Rising High: Exclusive talk with pharmaceutical company Artelo Biosciences

In this edition of “Rising High,” The Fly conducted an exclusive interview with Gregory D. Gorgas, President and CEO of Artelo Biosciences (ARTL), a clinical-stage pharmaceutical company focused on the development of therapeutics that modulate lipid-signaling pathways, including the endocannabinoid system. Here are some highlights:

ECS MODIFICATION: Artelo, founded in 2017, is advancing a portfolio of product candidates designed to address significant unmet needs in multiple diseases and conditions, including anorexia, cancer, anxiety, pain, neuropathy and inflammation. “The endocannabinoid system is the system of receptors and neurotransmitters that form one of the largest biochemical communication networks throughout our bodies,” Gorgas said. “We founded this company on the belief that modulating the ECS holds a treasure trove of drug development opportunity that is largely overlooked.” The National Institutes of Health has indicated that there are numerous diseases that are impacted by the system, he said, and modulating it holds a tremendous promise. “The possibilities of that are very rich and very attractive to us,” Gorgas said. “All our assets are covered by a very strong patent estate, aim to address significant healthcare needs and have blockbuster potential in billion-dollar markets. This makes us unique among the companies that are focusing on prescription-based ECS-modulating drugs.”

He noted Artelo has also assembled a top-tier team of internal staff and external consultants with expertise in the ECS. “Our Chief Medical Officer is Dr. Andy Yates, who has his PhD in cannabinoid pharmacology,” Gorgas said. “He is also a registered pharmacist in the UK and a pharmacy advisor to the Centre for Medicinal Cannabis. We also have as our Vice President of Translational Sciences, Professor Saoirse O’Sullivan, who was at the University of Nottingham, a center of excellence for cannabinoid research.”

ART12.11: In June, Artelo announced the company would present results from preclinical studies with ART12.11 in stress-induced anxiety and depression at the International Cannabinoid Research Society Symposium, being held June 24 to June 29. “ART12.11 is our unique cocrystal form of cannabidiol and is a more elegant pharmaceutical preparation,” Gorgas said. “We received two patents for the uniqueness of this in early 2020 at the beginning of COVID. We know CBD is FDA-approved in the form of Epidiolex and the question we asked at Artelo was, ‘Can we improve on mother nature?'” He said Artelo believes the answer is yes, but until the pharmacokinetics and behavioral study data is formally presented on June 25, there is not much more he can share. “The data is very positive and exceeded even the company’s own high expectations,” Gorgas said. “The data is consistent among multiple contract research organizations, who performed PK studies with two different batches of ART12.11, made from two different sources of CBD and manufactured at two different contract development and manufacturing organizations. The results are consistent.”

The data speaks to the robustness of Artelo’s manufacturing process, he said. “The behavioral test data suggests we may have a potential ‘best-in-class’ asset,” Gorgas said. “I don’t say that lightly and I am excited for that data to be presented. We are dedicated to teasing out that question to determine if that is really a fact as the data certainly looks very promising at this stage.” He also noted that the safety profile of CBD and the coformer to Artelo’s cocrystal tetramethylpyrazine (TMP) are well characterized, as TMP is a food flavoring approved in Europe. “We’re examining ways to accelerate the development of ART12.11 and trying to get it into the clinic as soon as possible,” Gorgas said.

ART27.13: In April, Artelo initiated the Phase 2a portion of its Cancer Appetite Recovery Study, or CAReS, of ART27.13 in cancer-related anorexia and weight loss. “It’s no secret cancer patients lose a lot of weight,” Gorgas said. “Anyone that has been around in the last 10 years has seen Patrick Swayze or more recently, Steve Jobs, pass away with a cancer diagnosis. These are public figures and they saw a tremendous weight loss.” That is actually very common in cancer patients, he said, and up to half of cancer deaths are associated with malnutrition. “The loss of weight and appetite eventually leads to loss of life itself,” Gorgas said. “There are no FDA-approved treatments indicated for the treatment of cancer-related weight loss.”

