officer Dr. Moshe Yeshurun. He is also Head of the Bone Marrow Transplantation Department at the Rabin Medical Centre in Tel Aviv, Israel.

Yeshurun began studying the use of CBD for the possible prevention of GvHD after hearing anecdotal evidence from patients who experienced symptomatic relief after smoking marijuana.

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“He surmised that this was because of the CBD in the marijuana that they were smoking,” Farrell said.

It is worth noting here that a marijuana plant has over 80 chemical constituents known as cannabinoids, which alter neurotransmitters released from the brain. Two of the most actively studied are THC, and cannabidiol (CBD).

THC is the major psychoactive component of cannabis. CBD binds with many receptors throughout the body, but without the psychoactive side effects.

Recent evidence suggests that CBD has potential therapeutic benefits for a wide range of conditions. United Kingdom company GW Pharmaceuticals Plc (NASDAQ: GWPH, Forum), for example, is developing a CBD product (Epidiolex) for the treatment of rare and catastrophic forms of childhood- onset epilepsy.

Sythian Biosciences Corp. (TSX. V.SCYB, SCCYF, Forum), is a pre-clinical trial phase company, which is developing a cannabinoid-based drug therapy for treatment of concussions and traumatic brain injury. On January 19, 2018, the stock was trading at $24 in a 52-week trading range is $24.88 and $2.60.

Patients who receive bone marrow transplants contract GVDH in part because high doses of radiation designed to kill the patient’s bone marrow prior to the transplant. The radiation damages epithelial cells in the patient’s skin and gastrointestinal tract that protect the body from external pathogens, including bacteria.

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These patients are also vulnerable to attack from immune cells produced from the donated bone
marrow cells, which view the patient’s body as foreign and start to attack it.

“For cancer patients, it can be like jumping from the frying pan into the fire,’’ said Farrell. “They had terminal cancer, and now they have GvHD. The symptoms of GvHD are often worse than cancer,” he said.

The current standard of care is to give patients high doses of steroids that are intended to suppress the immune system. Unfortunately, however, this increases the patient’s vulnerability to infection.

After hearing the anecdotal evidence from patients who had been smoking marijuana, Dr. Yeshurun approached the Rabin Medical Centre and got permission to conduct four clinical studies in prevention and treatment of GvHD.
A total of 88 patients participated in the studies.

The results showed that when CBD was administered, there was a significant decrease in the incidence of acute GvHD following bone marrow transplantation

It was the results from those studies that caught Kalytera’s attention, and subsequently led to the takeover of both Talent Biotechs and its research.

“The data that he got from the four studies was really quite extraordinary,” said Farrell.

Normally 50% of the patients who have undergone a bone marrow transplant get GVHD. The incidence of GvHD in patients who participated in the clinical trial was reduced to 12%. Even those people who did contract GVHD found that the severity of the disease was substantially reduced.

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The CBD used by Kalytera is produced synthetically by a manufacturer in Germany. It is mixed with olive oil and administered orally in a liquid form. The combination of CBD and olive oil ensures that the CBD

molecules have the best opportunity to circulate through the patient’s bloodstream without being metabolized in their liver.
Now that Kalytera is funding Talent’s research, Farrell is hoping that the payoff will eventually be approval by the U.S. Food and Drug Administration.

But before that can happen, the company has a number of key steps to go through including completion of the Phase 2 and Phase 3 clinical trials.

Farrell said the company recently raised $5.7 million from the sale of convertible debentures priced at
$1,000 per convertible debenture unit. Echelon Wealth Partners Inc. acted as the company’s agent in the financing and exercised its option to sell an additional 750 convertible debenture units.

Proceeds will be used to advance the Phase 2 clinical trial program designed to assess the pharmacokinetic and safety profile of multiple doses of CBD for the prevention of GvHD. It will enroll 36 patients following allogenic hematopoietic cell transplantation and will take place at Beilinson Hospital and three other major medical centres in Israel.
Kalytera expects to complete the Phase 2 program before the end of 2018, potentially as early as August or September. It will then launch into Phase 3 as quickly as possible.

“At that point we will be a Phase 3 company,” Farrell said. “There are a lot of companies at the preclinical stage, or Phase 1, or Phase 2, but there are very few who have Phase 3

Phase 3 pivotal study

Farrell said the clinical trials will cost around $15 million before the program can be sent to the FDA for approval, meaning that Kalytera will need to raise more money before launching into the Phase 3 trials.
Farrell also said the GvHD research is only a first step for the company.

Kalytera has entered into an agreement with the global drug development firm, The Salzman Group, under which The Salzman Group will provide clinical study management services in relation to the Phase 2 study, including chemistry, manufacturing and control analytics, as well as stability studies, toxicology studies and drug-drug interaction studies. All of these will be required by the FDA to be completed prior to the launch of the Phase 3 pivotal study.

The cost of these services is estimated at $1.24 million over an 11-month period. Salzman has agreed to accept payment in common shares of Kalytera in return for providing the services.

The incidence of GvHD is roughly 10,000 annually in the markets that Kalytera hopes to address.

“We are interested in expanding our company with other product development initiatives, where the commercial opportunities will be larger,” Farrell said. “We hope to announce another important program s later this year,’’ he said.

Full Disclosure: Kalytera Therapeutics Inc.. is a paid client of Stockhouse Publishing.

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