TBP: Don’t Fear the Dilution

INNO
Tetra Bio-Pharma Provides Management Update on COVID-19 ...

On May 15, Tetra released the details of announced financing pursuant to its Canadian base shelf prospectus dated April 1, 2020.  The offering will include sale of 33,089,000 units at a price of $0.26 per unit for gross proceeds of $8.6 million.  Proceeds will be used to continue development of its clinical program, including Phase 2 and phase 3 clinical trials, toxicology, regulatory and manufacturing expenses related to QIXLEEF (PPP001).

Naturally, social media has been inundated with angry and disappointed shareholders upset over the dilution to come as a result of this latest round of financing.  While dilution always hurts, shareholders of TBP must ask themselves if they are in to trade or in to invest.  As a biotech, TBP currently has next to no revenue and must continue to find sources of cash to fund research and development of their pipeline. 

First off, investors must stop comparing TBP to pot stocks. TBP is not a pot stock, it is a biotech specialized in cannabinoid-based medicine. Many of their proprietary drugs are not even derived from the cannabis plant, but are synthetically produced or sourced form alternative plant sources such as clover and cloves. As with any biotech, there is considerable risk when investing, and each round of financing threatens the short-term odds of a return on investment.  However, TBP must not be judged on their share price performance, but rather by the progress of their clinical programs.  This article will serve as an overview of TBP: the product line, the wide range of orphan drug designations, and the partnerships and agreements in place in order to highlight why the current (and no doubt future) financing should neither come as surprise to shareholders nor be feared by them.

Orphan Drug Designation

Any discussion of TBP would not be complete without mention of a significant group of assets:  their five – yes, five – orphan drug candidates.  Why is an orphan drug designation so valuable?  The cost of bringing any new drug to market is a significant barrier to entry.  Given these costs, drug companies tend to focus on large markets for their drugs, leaving behind small untreated populations suffering from debilitating and deadly illness.  US orphan drug designations act as encouragement for companies to develop drugs to address unmet needs in small clinical populations.  Orphan drug designation allows a drug company to:

  • Target diseases affecting 200,000 patients or less in the USA
  • Benefit from a 50% tax credit for trials in USA
  • Benefit from 7 years marketing exclusivity
  • Obtain fast track approach to submissions
  • Obtain a waiver of new drug approval fees which are estimated at $3M

Below is the list of TBP’s drug candidates with an orphan drug designation:

  1. HCC011
    • For the treatment of Hepatocellular carcinoma – the most common form of liver cancer
    • Aimed to improve quality life and treat tumors in conjunction with currently used drugs
    • Leverages data from CAUMZ (another one of TBP’s primary clinical focal points) to expedite Phase 2 clinical studies
    • Type B meeting scheduled for May 29 with FDA related to its proposed clinical program and overall premarketing requirements
  2. PP001
    • See discussion in subsequent section
  3. PP003
    • For prevention of proliferative vitreoretinopathy (PV)
    • PV is a vision-threatening condition that develops in approximately 10% of patients who undergo reparative primary retinal detachment surgery and in about 50% of patients with open globe injury.
  4. PPP004
    • 2 ODDs in relation to treatment of epidermolysis bullosa, each with unique chemical formulation, one being a THC-CBD combination, the other being CBD only.
    • Epidermolysis bullosa is a group of rare diseases that cause fragile, blistering skin and is associated with significant pain and reduced quality of life, and even death
    • PP004 will be used for management of pain and itch
    • Tetra will be seeking a Type B meeting with FDA regarding this drug and its development
    • Tetra will be reaching out to physicians specialized in this disease to discuss proof of concept clinical trials.

