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BioTuesday: Cannasat Batting Hot Streak in its CNS Turnaround

BioTuesday, March 9, 2022

By Leonard Zehr

First time up to bat, Anthony Giovinazzo hit what he calls a triple. He followed that up with a single. Now, he’s looking to park one in the bleachers.

Newly installed in the executive suite at Cannasat Therapeutics (TSX-V:CTH) last November, Mr. Giovinazzo’s mandate is to rebrand the company, founded in 2004 by Moses Znaimer to treat pain with a cannabinoid derivative, into a specialty central nervous system (CNS) drug company.

“There are investors disposed positively and negatively to the connotation of cannabinoids,” he told in an exclusive interview, referring to drugs derived from the cannabis plant. “That’s unfortunate because opioids are also narcotics, but their sales are some $9 billion (U.S.) a year. The hope was always that cannabinoids would eventually become mainstream therapy like opioids, but that still isn’t the case.”

Mr. Giovinazzo took the helm promising to secure a pharma partner for Cannasat’s cannabinoid technology, distance the company from some of the stigma associated with cannabinoids and build a portfolio of CNS assets, all with a managed-risk profile in target markets considered to be high-growth.

He has acted on two parts of the plan already and in April, shareholders at the annual meeting will vote on a new name for Cannasat, which will continue the move to a CNS foundation and away from the company’s cannabis roots.

To make his plan work, Mr. Giovinazzo is beating the bushes to raise $10 million in a private placement, with the help of several investment houses, as a stepping stone to attract institutional investors and research analysts to Cannasat.

The financing, which would match the total amount of money Cannasat raised from retail investors in its first five years of existence, is designed to kickstart its turnaround and possibly “find a third project to bring into the company and add further value,” Mr. Giovinazzo says.

His first deal for Cannasat was obtaining an option on an oral formulation of apomorphine, an approved drug for Parkinson’s disease. Apomorphine is given by injection to patients suffering from a severe version of the disease, and while it is highly effective, it has drawbacks such as scarring and inflammation.

The new compound, known as APL-130277, is effectively the same drug as apomorphine. But as an oral drug, it has the potential of treating a much larger group of Parkinson’s patients, who have a moderate-to-severe form of the disease. The gold standard treatment for these patients is levodopa, but recent evidence suggests that levodopa is responsible for many long-term side effects seen in Parkinson’s.

“APL-130277 has the potential to address a significant underserved portion of the $3 billion-plus Parkinson’s disease market,” he suggests, noting that it will take about three years of development in order to show proof-of-equivalence compared with injected apomorphine.

Cannasat plans to conduct due diligence, proof-of-concept and preclinical studies this year, with a Phase 1 trial scheduled for 2011. The reformulated drug qualifies for accelerated approval through the FDA’s 505 (b) (2) pathway after one successful Phase 2 clinical study.

“So, there is lower timeline and revelatory threshold as well and a lower amount of capital need because we only need to do the one major study to demonstrate that the amount of drug in the blood stream is the same and provides for the same profile as the amount of drug that is given by injection,” he points out.

“If the data are positive, then we would expect a pharma partner to step up and license the worldwide rights to the drug or acquire the rights outright in a merger or acquisition,” he said.

Last Thursday, Cannasat delivered on another leg of its turnaround. It agreed to give IntelGenx (TSX-V:IGX) a 50% ownership stake and an exclusive worldwide licence to develop and commercialize its Relivar cannabinoid drug candidate.

Under the agreement, IntelGenx will carry the ball for Relivar’s ongoing development, but both companies will share milestones and royalties if a pharmaceutical marketing partner is found for the drug in the future.

“This is an attractive proposition to Cannasat because it takes the future capital requirements out of our hands but gives us 50% of the upside,” Mr. Giovinazzo contends.

Relivar is a novel buccal formulation of dronabinol, the main psychoactive substance found in the cannabis plant, and is targeting various diseases, including neuropathic pain. Initial Phase 1 clinical work on Relivar has demonstrated “some clear advantages over the existing FDA-approved product,” IntelGenx’s CEO Dr. Horst Zerbe said last week.

Mr. Giovinazzo has strong views about the CNS space and the sector’s changing landscape. “Everybody for the last couple years has been talking about finding ways to modify CNS disease onset and progression. What many have now realized is that it is neither practical nor feasible in the foreseeable future. The idea that genetics or cell therapy could make a difference in these neurodegenerative diseases is a great idea, but it’s far from being therapeutically available. What people are now turning back to are the symptoms in these diseases and treating these symptoms with better drugs or with reformulations where the development risk is much lower. And that’s the strategy we have moved to and it’s one that the market now believes is the right strategy.”

He also contends that his strategy for Cannasat has worked before – specifically when he was picked in late 2002 to run Cita NeuroPharmaceuticals, a single drug candidate company based at Queen’s University in Kingston.

“I brought in a stronger management team and together we were able to go out and find two additional assets that were in a European pharmaceutical company’s hands and had clinical data behind them. So, we were able to demonstrate that we were building a portfolio,” he recalls. “Our total cost for those two assets was about $2.5 million and we spent another $4 million or $5 million (Canadian) on them, bringing the total amount raised by the company to about $14 million.”

In 2005, when Cita was preparing an IPO, it was approached by an investment bank in Europe, representing a European biotech company that wanted to acquire Cita’s portfolio of assets based on the information in the IPO.

“We sold the company to them for $72.5 million (U.S.) and a provisional $30 million of commitments to complete clinical development. That’s an example of how building a portfolio and delivering data can attract partners, either from a licensing or acquisition perspective,” he claims.

All of which sets the stage for his search for a third project for Cannasat, his so-called home run. Ideally, it would have a “profile of being a newer drug development candidate, with a newer target that would most likely be in neuropathic pain or possibly, anxiety. We’re looking for something that addresses a big market, has substantial value, and again where Phase 2 data is sufficient to drive a significant commercial inflection point. In other words, to give us a major licensing deal or a major M&A deal.”

And why does he think pharma partners will come knocking? “The rationale is there’s an aging baby boomer generation succumbing to CNS diseases. And secondly, Big Pharma is experiencing significant contraction in their sales volumes because of generic competition, which is driving licensing deals and M&As. And second-tier pharma companies are beefing up their pipelines to boost sales or for a takeout by Big Pharma. Either way, there’s strong interest in well validated programs at the Phase 2 level.”

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