Confidential Corporate Presentation - July 2018 Innovative, Pharma-Grade Cannabinoid-Based Medicine
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Innovative, Pharma-Grade
Cannabinoid-Based Medicine
Confidential Corporate Presentation
July 2018
FORWARD-LOOKING STATEMENTS AND ADVISORIES (“Scientus Pharma”, “Scientus”, “we”, “us”, and “our”) 2 When used herein, “Scientus” means HydRx Farms Ltd. and includes reference to its affiliates, as applicable. This presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking information is often, but not always, identified by the use of words such as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may”, “projected”, “sustain”, “continues”, “strategy”, “potential”, “projects”, “grow”, “take advantage”, “estimate”, “well positioned”, “intend”, “plan”, “predict” or similar expressions suggesting future outcomes, the results of which are uncertain. In particular, this presentation contains forward-looking statements including, but not limited to, those relating to the implementation of operations, licensing, production, sales and revenue generation, medical cannabinoid market size and trends, average monthly prescription value, penetration rate, the timing and next steps in Scientus’ business commercialization plan, employee and sales force growth, future trials, product launches and business opportunities, business strategies and competitive advantages. The forward-looking statements regarding HydRx Farms Ltd. are based on Scientus’ current views, key expectations and assumptions regarding future events, plans and objectives, including anticipated financial performance, maintaining necessary licences to conduct Scientus’ business, the ability to adequately outfit its production facility, prospects, strategies, the sufficiency of budgeted capital expenditures in carrying out planned activities, that there will be no adverse regulatory or political developments with respect to medical marihuana production, sales or consumption and the ability to obtain financing on acceptable terms, all of which are subject to change based on market conditions and potential timing delays. Although management of Scientus considers these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward-looking statements will not be achieved. Undue reliance should not be placed on forward-looking statements, as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in the forward-looking statements. These include, but are not limited to, the risks set out herein in Appendix A. Readers are cautioned that the foregoing list and the factors identified herein under “Appendix A - Risk Factors” are not exhaustive. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this presentation are made as of the date of this presentation and Scientus does not undertake and is not obligated to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws. Market and Industry Data Market data and industry forecasts contained in this presentation have been obtained from industry publications, various publicly available sources and subscription based reports as well as from management’s good faith estimates (including, in particular, our expectations regarding the medical cannabinoid product market size and trends), which are derived from management’s knowledge of the industry and independent sources that management believes to be reliable. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. We have not independently verified any of the information from third-party sources nor have we ascertained the validity or accuracy of the underlying economic assumptions relied upon therein. Scientus hereby disclaims any responsibility or liability whatsoever in respect of any third party sources of market and industry data or information. Notice to Investors In making an investment decision, prospective investors must rely on their own examination of Scientus and the terms of the private placement offering, including the merits and risks involved. Prospective investors should not construe the contents of this presentation as legal, tax, investment or accounting advice by Scientus or any of its directors, officers, shareholders, agents, employees or advisors. This presentation does not take into account the particular investment objectives or financial circumstances of any prospective investor. Each prospective investor who reviews this presentation must make its own independent assessment of Scientus after making such investigations and each prospective investor is strongly urged to consult with its own advisors with respect to legal, tax, regulatory, financial and accounting consequences, including the merits and the risks involved, of any investment in Scientus. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumption and each prospective investor should satisfy itself in relation to such matters. Investment is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity that are characteristic of an investment in a private company. Purchasers of Scientus’ securities will be required to execute subscription agreements, which will contain representations, warranties, covenants and acknowledgments of the purchasers required by the relevant regulatory authorities and Scientus to establish the availability of such exemptions and to ensure compliance with applicable securities legislation. Confidentiality This presentation contains highly confidential information regarding the investments, strategy and organization of Scientus. Your acceptance of this document constitutes your agreement to (i) keep confidential all the information contained in this document, as well as any information derived by you from the information contained in this document (collectively, “Confidential Information”) and not disclose any such Confidential Information to any other person, (ii) not use any of the Confidential Information for any purpose other than to evaluate the purchase of securities of Scientus, (iii) not copy this document without Scientus’ prior consent, and (iv) promptly return this document and any copies hereof to Scientus upon Scientus’ request.
