What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-28 · 127 added, 101 removed, 278 unchanged (45% of the section changed)

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We were incorporated in the State of Nevada on March 16, 2011.

We are a preclinical pharmaceutical company focused on the discovery, development and commercialization of a novel class of cannabinoid derivatives to modulate the endocannabinoid system, which has been shown to play a vital role in overall human health and, notably, in multiple ocular indications.

We are a clinical stage pharmaceutical company focused on the discovery, development and commercialization of a novel class of cannabinoid derivatives to modulate the endocannabinoid system, which has been shown to play a vital role in overall human health and, notably, in multiple ocular indications.

We are developing novel cannabinoid derivatives through our own directed research efforts and multiple license agreements.

Effective March 25, 2019, we changed our name from Nemus Bioscience, Inc.

to Emerald Bioscience, Inc.

and effective January 19, 2021, we changed our name to Skye Bioscience, Inc.

We have retained Novotech as our contract research organization ("CRO") in Australia and commenced our Phase 1 trial in December 2022.

We have also filed our IND for SBI-100 OE in the United States in anticipation of the start of our Phase 2 clinical trial in 2023, which we expect to commence in mid 2023.

Effective January 19, 2021, we changed our name from Emerald Bioscience, Inc.

to Skye Bioscience, Inc.

Our common stock is quoted on the OTCQB, under the symbol "SKYE".

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The primary purpose of SKYE Bioscience Australia is to conduct clinical trials for our drug product candidates.

SKYE Bioscience Australia is currently conducting our Phase 1 clinical study in Australia.

We expect to report final data from this study in the fourth quarter of 2023.

As described in more detail in the section below titled “ Liquidity and Going Concern ”, without additional funding during the second quarter of 2023, management believes that the Company will not have enough funds to meet its obligations and continue pre-clinical and clinical studies beyond the one year date the consolidated financial statements are issued.

If we do not receive additional funding during of the second quarter of 2023, we likely cannot continue operations.

EHT Acquisition

On May 11, 2022, we entered into an Arrangement Agreement (as amended, the “Arrangement Agreement”) with EHT, pursuant to which we agreed to acquire all of the issued and outstanding common shares of EHT pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the “Acquisition”).

The Acquisition was consummated on November 10, 2022.

Under the terms of the Arrangement Agreement and the Plan of Arrangement, on November 10, 2022, each share of EHT common stock (“EHT Shares”) outstanding immediately prior to the effective time of the Acquisition (the “Effective Time”) was transferred to the Company in exchange for 1.95 shares (the “Exchange Ratio”) of Company common stock.

The cash and assets of EHT and its subsidiaries acquired in the Acquisition are being used to fund our Phase 1 and Phase 2 clinical trials.

EHT and its subsidiaries are currently in the final stages of its realization process to wind down all prior operations and liquidate substantially all of its remaining assets.

As of the date of this Annual Report on Form 10K, we have divested both of EHT's former operating subsidiaries, VDL and Emerald Health Therapeutics Canada, Inc., and are in the process of resolving EHT's legacy tax matters with the Canadian tax authorities.

In February 2023, the closing payment from the sale of VDL provided the Company with $5,547,000.

This Acquisition has been a pivotal financing event for our business, allowing us to extend our cash runway into the second quarter of 2023 and will provide us with future funding as we collect the remaining receivables.

In addition, EHT has a vacant lab facility which we are currently evaluating to determine whether it is practical to bring certain aspects of our research and development activities in house or to divest to generate additional corporate funding.

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Our Product Candidates and Significant Contracts.

UM 5050 and UM 8930 License Agreements

In May 2019, we executed amended and restated license agreements with University of Mississippi ("UM") which expanded our use of UM 5050 and UM 8930 from ocular delivery only to "all fields of use" (collectively, the “License Agreements”).

