InvestInMJ recently had the pleasure to speak with Robert Brooke, the CEO of Vitality Biopharma (“Vitality”) (OTCQB: VBIO), a publicly traded pharmaceutical company focused on cannabis based medical drugs. While researching the company and speaking to Robert, we became very excited about the prospects for the company and the potential for their drug delivery system. After reading the Q&A interview below, we are confident you will agree that they have the potential to become one of the leading pharmaceutical companies that can bring unique and effective cannabis based drugs to market. 

IMJ: Hello Robert, thank you for taking the time to speak with us. The success of any company entering the medical cannabis industry is highly dependent on management, can you provide us a brief background on the key team members and their past experiences/success in bringing a drug to market and managing a pharmaceutical company.

RB: Our board and management team has a strong track record and their careers have been focused almost entirely on healthcare, biotechnology, and drug development. I’m the company’s CEO and a Co-Founder, and am a bioengineer by training. After working in hedge fund finance for several years following graduate school at UCLA, I founded a cancer drug development company. The company, now known as Lion Biotechnologies (NASDAQ:LBIO) is developing cancer immunotherapies in collaboration with the National Cancer Institute. The hedge fund I was with previously was the single most active investor in publicly-traded biotechnology companies during a period when I was with the firm, so it was exciting and fast-paced work. We invested directly in more than 60 publicly-traded healthcare companies.Through this experience I met Vitality Biopharma’s Chairman and other Co-Founder, Dr. Avtar Dhillon. He is a physician and former venture capitalist who has deep healthcare and biotechnology experience. Dr. Dhillon currently acts as the Chairman of several publicly-traded healthcare companies, including Inovio Pharmaceuticals (NASDAQ:INO), which he led for many years as CEO and that is a prominent developer of DNA vaccines for cancer and infectious diseases. 

IMJ: Can you provide us a brief background on the company and what made you decide to focus on using cannabis as a key component of your planned drugs?

RB: Over the last several years, we developed a unique enzymatic biosynthesis platform at our company that enables the glycosylation of small molecule compounds, especially natural products. This platform was originally developed to modify the taste and create industrial quantities of stevia, a high-potency sweetener. This is a capability that very few other companies in the world have – even large pharmaceutical companies will generally create new drug compounds using chemical synthesis, rather than through enzymatic biosynthesis. 

In late 2015, we made a surprising discovery, which was that the enzymes we were using were far more promiscuous than anyone ever had realized before. So they were useful not only for improving the properties of stevia, but for improving the properties of many other compounds, including cannabinoids. As a result, we were able to file intellectual property and pursue patent protection that would extend through 2035 on a new class of cannabinoid pharmaceuticals known as cannabosides. 

We very quickly recognized the therapeutic potential of our compounds. Through oral delivery, cannaboside drug formulations can be selectively delivered to the gut or intestines. This enables large concentrations of cannabinoids to be delivered, in order to provide potent pain relief and anti-inflammatory effects, and to do this while reducing or avoiding entirely the drug’s psychoactivity. 

IMJ: Now that medical cannabis is being accepted by the medical community as a treatment for many ailments, there has been a surge of pharmaceutical companies entering the space and looking to bring cannabis based drugs to market. What makes Vitality BioPharma unique in terms the ailments you are focusing on? What are some of the current treatments for these ailments and how can patients benefit from your pipeline of drugs?

RB: There has been a surge of interest and acceptance of medical cannabis in the medical community, and for many, this has been driven largely by the success of non-psychoactive cannabidiol (CBD) for epilepsy. CBD isn’t psychoactive and it also has very obvious therapeutic effects - it’s now been shown to help reduce seizure frequency by more than 40% even in children with rare seizure disorders who previously failed all FDA-approved therapies. 

Vitality’s drug development program is analogous in that we are developing products designed to not be psychoactive and also to tackle hard-to-treat pediatric forms of disease, including inflammatory bowel disease (IBD). IBD is an autoimmune condition where the body’s immune system attacks the intestines, and where most people are diagnosed at a relatively young age, often as teenagers. Emerging clinical data has suggested that cannabinoids could be able to induce remission of IBD. 

A placebo-controlled clinical trial was recently conducted by independent investigators, and in this study it was demonstrated that even in Crohn’s disease patients that failed front-line therapies – including treatment with corticosteroids and TNF-alpha inhibitors - the use of cannabis for only 8 weeks helped achieve remission in nearly half of patients. Some patients in this study were also able to fully eliminate the use of corticosteroids and opiate painkillers. 

Our proprietary cannabosides enable the targeting of cannabinoids directly to the site of disease. In doing this, we aim to provide these same therapeutic benefits of cannabis in pill form, and to deliver them while reducing or avoiding entirely any psychoactivity.

