This proxy contest offers a stark choice for Shareholders: risk further misadventure in the cannabis and psychedelics industry, or move forward as a specialty biotech pharmaceutical company that already has positive momentum. There are a number of avenues to significant Shareholder value creation under the current strategy.
The Company is pursuing multiple applications of its lead compound, FSD-201 ultra-micronized palmitoylethanolamide ("PEA"). Ultra-Micro PEA stabilizes mast cells and down-regulates the pro-inflammatory cytokines to effectuate an anti-inflammatory response; it is also known to target the CB2 receptors of the endocannabinoid system of the human body.
The Company has successfully completed Phase 1 first-in-human safety and tolerability study for FSD-201 and has found the compound to be safe with no serious adverse side effects. This study also validated considerable scientific literature already published in the European Union that claims safety and tolerability of micro-PEA. Since 2004, ultra-micro PEA has been dispensed in Italy and Spain as a prescription based medical food supplement.
In June 2020, the United States Food and Drug Administration (the "FDA") approved the submission of an Investigational New Drug Application ("IND") for the use of FSD-201 to treat COVID-19. In September 2020, a randomized, controlled, double-blind, multicenter Phase 2 clinical study was approved by the FDA and is currently underway and expected to cover 352 hospitalized COVID-19 patients, with patient enrollment steadily increasing.
In March 2021, the Company also announced that it had entered into a license agreement with Innovet Italia S.R.L. to use PEA to develop FDA approved veterinary drugs for the treatment of gastro-intestinal diseases in dogs and cats, a new and untapped market.
The Company has a letter of intent in place to acquire a controlling interest in a late stage asset that is expected to receive approval for commercialization from the FDA either in Q4 2021 or Q1 2022. The Dissidents, led by Mr. Durkacz and Mr. Saeed are blocking this potential transformational acquisition that has been in the works for several months.
The Company is also exploring a potential investment in a company with a demonstrated track record in the psychedelic space, unlike the Dissidents who want to force acquisition of the Start-Up that is notionally in the psychedelic space, with no demonstrated track record, and is laced with conflicts of interest.
With a strong balance sheet, the Company is actively exploring other mergers and acquisitions and licensing opportunities that could expand the drug development pipeline and create significant value for Shareholders.
The Company carefully evaluates all potential transactions against specific criteria, including:
- advanced, clinical stage research and development ("R&D") assets that fill unmet or underserved medical needs;
- assets with defined primary therapeutic targets, and the potential for secondary and tertiary targets; and
- assets that are substantially de-risked, with a defined path and R&D spend to reach subsequent stages of drug development and commercialization.
A disciplined, methodical approach to drive value creation is what Shareholders expect, and what will be delivered. The unstructured and riskier approach to building the business – as championed by the Dissidents – is in the past, where it should stay.