Artelo is currently enrolling in the second phase of CAReS, after evaluating 90 days of treatment with ART27.13 given orally once a day in the Phase 1 portion, he said. “In Phase 1 we examined four different dose levels to determine the dose to move into Phase 2,” Gorgas said. “Now that we are in Phase 2, we are comparing patients that are receiving our drug with patients that receive a placebo. Then we can measure the delta between and the results on things like lean body mass, weight gain, quality of life, appetite and activity. “

He added patient’s activities will be measured via a wearable watch-type device and Artelo hopes those receiving ART27.13 will have better outcomes than those on the placebo. “We are very excited and that is what we are aiming to see out of this Phase 2 study,” Gorgas said. “ART27.13 is a full agonist, unlike THC, which is a partial agonist. It is an on switch for the CB1 and CB2 receptors, but it doesn’t come out of cannabis and the unique feature of it is that it delivers the hunger without the high.” He said the asset was designed to preferentially be in the peripheral tissues and avoid the central nervous system, as many cancer patients aren’t looking for an effect from the brain. “They’re just looking for appetite restoration and that’s what our drug aims to do,” Gorgas said. “We are on track to complete enrollment in the middle of 2024. We’re tripling the number of clinical sites in Phase 2 and that should aid in our enrollment.”

ART26.12: Artelo also has ART26.12 under preclinical development for chemotherapy-induced peripheral neuropathy, various cancers and anxiety disorders. “We expect FDA feedback by the end of July on ART26.12 development in nerve pain and specifically CIPN,” Gorgas said. “ART26.12 is our leading candidate drug in the prevention and treatment of CIPN, a very painful side effect of many forms of chemotherapy.” He noted CIPN is dose-limiting, meaning patients are not able to receive continued treatments for their cancer. “ART26.12 is our leading candidate out of the family of assets that we have called Fatty Acid Binding Protein inhibitors,” Gorgas said. “Inhibiting this protein, FABP, is an alternative strategy for modulating the ECS and other fatty acid signaling systems. We’ve seen it have very interesting results in both diabetic neuropathy and CIPN.”

Artelo will share some positive pre-clinical data on ART26.12 in diabetic neuropathy in a poster presentation at ICRS, he said. “We’re very excited about this program,” Gorgas said. “We licensed it from Stony Brook University and we have full worldwide exclusive rights to almost 100 different chemistries within the library of fatty acid binding protein inhibitors.”

EARNINGS: In May, Artelo reported first quarter loss per share of 76c, which compared to loss per share of 70c for the same period last year, as well as $15.5M in cash and investments. “Last year, we spent about $8M and if that was flat moving forward you could project what $15.5M in cash and cash equivalents would get us,” Gorgas said. “Our current burn has been between $2M-$2.5M per quarter, so compared to a lot of companies we have a pretty decent runway.” He said Q1 results signaled the company does not have an immediate need to raise capital and there are significant near-term value inflection points on the horizon. “We continue to have the majority of the company’s assets dedicated towards science and investment in data,” Gorgas said. “Hopefully, this will bring us higher inflection points as the programs mature.”

Expenses will increase as Artelo moves assets into the clinic, he said, but it will be based on creating more value for the company. “We’re going to be in a better position at the end of Phase 2 with ART27.13, or once we are in the clinic with ART26.12 or ART12.11, to engage in either outlicensing, partnering or developing the assets ourselves as they get on the next rung of the ladder,” Gorgas said.

LEGALIZATION: When asked about expectations on federal cannabis reform, Gorgas said Artelo has a very clear path for development regardless of U.S. legalization. “That is one of the advantages of being a drug development company,” he said. “If you think about GW Pharmaceuticals, which was purchased for $7.2B by Jazz Pharmaceuticals (JAZZ), with a drug called Epidiolex, we are following directly in that pathway.”

