Pot Firm Finds Sweet Spot

0

Vitality Biopharma Inc. once worked to improve the taste and global supply of stevia, a sugar substitute.

But the company has found a sweeter product to pitch to investors: pharmaceuticals derived from cannabis.

The company, which was originally called Stevia First Corp. and based outside of Sacramento, discovered a key stevia enzyme that could lead to a range of cannabis-derived drugs for serious neurological and inflammatory disorders, without the high associated with marijuana.

Armed with the info, the firm moved its headquarters to Century City two years ago, changed its name to Vitality Biopharma and pivoted toward pot.

“Our biosynthesis platform was more useful than anyone realized,” said Robert Brooke, Vitality Biopharma’s co-founder and chief executive. “We could not only improve the quality of stevia compounds, but also cannabinoids.

“The work that we’re doing with pharmaceuticals is far more lucrative,” Brooke added.

Vitality Bio has a pipeline of cannabinoid pharmaceuticals geared toward treating painful gastrointestinal disorders. Clinical trials are expected to begin early next year.

The company also closed an $8.5 million raise last month with warrants that give investors the right to contribute another $17 million in exchange for more company equity.

The company also pulled off an all-stock purchase in October of Control Center, a pain treatment clinic based in Beverly Hills that includes cannabinoid therapy to wean patients off of addictive opioids.

“Our latest funding round will take us to a whole new level,” said Brooke, who declined to name his biggest investors.

Emerging market

The emerging market for cannabinoid pharmaceuticals hit a milestone in June when the U.S. Food and Drug Administration approved the first drug derived from marijuana.

GW Pharmaceuticals, a drug-maker based in the United Kingdom, launched Epidiolex, made from cannabidiol oil (CBD), a nonpsychotropic component of cannabis sativa, to treat two rare forms of epilepsy in newborns.

As Canada and a growing number of states – 10 plus Washington, D.C. – legalize the sale of recreational marijuana, biotech firms are rushing into the space, hoping to realize cannabinoid medical breakthroughs.

Arena Pharmaceuticals Inc., a biotech company based in San Diego, is testing a cannabinoid drug for patients with Crohn’s disease, a chronic ailment that affects the digestive tract.

Other U.S. cannabinoid-based drug companies include Zynerba Pharmaceuticals Inc., of Devon, Pa., and Corbus Pharmaceuticals Inc., of Norwood, Mass.

Even Big Pharma is getting into the cannabinoid game. Sandoz Canada, a subsidiary of Swiss-based Novartis International that manufactures generic and biosimilar drugs, signed a deal with Canada’s Tilray Inc. on Dec. 18 to distribute nonsmokable medical cannabis products.

Jonathan Vaught helped found Front Range Biosciences Inc., an agricultural biotech company north of Denver that specializes in tissue culture and breeding high-value crops such as hemp, cannabis and coffee.

Vaught, the founder of numerous biotech firms also spoke at a UCLA conference on medical cannabis in October, where he met Brandon Zipp, the co-founder of Vitality Biopharma and director of its research and development program.

Vaught said cannabis-based compounds may be developed to treat a broad spectrum of illnesses, from neurologic pain to seizure disorders, anxiety and depression. Cannabinoids can also be developed into food additives, dietary supplements and even a “super food.”

“Cannabinoid-based therapy has a stigma attached,” Vaught, chief executive of Lafayette, Colo-based Front Range, said. “But (the stigma is) definitely being removed and opens the doors to lots of pharmaceutical companies to focus on cannabis-based therapies.

“What Vitality is doing is innovative: You find some cool small molecules,” he said. “You get brand new chemicals from that. And you find new ways to achieve a desired effect. It’s an exciting time.”

Local ties

Vitality Biopharma was originally formed in 2012 as Stevia First in Yuba City. It employed eight full-time researchers on a 10-acre site with labs, greenhouses and farm fields. In 2015, it discovered a new class of cannabinoid molecules.

The next year it changed its name, announced a 1-for-10 reverse stock split, and moved its headquarters to Los Angeles.

Brooke, who earned a graduate degree in biomedical engineering from UCLA, has other local biotech ventures, including Intervene Immune Inc., a nonprofit biotech company based in Manhattan Beach where he is chief executive.

Vitality Pharma employs 18 people, including the eight researchers in Northern California operating with full federal compliance to manufacture cannabis-based drugs, and 10 employees at the Vitality Healthtech treatment center in Beverly Hills to reduce opioid dependence.

Vitality Biopharma, which trades over the counter under the VBIO ticker, lost nearly $2.4 million in the six months ended Sept. 30, according to a filing with the Securities and Exchange Commission. Shares in the publicly traded company have plunged 65 percent from a year ago to around $0.60 in mid-December.

The $8.5 million in financing will support the company until at least 2020, according to the company’s third quarter report filed with the SEC.

Brooke said he expects company research to create better alternatives to opioid painkillers.

No posts to display