There is a lot of excitement within the IBD community about the use of cannabis, as the disease has no cure and current treatments aren’t adequate for most. Often teenagers and kids afflicted with the condition are unable to eat or gain weight, and they end up missing school frequently due to being hospitalized. About 50% of patients will fail frontline therapies, and about 75% of Crohn’s disease patients will have to endure one or more surgeries. This includes colectomies, where they have to remove a portion of the intestines, and where they’re often forced to use colostomy bags. 

IMJ: The company has a very exciting technology in terms of drug delivery, can you explain what Cannabinoid Prodrugs is and how it is different in terms of targeted drug delivery?

RB: Prodrugs are compounds that are metabolized or that release the active drug within the body.Many prodrugs have become blockbusters because they can extend patent life, and the compounds can also solve long-standing problems known to exist with current therapies.In our case, cannabosides enable delivery directly to the site of disease, so much larger concentrations of cannabinoids can be delivered.This could enable us to maximize therapeutic effects, and at the same time reduce or avoid psychoactivity.

IMJ: The value of many pharmaceutical companies can be based on its intellectual property around the specific drugs they are bringing to market; Vitality does have a unique product offering and is seeking worldwide patent protection. Can you share some information on the intellectual property, why you believe it is patentable and what it could mean for the company if the patents are accepted?

RB: In 2015, the company discovered that its glycosylation platform could create a novel class of compounds known as cannabosides, and through that work we produced more than 20 novel cannabinoid pharmaceuticals. Because these prodrug compounds do not normally exist in nature, unlike THC and CBD, they are eligible for patent protection.So the company has filed for broad intellectual property coverage including composition of matter claims, which is generally recognized as the strongest type of intellectual property coverage that can be obtained within the pharmaceutical industry. Coverage for the company would extend to 2035 or beyond, and we’re currently pursuing protection in all major markets worldwide. 

IMJ: On December 21, 2016, the company received DEA and California Research Advisory Panel approval to permit the company to scale up research. This is a unique milestone for the company as there are only a few companies authorized and licensed to do so. Who are the other companies that are similarly licensed, what are they focused on researching and how is Vitality differentiated from them?

RB:  GW Pharmaceuticals (NASDAQ:GWPH) has been active in this field for about 18 years, and they are developing pharmaceutical-grade cannabis extracts. They were the “first-mover” and the entire industry has them to thank for pioneering work they’ve done proving the benefits of cannabis for pain and other disease indications. 

They were the company that demonstrated in a rigorous randomized trial the benefits of non-psychoactive CBD for the treatment of pediatric epilepsy.This was a pivotal moment that convinced many in the medical community that cannabinoids were here to stay, and that their benefits could be dramatic. 

Another cannabinoid pharmaceutical company is Zynerba Pharmaceuticals (NASDAQ:ZYNE), who is developing topical or transdermal cannabinoid formulations of both THC and CBD.These topical cannabinoids could be useful especially for targeted or localized relief of muscle or joint pain, and they are targeting indications such as osteoarthritis and fibromyalgia. 

Our drug development program is somewhat analogous to this, as we’ve developed a prodrug technology that enables targeted or localized delivery. But because our prodrugs are designed to reduce or avoid the psychoactivity of THC and other cannabinoids, our technology is quite different from anyone else. We’ve created a way to target, coat and cool the intestines with cannabinoids, which are known to have potent pain relief and anti-inflammatory effects. 

While we’re technically operating in the same industry segment as GW Pharma and Zynerba Pharmaceuticals, as a developer of cannabis pharmaceuticals, we’re each targeting fairly unique patient populations and therapeutic applications. 

IMJ: The process of clinical trials and bringing a drug to market can be cumbersome and very expensive with no guarantees of getting FDA approval on the final drug. Can you tell us about the unique challenges of bringing cannabis based drugs to market, where you are in terms of the clinical trial (past, present and future) and any guidance on milestones you are looking to complete over the next year and beyond?

RB: A significant obstacle for new entrants is adhering to DEA controlled substance regulations. We’ve made significant progress on that front with their recent approval of our R&D facilities. 

The FDA is concerned primarily with drug safety and efficacy, and with cannabinoids we benefit from the fact that there is a wealth of clinical data available that testifies to both their safety and therapeutic effects. For example, there are dozens of scientific papers and even clinical studies that already make a strong case for why cannabis should be developed for our lead drug indication, IBD. We can reference this scientific data in discussions with the FDA and other regulators, and it will help expedite our path into the clinic and towards eventual drug approvals.

In late 2017, we plan to initiate Phase 1 trials of our compounds, which will be a major milestone for our program. Prior to initiating this work, we will also complete and announce results of related preclinical studies, including toxicology and efficacy studies using our cannaboside drug formulation VB100. We will also complete manufacturing scale-up to enable clinical-grade production of our compounds.