INVESTMENT HIGHLIGHTS 3
• Multiple patents pending & proprietary technology platform
• Highly scalable production and manufacturing, to meet growing demand
Proprietary Technology • Decarboxylation and extraction platform creates a standardized, consistent API within
very low tolerance levels (internal QC standards include 100% decarboxylated resin,
instilling confidence and loyalty from
physicians and patients
Barriers to Entry
• Scaled production of consistent resin (Resicann® resin = Standardized API -100%
decarboxylated Resin) is the foundation for all Scientus formulations and cannabinoid-
based medicines (patent pending continuous flow production process vs. industry
standard batch process)
• Scientific papers and inputs from Key Opinion Leaders (“KOLs”)
Scientific Research • Research and clinical trials
• Supported by pharmacokinetic / pharmacodynamic data
Recognized Scientific • Highly regarded Scientific Advisory Board and Medical Advisory Board
Personnel & Infrastructure • Full access to University Health Network (“UHN”) research facilities
• Seasoned management team
Strong Management • Depth of experience in life sciences and public companies
& Board
• Track record of growing companies at this stage of development
COMPANY SNAP SHOT
4
Long Term Focus on Unmet Medical Needs
Manufacturing R&D Clinical Studies
HydRx Facility UHN Research Facilities UHN (5 Hospitals)
Full-Time Staff and Research Team from UHN Pharma-grade products
Consultants • Led by Lakshmi P. Kotra supported with clinical
• 26 Staff (BPharm & Ph.D.) & team data
• 4 Consulting Teams of 5 scientists (4 Ph.D.s)
Team of M.D.s & Ph.D.s
Growing Capabilities UHN is the leading life • Led by Hance Clarke
• Goal to reach 40 sciences research (M.D. & Ph.D.)
employees by Q1 2019 organization in Canada
First mover advantage with
proprietary technology
THE CHALLENGE
5
Difficult API to Harness
While the therapeutic benefits are well established, cannabis has proven to be
a challenging active pharmaceutical ingredient (API) to harness
Barriers Our Solution
Batch-to-batch variability (growth cycle and
Consistency, Solubility, Bioavailability, Stability
extraction technology/process)
Each cannabinoid works a different way; lack of Building proprietary library of cannabinoids with
mechanism data supporting data
In natural state, cannabis is inactive Complete activation of phytocannabinoids
Decarboxylated when consumed via smoking or Activated resin is necessary for commercial scale
vaping dosage forms
Scientific bench strength in medicinal chemistry
Resin is a glue-like, sticky substance – tough to
has solved particle size, absorption and other
deal with for many dosing forms
problems
DECARBOXYLATED CANNABINOIDS
6
Essential for Physiological Activity
• Decarboxylation of cannabinoids in cannabinoid-based medicines matters
due to higher potency
• CB1 and CB2 Receptor respond to decarboxylated phytocannabinoids
(THC and CBD)
• Consistency in cannabinoid “content” and their complete decarboxylation:
vital for cannabinoid-based medicines
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
RECEPTORS RESPONSES
7
CB1 Receptor
v THC is more potent agonist compared to THCA at CB1 receptor
Agonistic mode screening Antagonistic mode screening
Inactive
High
potency
CB1 Receptor
THCA – weak agonist
THC – potent agonist
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
RECEPTORS RESPONSES
8
CB2 Receptor
v CBD is more potent antagonist compared to CBDA at CB2 receptor
Agonistic mode screening Antagonistic mode screening
CB2 Receptor
CBDA – very weak antagonist
CBD – moderate antagonist
“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
CURRENT STATE OF CANNABINOID-BASED MEDICINES
9
Δ9-THC and Δ9-THCA in Commercial Oils – Patients Samples
Scientus Pharma Funded Research at UHN
Pain Patients’ Samples
THC Content (%) THCA Content (%)
100.00
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“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”
CURRENT STATE OF CANNABINOID-BASED MEDICINES
10
CBD and CBDA in Commercial Oils – Patients Samples
