Zelira Therapeutics Ltd (ASX: ZLD) (OTCQB: ZLDAF) said that it has funding to conduct mid-to-late-stage FDA trials for its cannabinoid-based drug to treat autism spectrum disorder (ASD).
The company received $8.6 million in funding from U.S.-based investment firm Cantheon Capital LLC to conduct phase 2 and phase 3 clinical trials for its proprietary and patented protected HOPE-1 product via a special purpose vehicle (SPV).
An SPV is a subsidiary created by a parent company to isolate financial risk.
The drug has been available to purchase in tincture form in medical marijuana markets such as Louisiana, Pennsylvania, and Washington D.C. for three years now, as well as in Australia. It will now undergo formal development under the FDA process.
“During this period, we learned from patients who use HOPE- 1 for essential data points – the dose they used, their frequency of dosing, any side effects they experienced, and the efficacy of our product,” Zelira chairman Osagie Imasogie said. “The results support the safe and effective use of HOPE-1.”
“In addition, 70% of patients in the study cohort were rated by clinicians as having achieved at least ‘moderate’ therapeutic effect after five months. In the state of Pennsylvania, our licensee has sold and dispensed over nine million doses over the past three years with no negative safety signal. These doses have been bought and paid for, out of pocket, by parents who have administered HOPE-1 to their children with ASD, on a monthly basis.”
The chairman said that the company will be pursuing, “with a high level of comfort,” the formal development of the drug under the FDA process.
“Our target is a potential eventual approval of HOPE-1 in the U.S. as a drug for ASD within approximately 36 months from the commencement of our trials,” Imasogie said.
Zelira reformulated HOPE-1 into a pharmaceutical grade capsule for the FDA trial, using its proprietary Zyraydi technology.
Under the new accord, the company will contribute its HOPE-1 product, intellectual property, and real-world data for 55% equity ownership of the SPV. Cash investors will contribute $35 million to fund the subsidiary and FDA trials in exchange for a 45% equity interest.
The firm also executed a mandate with SW4 Advisors Limited (SW4 Partners) to raise the remaining $26 million required for the SVP. Zelira will manage the branch as part of its business platform, the company said.
“As global investors in this space, we are excited to have the opportunity to fund a product that already has a considerable amount of real-world data for safety and efficacy, with millions of doses having been dispensed to patients over several years before the start of formal FDA clinical trials,” Cantheon’s general partner Aaron Ray said.
“This situation is in sharp positive contrast with the traditional situation where formal first in man studies (usually phase 1) FDA trials start with reliance on only animal studies and a hypothesis as to how the study product will do in humans.”
Cantheon’s contributions make up around 25% of the total $35 million needed to fund the studies. The $8.6 million funding is structured as a convertible note that can be converted into a maximum of 12.93% of the subsidiary’s common stock.
Zelira’s latest move in the cannabinoid pharmaceuticals space comes after the company’s Zenivol became the world’s first clinically validated, peer-reviewed cannabinoid-based medicine to treat chronic insomnia. Zenivol launched in Australia and recently received regulatory approval in Germany.
The clinical trials will be the first FDA trials Zelira will be conducting for the U.S. prescription market.