Our Phase 1 trials are intended to demonstrate primarily safety, but we plan to soon after initiate Phase 2 trials where we will seek to demonstrate the effectiveness of cannabosides for treatment of IBD and also narcotic bowel syndrome (NBS), a severe form of opiate-induced abdominal pain. We are targeting acute treatment of these disorders. For IBD, this means inducing remission within as few as 8 weeks, as has been demonstrated already in independently-conducted placebo-controlled clinical trials using cannabis. 

There is less regulatory burden for acute treatments, and they require much shorter Phase 2 trial designs, so this approach can greatly reduce the overall cost and time required for drug development.

IMJ: While many States have legalized medical marijuana, at the federal level the substance still remains a Schedule I drug. Getting DEA approval for research is a step in the right direction, however pharmaceutical companies in the U.S. are still having to deal with a regulatory framework that is not cannabis drug friendly, especially compared to companies in Canada where medical marijuana is highly accepted.  What challenges do you see as a pharmaceutical company trying to bring a cannabis based drug to market in the U.S.? What are the advantages and how is Vitality positioned to excel in bringing a pharma-based drug to market in the U.S.?

RB: In the U.S., the DEA and the FDA of course remain the key regulatory enforcement agencies. In an environment where federal cannabis legalization is unlikely to occur anytime soon, it seems clear that for many years, possibly decades, it will be lucrative to market and sell pharmaceutical versions within the U.S. market. 

In many ways, I see our company’s drug development programs evolving in a similar way to how CBD has emerged as a very exciting new treatment for pediatric epilepsy. Many hardly remember how deeply skeptical some in the medical community were only a couple of years ago about CBD, but the clinical data now is overwhelming. It has clear therapeutic effects and there’s nothing controversial about it because CBD isn’t psychoactive. It’s a great combination.

IMJ: At Invest In MJ, we like to pay attention to a few financial metrics when looking at a company for potential investment. Can you provide us details on the company share structure and owners, past and future financing, current market cap and cash on hand/burn rate.

RB: The company has raised more than $8 million since inception, which has supported development of our proprietary glycosylation platform and internal manufacturing capabilities. We have a relatively small staff of 7 employees, including 2 PhD-level scientists and 4 MS-level researchers, with R&D expenses and corporate overhead of approximately $2 million annually. Our market cap is $40 million and we are currently publicly traded on the OTC bulletin board. Given the milestones on the horizon for our company, we expect to raise additional financing in 2017 that will support clinical development. 

IMJ: Investors are always interested in know the upside potential on their investment and the risks involved with the company. In your opinion, what makes Vitality a good investment opportunity at this time and what are the potential risks?

RB: Vitality is one of the few cannabinoid pharmaceutical companies that is properly licensed in the U.S. We also have a very clear therapeutic application – we are treating IBD and other large market indications with cannabinoid prodrugs that could reduce or eliminate their psychoactivity. 

Independently-conducted clinical trials have already shown that an 8-week cannabis treatment was able to induce remission in almost half of Crohn’s disease patients, including patients that failed frontline therapies. Some patients in the trial were able to wean themselves off both corticosteroids and opiates. In a disease with no cure and where about 75% of patients will be forced to endure surgery, there is a strong demand for alternatives, and it’s easy to see why patients and physicians are excited about cannabinoids.

We are still an early-stage venture, so many of the typical risks apply. Our public filings provide a pretty good discussion of the regulatory and financing risks that are inherent to drug development companies. As a former healthcare investor turned entrepreneur, I really value a team’s track record, and believe our team has a strong one. We continue to prove we’re able to persevere and to execute through achieving milestones like our recent DEA approval. Another critical element is proving your team can build value within the highly competitive and lucrative pharmaceutical industry. Again, over the last year, we’ve made great strides. We developed novel cannabinoid pharmaceutical IP, all through R&D work conducted internally, and now based on these discoveries Vitality could achieve patent protection in all major markets through 2035. It’s a very desirable position for a company within this field.

IMJ Summary: Thank you Robert for taking the time to speak with us and sharing your company’s story. We at Invest In MJ enjoy seeking out unique companies in the emerging cannabis industry and speaking to management to gain a sense of the company’s prospects and potential for success. 

While we are not medical experts in providing analysis and opinions on the potential benefits of cannabis based drugs (we leave that to the medical community to determine), obviously companies like Vitality have the right management, expertise and a pipeline of potential drugs that may help with certain ailments. We do feel Vitality is moving in the right direction in terms of their niche pharmaceutical approach to creating and delivering targeted drugs, an area that they clearly have expertise in.  

With an experienced management team and unique cannabis based drugs and targeted delivery system, the company is definitely worth paying attention to. They have the potential to be one of the leading pharmaceutical companies that can bring cannabis based drugs to market in the future. We look forward to continually following the company’s progress and providing further research and reports over the coming years to the marijuana investment community.