CAUMZ

One of TBP’s drugs in advanced clinical stages:

  • Synthetic cannabinoid-based drug
  • Targets patients with cancer cachexia to improve quality of life and prolong survival
  • Will also target fibromyalgia and breakthrough cancer pain
  • Qualified for several FDA regulatory pathways that would see reduced time required to get CAUMZ approved and to market

PP001 (QIXLEEF)

Another one of TBP’s drugs in advanced clinical stages:

  • Patented plant-derived cannabinoid-based drug
  • Dry pellet made of 3 strains of cannabis that generates a unique composition of medicinal products when administered to patients with Tetra’s class II medical devices and by smoking or vaporization
  • Targets both cancer and non-cancer pain patients and seeking approval as second and third line pain medication, competing with current treatment options that include opioids in these populations.
  • Allows Tetra to participate in a $44.3B market which includes first line therapies and self-care options
  • Stems from Tetra research identifying the compounds released in combusted vs vaporized cannabis and patenting the resulting discovered compounds into their proprietary drug
  • Submissions have been made to Canadian, American, and European health authorities
  • TBP announced January 13 receipt of favorable letter of advice from FDA laying out the requirements for marketing approval for cancer and non-cancer pain indications.

PP003

PP003 is a significant asset to TBP and. As stated, a major focus of their clinical development programs.  This single proprietary drug candidate has, since its inception, expanded beyond its original intention to treat several additional indications.  In all cases, PP003 has the advantage of being derived from non-controlled cannabinoids, reducing barrier to entry in markets globally.

  • Human Ophthalmic Drug
    • Seeks to target a $9.5B market
    • Treatment of uveitis and painful dry eye
    • Addresses an unmet medical need in patients dissatisfied with currently available treatment options
    • First-in-human Phase 2 clinical studies planned for 2020
  • Veterinary Ophthalmic Drug
    • Treatment of corneal ulcers in companion animals and studies are under way
    • Addresses an unmet need for ophthalmic drugs in animals
    • Phase 2 clinical trails underway in pets – not lab animals
  • Cytokine Release Syndrome
    • The mechanism behind ARDS (Acute Respiratory Distress Syndrome) seen in 10-15% of COVID-19 patients.
    • Because of previous work, PP003 can soon be brought to human clinical trials and are working to bring this drug to market by Q3 2021 through conditional Health Canada approval.
    • Application in place for a Canadian grant to cover 75% of drug development costs
  • Proliferative Vitreoretinopathy
    • As already mentioned, TBP has received orphan drug designation for PP003 for this indication

Drug Development Pipeline:

TBP has stated that CAUMZ, PP003, and HCC-011 will be of primary focus in 2020.

Commercialization agreements and Other Partnerships:

  • Alternavida
    • Will assist in clinical development, marketing and distribution of CAUMZ in Mexico
    • Accelerates time required to complete Phase 2 and 3 for fibromyalgia and
    • Up to 15% royalties for up to 15 years
  • Azevedos Indústria Farmacêutica
    • Responsible for registering manufacturing, and marketing of CAUMZ in Portugal
    • Ability to manufacture and distribute throughout Europe
  • Vitiprints LLC
    • Applies to both CAUMZ and HCC011
    • License to use proprietary manufacturing technology in exchange for milestone payments
    • Allows for significant scaling of drug manufacturing as well as production cost savings of approximately 75%
  • Kamada Ltd
    • Leading Israel-based therapeutics company
    • Responsible for registering, marketing, and distribution of PP001 in Israel.
    • TBP will receive milestone payments and certain percentage of sales
  • Storz & Bickel
    • Tetra entered into a co-development agreement with Storz & Bickel, widely recognized as the global leader in vaporizer design and manufacturing and has incorporated their product into its smoke-vapor research program
  • Altus
    • Joint venture created to formulate, develop, and deliver cannabinoid-derived therapeutics.
    • Altus has 3 distinct technologies that Tetra can leverage:
      • Intellitab abuse deterrent
      • Flexitab sustained release tablet
      • SmartCelle nano-technology allows enhanced solubility of THC and CBD products and permits increased absorption
    • Benefits of this JV include:
      • Increased intellectual property protection for products developed under the joint venture;
      • Access to abuse deterrent technology to minimize non-medical use of cannabinoids;
      • An enhanced development pipeline addressing new therapeutic areas;
      • Opportunities for disease-appropriate delivery including intranasal and intravenous delivery; and
      • Increased oral drug absorption with immediate and extended release products
  • Crescita Therapeutics
    • Partnership to leverage Crescita’s patented transdermal delivery technologies:
      • Multiplexed Molecular Penetration Enhancer
      • DuraPeel
    • These technologies will help with absorption of beta-caryophyllene into skin and local tissues
    • TBP plans to leverage these technologies in their OTC and natural health product lines being launched later this year
  • Rhodes
    • Supply agreement for GMP-grade THC to be sued in several drug development activities including PP003 and PP004
  • True North Cannabis
    • Supply agreement for CBD from hemp