Pursuant to the License Agreements, UM granted us an exclusive perpetual license including, with the prior written consent of UM, the right to sublicense the intellectual property related to UM 5050 and UM 8930 for all fields of use.

All fields of use means that we may develop UM 5050 and UM 8930 to treat any disease through any form of delivery under the License Agreements.

The exclusive license for SBI-100, a cannabinoid receptor type 1 ("CBR1") agonist, under UM 5050 is expected to allow us to explore related uses for the active moiety of SBI-100.

We have license agreements with University of Mississippi ("UM") for UM 5050 and UM 8930 for "all fields of use" (each, a "License Agreement" and, collectively, the “License Agreements”).

Pursuant to the License Agreements, UM granted us an exclusive license including, with the prior written consent of UM, the right to sublicense the intellectual property related to UM 5050 (referred to by Skye as SBI-100) and UM 8930 (referred to by Skye as SBI-200) for all fields of use.

All fields of use means no restrictions on use of the underlying inventions, including developing UM 5050 and UM 8930 to treat any disease through any form of delivery under the License Agreements.

The exclusive license for our lead molecule, SBI-100, a cannabinoid receptor type 1 ("CBR1") agonist, under the License Agreement for UM 5050 is expected to allow us to explore related uses for the active moiety of SBI-100.

Independent in vitro and in vivo studies have demonstrated the potential use of SBI-100 in a variety of potential indications based on the ability of CBR1 agonists to act as an anti-inflammatory, anti-fibrotic and/or inhibitor of neovascularization.

The Company has generated data related to these effects using an ex vivo human tissue model of the eye.

SBI-100 is designed to enhance the pharmacokinetics and pharmacodynamics of the active part of the molecule once introduced into the body through various routes of administration being considered by the development team.

The exclusive license of SBI-200, a novel cannabinoid receptor ("CBR") modulator, under UM 8930, is expected to allow us to explore uses in ophthalmic disorders as well as expanded research and development into organ systems outside of ophthalmology.

Potential therapeutic areas beyond ophthalmic indications for SBI-200 may include the central nervous system, the gastrointestinal tract, the endocrine/metabolic system, reproductive system diseases, or as yet unrecognized opportunities.

While earlier third party research validated the utility of a cannabinoid to provide therapeutic utility against diseases such as glaucoma, available methods of administration were burdened with their own side effects and limitations.

Notably, it is difficult to topically deliver a natural cannabinoid molecule into the eye due to its lipophilic nature.

SBI-100 is a natural cannabinoid that has been chemically modified to reduce the lipophilic nature of the original molecule and enhance the ability to administer the molecule on and through the eye.

It is designed such that after it is introduced into the body, enzymes convert it back to its original active ingredient and enable its beneficial mechanisms of action to be unlocked.

The Company's development team is also considering various routes of administration for SBI-100 into the body for different potential disease applications.

The exclusive license of SBI-200, a novel cannabinoid receptor ("CBR") modulator, under the License Agreement for UM 8930, allows us to explore uses in ophthalmic disorders as well as expanded research and development into organ systems outside of ophthalmology.

Potential therapeutic areas beyond ophthalmic indications for SBI-200 may include the central nervous system, gastrointestinal tract, endocrine/metabolic system, reproductive system, or as yet unrecognized opportunities.

We have developed strategic collaborations to identify and advance these applications.

Our lead compound, SBI-100, is initially being developed to treat glaucoma and ocular hypertension.

SBI-100 has been designed to make the usually lipophilic cannabinoid more hydrophilic to allow for improved transport across the membranes of the eye.

In 2013 and 2014, UM conducted studies of the formulation in the rabbit ocular model which showed that SBI-100 was able to penetrate all chambers of the eye.

This could potentially broaden the proposed therapeutic indications of interest for SBI-100 to diseases of the eye that affect the retina and the optic nerve, such as macular degeneration or diabetic retinopathy.