The CEO added the Drug Enforcement Administration had to change the scheduling status of CBD for Epidiolex, leading to it being taken completely off the schedule. “That’s the pathway we’re on and federal legalization would have very little impact on our particular aspect of the cannabis industry,” he said.

SAFE BANKING: In April, Oregon’s U.S. Senator Jeff Merkley along with Montana’s U.S. Senator Steve Daines introduced the bipartisan Secure and Fair Enforcement Banking Act of 2023, which looks to ensure that legal cannabis businesses have access to critical banking and financial services. “I believe that that would have a positive impact on the state-legal businesses by welcoming them into the banking industry,” Gorgas said. “Like every other legal business, they would be able to secure loans and have insured deposits.”

He stated Artelo has been banking at an FDIC federally insured bank since its outset and therefore will not be impacted by the SAFE Banking Act. “That is one advantage to companies like Artelo,” Gorgas said. “By the virtue of the regulated drug development pathway, our risk profile in banking is much different than other companies in the sector.”

CHALLENGES: When asked about the largest hurdles facing the cannabis space, Gorgas said most people might think about regulation, legalization and banking, but he takes a slightly different view. “The biggest real long-term challenges are not those, because those are being addressed rather quickly,” he said. “For me, it’s evidence. It’s the ability to make claims about your assets and the consistency of delivering the same product day in and day out for the consumer.” The CEO said he believes Artelo plays a leadership role in this area as the company is consistently focused on evidence generation. “CBD and THC will always have their uses, but we believe we can take and improve upon what Mother Nature made,” he said. “For example, it’s widely known that CBD has more bioavailability, its melting point is rather low and it’s hard to make into a solid dosage form with consistency. We found a solution to that in our cocrystal of CBD. These things take time, but we expect in the long run they will be winners.”

OPPORTUNITIES: As the cannabis sector develops, Gorgas said he sees the biggest opportunities in moving up the value chain. “There are barriers of entry for production, but it all comes down to price, distribution and promotion with consumer products,” he said. “What we’re most excited about is companies like Artelo moving up the value chain to really create a tremendous amount of evidence for the medicinal use of chemicals that the plant makes or we can make and improve upon.” Artelo sees potential impact for many diseases for which there are no solutions, Gorgas said, and will look to improve on current drugs that might not be meeting the needs of patients. “For investors, the questions to ask are, ‘Where is the real growth coming from and where is real innovation taking place?'” he said. “Artelo is very well-positioned with the depth and breadth of our science, with either best-in-class or first-in-class assets that look very promising.”

He added the pharmaceutical space is currently experiencing a unique time and Artelo is trading at about one-third of its cash position as far as market capitalization. “However, we have a solid balance sheet, a great team and some strong science,” Gorgas said. “We offer investors a unique opportunity to invest in a cannabis-related industry in a sector that has the highest long-term growth potential.”

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Aleafia Health (ALEAF), Acreage (ACRHF), Atai Life Science (ATAI), Audacious (AUSAF), Aurora Cannabis (ACB), Avant Brands (AVTBF), Awakn Life Sciences (AWKNF), Ayr Wellness (AYRWF), Body and Mind (BMMJ), BZAM (BZAMF), Cannara Biotech (LOVFF), Canopy Growth (CGC), Chicago Atlantic (REFI), Clever Leaves (CLVR), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), Columbia Care (CCHWF), Compass Pathways (CMPS), Curaleaf (CURLF), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Fire & Flower (FFLWF), Flora Growth (FLGC), General Cannabis (CANN), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Goodness Growth (GDNSF), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), InterCure (INCR), IM Cannabis (IMCC), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm Labs (MEDIF), MedMen (MMNFF), NewLake Capital (NLCP) Organigram (OGI), Planet 13 (PLNHF), Reunion Neuroscience (REUN), Revitalist (RVLWF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Safe Harbor (SHFS), Small Pharma (DMTTF), SNDL (SNDL), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Tryp Therapeutics (TRYPF), Verano (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).