OTC Drug Identification Numbers

Health Canada granted two OTC DINs for the Terpecan banner:

  1. Terpecan (hemmoroids)
  2. Terpecan (back and muscle pain)

Tetra is in the process of finalizing supply, sales and distribution agreements with several companies, and anticipates launching Terpecan products in Canadian pharmacy retail outlets by mid-2020, and planning a launch in US and European markets once approval is obtained.  Interest has also been garnered in the middle east, where advanced discussions with a pharmaceutical company are underway.

The company also holds Canada Natural Product Numbers for its Topical  A ‐ AWAYE,  AWAYE  PLUS,  Beta  C  +  Zinc  (cold  sore  gel),  and  Beta  C  +  Benzocaine  (cold  sores/fever blisters/oral herpes cream

Conclusion

As has been evidenced above, TBP has made significant strides with a robust pipeline of cannabinoid-based drug candidates targeting a wide range of indications and high value markets.  There are several products in advanced clinical trials with several other products to follow, as well as OTC products already approved for the Canadian market and due to hit shelves later this year.  CEO Guy Chamberland has masterfully navigated this company through treacherous regulatory waters and primed TBP to be a market leader in cannabinoid-based medicine and research. 

Through CAUMZ and QIXLEEF, TBP is set to tackle the ongoing opioid drug epidemic by providing the medical community, for the first time in decades, with an alternative to what have been a truly destructive class of drugs.  This alone offers the potential for huge reward for shareholders willing to weather the storms of dilution that come from ongoing financing. 

TBP provides further promise to shareholders through their five ODDs as well as their foray into veterinary medicine via the PP003 program.

Furthermore, numerous global development, marketing, and distribution agreements are currently in place.

TBP can not capitalize on these assets without further financing.  It is for this reason shareholders should not fear the latest round of financing, but welcome it.  With these funds, TBP will be in a better position to advance the work being done to bring their high value, cannabinoid-based drug candidates to market.

Disclosure: Author is paid by Candlr for contribution, not by any companies mentioned in the post. Candlr is not being compensated by any companies mentioned in the post.

 

All posts made on this website are provided for information purposes only. None of the information here is intended as investment advice, as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, Company, or fund. Before making an investment decision, you should seek the advice of a qualified and registered securities professional. Candlr is not receiving payment or commissions from companies for shared content on Candlr website unless its specified. View full disclaimer HERE.

[bbp-topic-index]

3 Comments

  1. Tweedle Dee

    Question: this is a substanial laundry list of everything they have done or are trying to do. What’s the price tag to make any one of these programs a profitable asset?
    The short answer is a lot more than $8m.
    Marketing budget?
    Sales budget?
    Manufacturing budget?

    Approval to sell is step one. Getting people to buy is another mountain to climb.How do you propose Tetra climbs this moutain?

  2. Leaf

    Key component here is that they are smart enough to love forward with drug compositions that are based on synthetic (controlled) cannabinoids. The FDA will approve synthetics ahead of difficult to control botanicals. This is why they shifted to clinicals related to synthetics. Get a couple real DINs approved and bringing in some revenue… been talking about revenue for years so get on with it! Lastly Guy Chamberland hires a President and then he leaves the company, that doesn’t look good at all. Chamberland continues to screw things up.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.