Scientus Pharma Funded Research at UHN
Pain Patients’ Samples
CBD Content (%) CBDA Content (%)
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“Kotra et el., University Health Network, Toronto, 2015-18.(Sponsored by CannScience Innovations, Inc.)”MEDICINES – BEYOND “TRADITIONAL CANNABINOID-BASED MEDICINE USERS”
11
Industrial Scale to Meet Demands of Patients World Wide
Scale-up Accomplished
Scale-up results: 99.5% decarboxylation consistently reproduced
US Patent Application# 62/609,708 (Dec 22, 2017): Apparatus for extraction and decarboxylation
of phytocannabinoidsPROPRIETARY EXTRACTION METHOD
12
Platform Technology
Proprietary Method Supercritical Fluid Extraction (LP Method)(2)
Energy Costs Up to 70-90% savings versus LP method Energy consuming processes
Reagent / Solvent Up to 70-90% savings versus LP method
Needs constant supply of liquid CO2
Costs (reagents recycled)
30-50 min. operator time / 2 hour operator time and 8-14 hour
Labour
2 hour elapsed time elapsed time
Active Pharma
Ingredient (API) 100% decarboxylation 60-95% decarboxylation
Yield
Batch-to-Batch Minimal due to proprietary Inferior QA due to
Variability processing method high processing variability
(1)
Consistent chemical composition of the
Consistency Not Applicable
Resicann® resin = Standardized API
Capacity Continuous Flow Production Process 2 cycles/day
Comparison (scalable/consistent) (maintenance/replacements)
Notes:
(1) Due to consistent 100% decarboxylation from extraction process
(2) Source: ManagementPATENT STRATEGY
13
Protecting First Mover Advantage
• Use of microwave reaction for extraction and
Methods Claims decarboxylation of cannabinoids
• Design of closed system to extract cannabis resin in
Design and Apparatus Claims a continuous flow process
Composition of Matter Claims • Decarboxylated cannabis resin
Formulations Claims • Range of dosing forms
US Patent Application# 62/609,708 (Dec 22, 2017)
Decarboxylated Cannabis Resins, Uses Thereof and Methods of Making Same
PCT/CA2017/050788
WO 2018/000094
29 June 2016THE OPPORTUNITY
14
Target Indications
Target Condition Universe
ü Myoclonus ü Anorexia
ü Migraines ü Inflammatory Bowl Disorder
ü Epilepsy ü Hepatitis C
ü Sleep Disorders ü Parkinson’s Disease
ü Crohn’s & Colitis ü Eating Disorders
Subsets of
>$1B(1)
• Epilepsy / Seizures Initial “Rx Switch”
Addressable
• Pain Market Focus Market by
• CNS Related Disorders 2019(2)
ü Nausea & Vomiting ü Alzheimer’s
ü Lupus ü Spinal Cord Damage
ü Tourette Syndrome ü Huntington’s Disease
ü Cancer ü PTSD
ü Dravet Syndrome ü HIV / AIDs
Notes:
(1) Addressable Market: patients being treated with prescription drugs for Pain, Seizure and CNS in Canada
(2) Management estimate based on analysis of Canadian prescription data from IMS Health for various pain, CNS and seizure related indications. See “Forward-Looking Statements and Advisories – Market and
Industry Data”THE GOAL
15
Target to Switch Sales from Existing Prescriptions
Canada’s Market Expectation Scientus
& Target Market Target Market
CURRENT FUTURE SWITCH
MEDICAL MARKET RECREATIONAL MARKET MEDICAL MARKET
LD
LP
Market Participants in Market Participants in Market Participants in Canada
Canada Canada Specialized Licensed Dealers
Licensed Producers Licensed Producers Integrated Licensed Producers
Total Addressable Market (3) Total Addressable Market (3) Total Addressable Market (3)
$250M(1) $1.8B - $2.4B (2019-2020)(1) $1.0B+ in Canada (2019)(2)
Market growth potential with
expansion of product definitions
Notes:
(1) Based on GMP Research estimates
(2) Management estimate based on analysis of Canadian prescription volumes for various pain, CNS and seizure related indications. See “Forward-Looking Statements and Advisories
– Market and Industry Data”
(3) Addressable Market: patients being treated with prescription drugs for Pain, Seizure and CNS in CanadaINCREASING CLINICAL EVIDENCE
16
Growing evidence that Cannabinoid-based medicines may offer opioid sparing
properties and are growing in adoption in treatment guidelines
Neuropsychopharmacology.
