Kalytera Therapeutics, Inc. (TSX VENTURE: KALY and OTCQB: KALTF) (the “Company” or “Kalytera”) today provided an update on its lead product development program evaluating cannabidiol (“CBD”) for the prevention and treatment of acute graft versus host disease (“GVHD”).

GVHD is a life-threatening complication commonly occurring after bone marrow transplant procedures. GVHD occurs when the transplanted donor cells attack the patient’s organs, including the skin, GI tract, liver, lungs, and eyes. GVHD is associated with acute and chronic illness, infections, disability, reduced quality of life, and death.

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 an unrelated donor, will develop some level of GVHD. There are currently no FDA approved therapies for either the prevention or treatment of acute GVHD.

CBD is a non-psychotropic ingredient of cannabis that does not cause euphoria or cognitive effects. The formulation of CBD that Kalytera is evaluating for the prevention and treatment of acute GVHD is a proprietary formulation that is designed to improve product stability and absorption after oral dosing.

Kalytera’s Two Separate Programs in GVHD

The work that Kalytera is doing in GVHD consists of two separate product development programs: a program evaluating CBD for the prevention of acute GVHD; and a separate program evaluating CBD for the treatment of acute GVHD. Although there is some overlap between the two programs in terms of the data that will be required for FDA registration and marketing approval, the Phase 2 and Phase 3 clinical studies for each of these two programs will be separate and distinct.

The Company’s program in prevention of acute GVHD is more advanced than is the program in treatment of acute GVHD. The prevention program is currently in Phase 2 clinical testing, with an ongoing study enrolling patients at three clinical sites in Israel. To expedite the enrollment process, Kalytera is expanding this study to include one additional site in Israel, and up to four additional sites in other jurisdictions, including Australia. Upon completion of this Phase 2 clinical study, the Company will begin preparations for the pivotal Phase 3 clinical study that will be required for approval.

“We believe the best strategy for building shareholder value will be to advance our programs in GVHD to Phase 3 status. We will be able to initiate the Phase 3 pivotal registration study in prevention of acute GVHD ahead of the Phase 3 study in treatment of acute GVHD, and, for this reason, we will prioritize the program in prevention of acute GVHD over the companion program in treatment of acute GVHD,” said Robert Farrell, President and CEO of Kalytera. “We expect to initiate the Phase 3 clinical study in prevention of acute GVHD within the next 12 months. Our plans for this program are as follows: (1) we plan to announce interim data from the ongoing Phase 2 study later this year; (2) we will complete the Phase 2 study in Q2 2019; and (3) we plan to initiate the Phase 3 clinical study during Q3 2019. We have also begun the process of seeking corporate partnering opportunities for both of our GVHD programs. The objective of such a partnership will be to provide a non-dilutive source of funding for the programs, as well as future revenue through licensing fees, milestone payments and royalties.”

Prior to the ongoing Phase 2 clinical study in prevention of acute GVHD, two Phase 2a clinical studies were completed evaluating CBD in the prevention of GVHD. Data from both of these clinical studies were positive and highly encouraging. Dr. Moshe Yeshurun, Kalytera’s Chief Medical Officer, was the Principal Investigator for both of these studies, which were conducted at the Institute of Hematology, Davidoff Center, Rabin Medical Center, Petah Tikva, Israel. These studies were carried out by Dr. Yeshurun prior to the date he joined the Company, and the Company subsequently acquired the relevant technology through its acquisition of Talent Biotechs Ltd. in February 2017.

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).

As previously announced, the data from this study, in which 48 patients received daily doses of 150 mg of CBD administered twice daily for 7 days prior to the bone marrow transplant procedure and for 30 days after, demonstrated the following results:

No patients developed acute GVHD while being treated with CBD;

The rates of grades 2-4 acute GVHD by day 100 were 12.1%, compared with 46% in a group of all 101 hematopoietic stem cell transplant recipients who received standard GVHD prophylaxis at the same institution in Israel (the Institute of Hematology, Davidoff Center, Rabin Medical Center at Beilinson Hospital) directly prior to the onset of this study; and

CBD was found to be safe and well tolerated

Kalytera also previously announced the results from the second of the two prior clinical studies, in which 12 patients were administered CBD at a dose of 150 mg administered twice daily from 7 days prior to the bone marrow transplant procedure until up to 100-days post transplantation. In that study, no safety issues were observed, and only 15% of patients in the CBD treatment group developed grades 2-4 acute GVHD, compared to a 46% incidence at the same institution in the historical group of 101 patients described above.

On July 31, the Company met with the United States Food & Drug Administration (“FDA”). In accordance with the guidance received from the FDA, the Company plans to initiate two clinical studies in healthy volunteers this year. These studies will assess certain safety and laboratory parameters of CBD, including the effect of food intake on the absorption of oral CBD and the interaction of CBD with certain anti-fungal drugs. These studies will be conducted in parallel with the company’s ongoing Phase 2 clinical study in prevention of GVHD, and the data from these studies will be required by the FDA for both the Company’s prevention and treatment programs.

“Acute GVHD is a severe complication of bone marrow transplant procedures that can lead to permanent impairment of quality of life and even death,” said Robert Farrell, President and CEO of Kalytera. “With no FDA approved therapy for the prevention of acute GVHD, there exists an important unmet medical need that we believe we can address. Based on the positive and encouraging results from the two prior Phase 2a clinical studies in prevention of GVHD, we are optimistic that our CBD product will address this unmet need, and will be demonstrated to be a safe and effective means to prevent the onset of acute GVHD.”

The commercial opportunity for Kalytera’s CBD products for the prevention and treatment of GVHD is large. According to the January 2018 Market Forecast Report by DelveInsight Perspective, the potential market for a successful product for prevention and treatment of GVHD in the 7 major jurisdictions (the U.S., Germany, France, Italy, Spain, the U.K. and Japan) is estimated to be more than USD $408 million in 2018, and could grow to approximately USD $1.3 billion by 2027.

If Kalytera’s CBD products are approved for the prevention and/or treatment of acute GVHD, the Company believes that, given the severe and life-threatening nature of this disorder, treating physicians would not be expected to prescribe anything other than the Company’s approved formulation of CBD (rather than non-approved CBD that might be available online or from other commercial sources).

Kalytera is the exclusive licensee of two issued U.S. patents covering the use of CBD in the prevention and treatment of 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 GVHD. In addition to these patents and patent applications, the Company has also obtained four orphan drug designations for the treatment and prevention of GVHD in the U.S. and Europe. Such orphan drug designations will provide 7-years of market exclusivity in the U.S., and 10-years of market exclusivity in the E.U., upon regulatory approval of the Company’s CBD products for the prevention and/or treatment of acute GVHD.

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