Kalytera Therapeutics, Inc. (TSXV:KLY, OTCQB:KALTF) (the “Company” or “Kalytera”) today announced that interim results from the Company’s Phase 2 clinical study evaluating cannabidiol (“CBD”) for the prevention of acute graft versus host disease (“GVHD”) are significantly positive, and, as a result, the Company will not enroll the high dose cohort in its ongoing Phase 2 study, but will instead proceed directly to initiate a Phase 3 clinical registration study.

Significance of Phase 2 Data in Prevention of Acute GVHD
The Company’s Phase 2 clinical study was designed in accordance with input received from the U.S. FDA. The study is fully GCP compliant. The CBD drug utilized in the study was produced in full compliance with GMP guidelines, and the analyses of samples from the study have been performed using validated methods in a fully compliant GLP facility.

The Phase 2 study is focused on the most difficult of all patients at risk for acute GVHD: those receiving bone marrow transplants from matched unrelated donors. Because of the inherent differences between unrelated individuals, patients receiving bone marrow transplants from matched unrelated donors experience an incidence of grades 2-4 acute GVHD in the range of 60% – 70%. This level of disease is profoundly significant: in fact, in patients with grades 3 and 4 acute GVHD the mortality rate in the first several months after diagnosis is greater than 70% (for grade 3) and more than 95% (for grade 4). Prevention of acute GVHD is accordingly a significant unmet medical need, and a major goal of modern bone marrow transplantation medicine.

In the Company’s Phase 2 study, the incidence of grades 2-4 acute GVHD observed to date in the low dose and medium dose cohorts are much lower than historic norms. Only 1 of 12 patients in the low dose cohort (8%) developed grade 2-4 acute GVHD after 180 days of observation, and in the medium dose cohort, no patients to date have developed grades 2-4 acute GVHD. The Company believes that these results are unprecedented, highly significant, and could signal a paradigm shift in the treatment of bone marrow transplant patients. The Company plans to submit these data, along with findings on the mechanism of action of CBD in the prevention and treatment of acute GVHD, for presentation at upcoming scientific meetings and for publication.

“We are very pleased and encouraged by these excellent results,” stated Robert Farrell, President and CEO of Kalytera. “Earlier this year, we announced positive interim results from the first (low dose) cohort. We did not expect the results from the low dose cohort to be as positive as they were, and now we have interim results from the medium dose cohort that are equally as good.”

Mr. Farrell continued, “We believe the data to date in our Phase 2 study exceed what will be required in a Phase 3 registration study to demonstrate the efficacy of CDB in prevention of acute GVHD, and leave little or no room for improvement with the high dose. For this reason, and because these results are consistent with results from two previous clinical studies conducted in Israel, we have decided to halt the ongoing Phase 2 clinical study without enrolling the high dose cohort, and proceed directly to initiate a Phase 3 clinical registration study.”

Phase 3 Clinical Study Design
Kalytera has retained expert bio-statistical consultants to assist with the Phase 3 study design. They have advised that, based on the highly significant reduction in the incidence of acute GVHD seen to date in the Phase 2 study results, the number of subjects in the Phase 3 study can be greatly reduced from what had previously been assumed.

Because the effect of CBD in the Phase 2 study was so pronounced, with a reduction in the incidence of acute GVHD from a historic norm of 60% – 70% in patients receiving bone marrow transplants from matched unrelated donors to less than 10%, the Phase 3 study can be powered with a two-tailed p-value of less than 0.01 and a statistical power of 90% with no more than 50 subjects. This will allow the study to be completed within one year, and at much lower cost than had previously been assumed.

Principal elements of the Phase 3 study design will include the following:

  • A total of 50 subjects will be enrolled, including 25 patients receiving drug, and 25 placebo subjects
  • All subjects will receive either 150 mg of CBD or placebo twice daily for a total of approximately 100 days
  • The study will be a multi-center, multinational, randomized, double-blind, placebo controlled clinical trial that will be initiated at the same clinical sites in Israel and Australia where the Phase 2 clinical study is being conducted
  • The Company will subsequently expand the study to 1 or 2 additional sites in both the U.S. and E.U.
  • The duration of the study will be approximately12-months

Projected Timing for Approvals
The Company’s planned Phase 3 clinical study is designed as a pivotal registration study that will meet requirements for approval by regulatory agencies in the U.S., the E.U., and other jurisdictions. The study will take approximately 12-months to complete. Upon successful completion of the study, the Company expects to initially commercialize the drug in Israel and Australia, and then to expand commercialization to the U.S., the E.U., and other jurisdictions.