2017 Aug;42(9):1752-1765. doi: 10.1038/npp.2017.51. Epub 2017 Mar 22.
Opioid-Sparing Effect of Cannabinoids: A Systematic Review and
Meta-Analysis.
Nielsen S1,2, Sabioni P3, Trigo JM3, Ware MA4, Betz-Stablein BD5, Murnion B6,7, Lintzeris N2,6, Khor KE8, Farrell M1, Smith A9, Le Foll B3.
Abstract
Cannabinoids, when co-administered with opioids, may enable reduced opioid doses without loss of analgesic efficacy (ie,
an opioid-sparing effect). The aim of this study was to conduct a systematic review to determine the opioid-sparing potential
of cannabinoids.
New York State Department of Health Announces Opioid Use to be Added as a
Qualifying Condition for Medical Marijuana
Opioid Use Joins 12 other Qualifying Conditions Under the Compassionate Care Act
ALBANY, N.Y. (June 18, 2018) - The New York State Department of Health today announced it will develop a regulatory
amendment to add opioid use as a qualifying condition for medical marijuana.
"The opioid epidemic in New York State is an unprecedented crisis, and it is critical to ensure that providers have as
many options as possible to treat patients in the most effective way," said New York State Health Commissioner
Dr. Howard Zucker. "As research indicates that marijuana can reduce the use of opioids, adding opioid use as a
qualifying condition for medical marijuana has the potential to help save countless lives across the state."OPIOID WEANING – SCIENTUS SCIENTIST AT THE FOREFRONT
17
Cannabinoid-based medicines are growing in adoption in treatment guidelines
and offer a potential solution to current drug abuse crisis
Howard Meng, MD · John G. Hanlon, MD · Rita Katznelson, MD ·
Anand Ghanekar, MD, PhD · Ian McGilvray, MD, PhD · Hance Clarke, MD, PhD
Liver transplant patient post-op 40mg hydromorphone per day
Initiated cannabis indica dominant (Medreleaf: THC 0.79%, CBD
17.08%) 1g smoked TID, 0.4g PO OD
Currently taking hydromorphone contin 3mg BIDRESEARCH AT SCIENTUS
18
Science Focus
• Endocannabinoids are a major class of
neuromodulators, acting through CB1 and CB2
receptors
• CB1 primarily located on CNS neurons
• CB2 mainly located on immune cells in the
periphery
• Cannabinoids exert their effects by interacting with
these innate systems – neuro and inflammatory
systems in various disease conditions
• Scientus has conducted in vitro and in vivo preclinical
studies and is currently conducting clinical studies
(UHN 4 hospitals, CAMH and Rouge Valley Clinic). Data with receptor level and
See Appendix A for supporting data biochemical certainty, brings
patient safety to the forefrontRESEARCH AT SCIENTUS PHARMA
19
Clinical Strategy
Observational Studies:
Profile cannabis and correlate clinical diagnosis
• Chronic Pain (UHN) – REB approved; 56 patients, patient enrollment has
commenced
• PTSD (CAMH/UHN) - REB approved; 44 patients; patient enrollment has
commenced
• IBD – under development
• Driving study: Safety and Bioavailability Studies – Clinical Trial approved;
Study to commence soon
Prospective RCTs (for 2018/2019):
Including single and multiple ascending dose studies
• Chronic Pain
• IBD
• Arthritis
Scientus-UHN-CAMH:
Products Efficacy using PET Scanning under discussions with unique trial designsLEADERSHIP TEAM
21
Management
• Life Sciences entrepreneur with track record of taking companies through all stages of
growth, from startup to going public and past the $1 billion revenue mark