Israel and Australia were chosen as the initial jurisdictions in which to initiate the study due to the fact that the heterogeneous populations of each of these countries are similar to those in the U.S. and Europe, as well as due to the fact that the quality of medicine practiced at the selected clinical sites in both Israel and Australia are on par with those in the U.S. and E. U., and these sites are familiar with and supportive of the Company’s program in prevention of acute GVHD.

Pathway to Approval and Commercialization
The developmental and commercial pathways for the Company’s CBD product have been validated by the nearly identical CBD product, Epidiolex®, that was approved by the FDA last year. Epidiolex is owned by GW Pharmaceuticals Plc.

Epidiolex is CBD formulated in sesame seed oil. It is administered orally, and it is protected by issued method of use patents protecting the use of CBD in the treatment of seizures in juvenile epilepsy, which is an orphan indication with an unmet medical need. Similarly, Kalytera’s product is CBD formulated in olive oil. It is administered orally, and it is protected by issued method of use patents protecting the use of CBD in the prevention of acute GVHD, which is an orphan indications with an unmet medical need.

Because Kalytera’s product is intended to save lives by reducing life-threatening acute GVHD, and there are no alternative approved therapies on the market, the Company believes that the FDA and other regulatory bodies may consider its program with even greater urgency than that of Epidiolex.

The Company believes it is a leader in the development of CBD pharmaceuticals, second only to GW Pharmaceuticals.

Large Commercial Opportunity
The commercial opportunity for Kalytera’s CBD products for the prevention and treatment of acute GVHD is large. According to the January 2018 Market Forecast Report by DelveInsight Perspective, projected annual sales for prevention and treatment of GVHD in the 7 major markets (the U.S., Germany, France, Italy, Spain, the U.K., and Japan) were estimated to be more than USD $408 million in 2018, and could grow to approximately USD $1.3 billion by 2027.

Potential Out-License of GVHD Program to Corporate Partner
Kalytera has recently received unsolicited inquiries from companies interested in the commercial rights to Kalytera’s GVHD products. In response to these inquiries, the Company has engaged Echelon Wealth Partners to assist in managing the out-licensing process. Echelon will also assist in evaluating any consideration that may be received by Kalytera for such commercial rights, such as up-front license fees, and/or milestone payments and royalties.

“We will pursue a corporate partnering strategy for our GVHD program, primarily because this could be a source of non-dilutive financing for our planned Phase 3 study, as well as a source of potential revenues from up-front license fees, milestone payments and royalties,” stated Robert Farrell, President and CEO of Kalytera.

Phase 2 Study Data and Follow-up Data
No patients in the low dose cohort developed grades 3 or 4 acute GVHD while receiving oral CBD treatment, and only one patient developed grade 2 acute GVHD, the least serious form of the disease. Furthermore, no patients at all in the medium dose cohort have developed grades 2-4 acute GVHD.

In addition, the Company now has 180-day follow-up data on all patients in the low dose cohort that reaffirm the potential efficacy of CBD in prevention of GVHD and the durability of this effect. All patients were followed for an additional period of 80 days beyond cessation of CBD treatment at day-100. No patient developed acute GVHD during the follow-up period, and no patient experienced a cancer relapse during the follow-up period.

These follow-up data are highly significant. Most patients who develop acute GVHD do so within the first 30 days following their bone marrow transplant. Some patients may still develop acute GVHD during the 100-day period following their bone marrow transplant, but it is less likely that a patient will develop acute GVHD beyond the 100-day mark.

Phase 2 Results Consistent with Results From Previous Studies in 60 Patients
The Phase 2 data are consistent with, and confirm, the earlier data from 2 previous clinical studies conducted in Israel in a total of 60 patients by Dr. Moshe Yeshurun, Kalytera’s Chief Medical Officer. These 2 previous studies were conducted at the Institute of Hematology, Davidoff Center, Rabin Medical Center, Petah Tikva, Israel. The results from the first of these clinical studies were published in Biology of Blood and Marrow Transplantation (Cannabidiol for the Prevention of Graft-versus-Host-Disease after Allogeneic Hematopoietic Cell Transplantation: Results of a Phase II Study, M. Yeshurun et al. / Biology Blood Marrow Transplant 21 (2015) 1770 – 1775).