Har Grover • Former public company executive (MDS), with extensive strategic planning (Deloitte),
Chairman & Chief Executive Officer M&A and operational roll out experience including several major medical product
launches (Cryocath, Visualsonics)
• Experienced financial executive with capital markets, M&A and corporate re-organizational
Phillip Hemans experience
Chief Operating Officer • Significant operational and manufacturing experience in regulated environments
• Leadership in capital markets, operations, finance and corporate development
• Experienced financial professional with significant experience in corporate
Rav Grover development, private equity, capital markets, M&A, operational and finance activities
Chief Financial Officer • Leadership in finance, corporate development, legal and investor relations
• Chief of Scientus’ SAB and internationally recognized as one of Canada’s top
medicinal chemists
Lakshmi P. Kotra • Author/co-author of over 100 publications and patents
Chief Scientific Officer • Director, Center for Molecular Design and Pre-formulations, UHN
• Professor of Medicinal Chemistry, University of Toronto
• Chair of Scientus Medical Advisory Board
• Medical Director, Pain Research Unit, TGH
Hance Clarke • Staff Anaesthesiologist, Department of Anesthesia and Pain Management, Toronto
Chair of Medical Advisory Board General Hospital
• Assistant Professor at the University of Toronto
• Leading KOL in pain management, cannabis and opioidsLEADERSHIP TEAM
23
Scientific Advisory Board
• Immunologist and arthritis researcher at the University of Toronto
• Previous appointments include Director of the Arthritis and Autoimmunity Research
Eleanor Fish Centre, Canada Research Chair in Women’s Health and immunobiology, a Senior
Ph.D. Scientist at the Division of Advanced Diagnostics at the Toronto General Research
Institute, and the Associate Chair of International Collaborations and Initiatives
• Held a series of positions internationally within the biotechnology and pharmaceutical
industries
Barry Greenberg • Directly involved with Alzheimer’s disease research and drug discovery since 1985
Ph.D. • PhD in Genetics and Molecular Biology at the University of North Carolina, and post-
doctorate work at Stanford University
• Professor in the Department of Medicine, University of Toronto
Atul Humar • Director of the Multi-Organ Transplant Program at the UHN and the University of
M.Sc., M.D. Toronto Transplant Institute
• Physician, researcher, drug designer, multiple patent holder, and multiple award
recipient
• Currently a Director of the Krembil Research Institute, a prestigious research arm of
the Toronto Western Hospital
Donald Weaver
Ph.D., M.D. • Chair of Tier 1 Neuroscience Canada Research
• Former Research Director of medicine at Dalhousie Medical School and Capital Health
• Former Chair of the Division of neurology and Chief of Clinical Neurology at Queen’s
University
• Focuses on airway management, clinical pharmacology and drug delivery systems
• Collaborates on research with other clinicians and scientists at Dalhousie, Stanford,
Orlando Hung and the University of Toronto
B. Pharm., M.D. • Developed and patented a number of innovative drug delivery systems and medical
devices
• Professor in the Department of Pharmacology at Dalhousie UniversityYou can also read