Including the 2 previous studies performed in Israel by Dr. Yeshurun, more than 80 patients have now been studied, with the following results:

  • In the first Israeli study, 48 patients were enrolled, and no patients developed grades 2-4 acute GVHD while receiving CBD
  • In the second Israeli study, 12 patients were enrolled, and 2 patients developed grades 2-4 acute GVHD while receiving CBD
  • In the low dose cohort of the Company’s Phase 2 study, only 1 patient of the 12 patients enrolled developed grade 2 acute GVHD while receiving CBD
  • In the medium dose cohort to date, no patients have developed grades 2-4 GVHD while receiving CBD

The Potential of CBD to Improve Outcomes in Bone Marrow Transplantations
Bone marrow transplantation procedures are among the most successful treatments available to patients with refractory, stage 4 blood cancers, such as lymphoma, leukemia, or multiple myeloma. This procedure is intended to cure these forms of cancer, and it has boosted survival rates from nearly zero to more than 85 percent for some blood cancers. However, patients receiving bone marrow transplants are at high risk of developing acute GVHD, a life-threatening complication that occurs when the transplanted donor cells attack the patient’s organs, including the skin, GI tract, liver, lungs, and eyes. There are currently no FDA approved therapies for the prevention of acute GVHD. Based on the excellent data observed to date in the clinical studies conducted by Kalytera and by Dr. Yeshurun in Israel, the Company believes that CBD has potential to become the first pharmaceutical approved for prevention of acute GVHD following bone marrow transplantation, which would give the Company first mover advantage in this commercial space.

Kalytera Has Conducted Extensive Research to Understand the Mechanism of Action of CBD in the Prevention of Acute GVHD
Kalytera operates a major research laboratory focused on understanding and identifying the activity of CBD and other cannabinoids in the amelioration and prevention of epithelial disease, such as intestinal, dermal, ocular, and hepatic inflammation in acute GVHD. Kalytera’s research has elucidated the basic mechanism of action of CBD in prevention of acute GVHD, and this has led to other important discoveries for which Kalytera has filed additional patents.

Patients are at significant risk of developing acute GVHD following bone marrow transplantation. Acute GVHD is an immune disorder that occurs when immune cells from the bone marrow donor (known as the graft) attack or reject the organs and tissues of the patient (the host). It is estimated that up to 50% of patients who undergo a bone marrow transplant from a sibling donor, and up to 70% of patients who undergo a bone marrow transplant from a matched unrelated donor, will develop grades 2-4 acute GVHD.

Patients typically undergo a total body irradiation (“TBI”) procedure prior to their bone marrow transplant procedure. The TBI procedure damages the patient’s epithelial cells, including those that line the GI tract. This damage breaks down the tight junction barrier that healthy epithelial cells provide. This loss of barrier integrity predisposes the patient to infection and overwhelming sepsis (blood poisoning) as bacteria from the gut microbiome pass through the damaged epithelial cell barrier and enter the patient’s bloodstream. Damage to the epithelial cell lining of the GI tract is a serious and life-threatening comorbidity of acute GVHD, and sepsis is the main cause of death in patients with severe acute GVHD.

“An ideal preventive therapy for acute GVHD would act to both repair the damage to epithelial cells caused by the TBI procedure, and act as an immunosuppressant to suppress the attack by the donor’s immune cells against the patient’s organs and tissues. It is already well established that CBD acts as an immunosuppressant, and Kalytera’s research has now confirmed that CBD also acts through a distinct biological pathway to prevent and repair the damage to epithelial cells caused by the TBI procedure,” stated Robert Farrell, Kalytera’s President and CEO. “Our laboratory findings, as well as research done by others, demonstrate that CBD has this dual mechanism of action that could be ideal for prevention of acute GVHD.”

“Our work to understand and elucidate the mechanism of action of CBD in the prevention and treatment of GVHD has led to additional discoveries, including the fact that CBD administered together with certain bacterial metabolites is a potentially highly effective treatment for gastrointestinal diseases or disorders characterized by damage to the tight junction epithelial cell lining of the GI tract. We have filed a provisional patent covering this important discovery, and we intend to capitalize on this discovery through development of a second generation CBD product for the treatment of acute and chronic GVHD, as well as additional products in the treatment of inflammatory bowel diseases and other intestinal diseases,” stated Farrell.

Kalytera’s major research effort to discover the fundamental mechanism of action of CBD in prevention of GVHD has led to several other important discoveries relating to protein modulation that inhibits bacterial infection across the gut epithelial cell barrier. This research will be the subject of future patent applications and scientific research papers. Kalytera intends to maintain its scientific leadership in the field of CBD biology and to spin off its basic discoveries in the molecular pathway of CBD activity into improved therapeutic products for prevention and treatment of acute GVHD.

Kalytera’s Novel, Proprietary CBD Formulation for Prevention of GVHD
The CBD drug product that Kalytera is evaluating for prevention of GVHD is a novel and proprietary formulation designed to overcome issues of poor oral bioavailability and stability.

One of the principal obstacles to the development of CBD as an orally administered pharmaceutical is the poor oral bioavailability caused by first pass metabolism. First pass metabolism occurs when CBD is absorbed from the GI tract and is then delivered to the liver by the portal vein. A significant fraction of CBD is then metabolized in the liver before it reaches systemic circulation, thereby reducing the oral bioavailability of the drug.

To overcome this issue, Kalytera has successfully developed a novel oral formulation of CBD that is intended to by-pass first pass liver metabolism. Kalytera’s formulation is designed to allow CBD to be absorbed directly into the circulatory system through the ileal region of the small intestine, thus bypassing the liver and greatly enhancing the oral bioavailability of its CBD formulation.

CBD is also known to be chemically unstable, leading to drug degradation over time. Stability is a critical quality attribute directly linked to potency, purity, and safety, and therefore it was important that Kalytera find a way to overcome the instability of CBD during storage. The Company’s novel oral formulation is designed to overcome this important challenge, and this has been successfully demonstrated in stability studies conducted by the Company in an accredited GMP laboratory using fully compliant and validated GMP methods.

CBD is a non-psychotropic ingredient of cannabis that does not cause euphoria or cognitive effects. Kalytera is the exclusive licensee of two issued U.S. patents covering the use of CBD in the prevention and treatment of acute GVHD, and is also the exclusive licensee of pending patent applications in other jurisdictions for the use of CBD in the prevention and treatment of acute GVHD.

Generic Competition is Not a Threat
The Company believes that it will be able to successfully overcome the threat of competition from off-label, non-prescription, generic CBD for the following reasons:

  • Kalytera’s CBD product is protected by two issued U.S. patents it has licensed, which provide market exclusivity through approximately the year 2034. Kalytera has also applied for patents in the EU and other jurisdictions.
  • Kalytera has been granted orphan drug designation (“ODD Designation”) for its CBD product for the prevention of acute GVHD in both the U.S. and the EU. These ODD Designations will provide an additional form of market exclusivity: 7-years in the U.S. and 10-years in the EU.
  • Most importantly, patients who have undergone a bone marrow transplantation procedure from a matched unrelated donor are at extremely high risk of developing acute GVHD, which is a serious and immediate life-threatening disorder. These patients are kept in isolation in the bone marrow transplantation hospital ward, and it is thus obligatory in this setting for treating physicians to prescribe approved and registered medications. It is not conceivable that an unregulated form of CBD would be administered other than an approved formulation. Of secondary importance is the fact that in all jurisdictions where the Company intends to market its CBD product, neither private insurance nor government provided healthcare reimbursement would be available for non-prescription generic CBD.

Exclusive License Under Issued and Pending Patents
Kalytera is the exclusive licensee of two issued U.S. patents covering the use of CBD in the prevention and treatment of acute GVHD, and is also the exclusive licensee of pending patent applications in other jurisdictions for the use of CBD in the prevention and treatment of acute GVHD.

Breakthrough Therapy and Fast Track Designations
The U.S. FDA has recommended that Kalytera apply for both Breakthrough Therapy and Fast Track Designations for its CBD products for prevention and treatment of acute GVHD, each of which could accelerate the approval process for these products.

About Kalytera Therapeutics
Kalytera Therapeutics, Inc. is pioneering the development of CBD therapeutics. Through its proven leadership, the depth of its basic science research initiatives, its drug development expertise, and because of the breadth and strength of its intellectual property portfolio, Kalytera is a global leader in the development of CBD medicines for a range of important unmet medical needs, with an initial focus on GVHD and treatment of acute and chronic pain.

Website Home: https://kalytera.co/
News and Insights: https://kalytera.co/news/
Investors: https://kalytera.co/investors/

Cautionary Statements Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This press release may contain certain forward-looking information and statements (“forward- looking information”) within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation in respect of its product candidate pipeline, planned clinical trials, regulatory approval prospects, intellectual property objectives and other statements containing the words “believes”, “anticipates”, “plans”, “intends”, “will”, “should”, “expects”, “continue”, “estimate”, “forecasts” and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risk that future clinical studies may not proceed as expected or may produce unfavourable results. Kalytera undertakes no obligation to comment on analyses, expectations or statements made by third parties, its securities, or financial or operating results (as applicable). Although Kalytera believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond Kalytera’s control. The forward-looking information contained in this press release is expressly qualified by this cautionary statement and is made as of the date hereof. Kalytera disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.


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