These studies also revealed that SBI-100 was able to achieve potentially therapeutic concentrations in the anterior compartment, vitreous humor, and posterior compartment of the normal rabbit eye, which is very similar to the human eye in anatomy and physiology.

Glaucoma is an ocular neuropathy associated with the initiation of programmed cell death, known as apoptosis, of the retinal ganglion cells ("RGCs") of the optic nerve, resulting in the progressive and irreversible loss of vision.

Our lead product, SBI-100 OE, is initially being developed to treat glaucoma and ocular hypertension.

SBI-100 OE is comprised of the molecule licensed from UM, SBI-100, plus a proprietary nanoemulsion formulation.

The first-in-human Phase 1 trial of SBI-100 OE is currently being conducted in healthy volunteers in Australia to evaluate this drug candidate's safety, tolerability, pharmacokinetics and pharmacodynamics.

We are eligible under the AusIndustry research and development tax incentive program to obtain a cash incentive from the Australian Taxation Office.

The tax incentive is available to us based on specific criteria with which we must comply and is based on our eligible research and development spend in Australia.

The Company is currently eligible for a 48.5% refundable tax offset as long as it has aggregate turnover of less than $20 million per annum.

SBI-100 OE targets the CB1 receptor, which plays a key role in managing intraocular pressure associated with glaucoma.

Glaucoma is an ocular neuropathy associated with the initiation of programmed cell death, known as apoptosis, of retinal ganglion cells ("RGCs") of the optic nerve, resulting in progressive and irreversible loss of vision.

Intraocular pressure ("IOP") has been identified as an important risk factor in the pathogenesis of this disease.

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Statistical significance was reached across multiple time points during a seven-day course of dosing using a validated rabbit normotensive ocular model and SBI-100 exerted pharmacologic activity consistent with once-daily to twice-daily dosing.

Additional work was also completed to develop a proprietary nanoemulsion formulation.

This intended clinical formulation was developed to optimize the amount of SBI-100 that can be delivered to the eye in a single drop while also improving the duration of activity.

Skye has since completed the development of a proprietary nanoemulsion formulation to optimize the amount of SBI-100 that can be delivered to the eye in a single drop while also improving the duration of activity.

Importantly, this formulation can be sterilized by filtration without impacting the attributes of SBI-100.

This SBI-100 ophthalmic emulsion formulation significantly reduced IOP compared to other commercially available ophthalmic solutions, and will be the final formulation used in future clinical trials of SBI-100.

Lastly, we evaluated the mechanism of action and IOP-lowering ability of the active moiety of SBI-100 when administered into an ex vivo model of a 3D-human trabecular meshwork using both healthy and glaucomatous-induced tissues.

This final formulation of the API, known as SBI-100 Ophthalmic Emulsion, significantly reduced IOP compared to other commercially available ophthalmic solutions and is now being evaluated in clinical trials.

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We evaluated the mechanism of action and IOP-lowering ability of the active moiety of SBI-100 when administered into an ex vivo model of a 3D-human trabecular meshwork using both healthy and glaucomatous-induced tissues.

The trabecular meshwork plays a key role in removing a vital functional liquid in the eye, called aqueous humor, in order to maintain a healthy balance of pressure in the eye (an imbalance can lead to a detrimental increase in IOP).

This study validated the mechanism of action of SBI-100 in lowering IOP, a defining disease process of hypertensive glaucoma.

Moreover, biomarkers associated with inflammation and fibrosis in both normal tissue and tissues affected by glaucoma were significantly decreased, pointing to anti-inflammatory and anti-fibrotic activities that are often associated with cannabinoids in other disease-states.

Moreover, biomarkers associated with inflammation and fibrosis in both normal tissue and tissues affected by glaucoma were significantly decreased, pointing to anti-inflammatory and anti-fibrotic activities often associated with cannabinoids in other disease states.

Data also revealed that biomarkers associated with neovascularization, a disease process of new blood vessel formation that can damage the retina in a variety of ocular diseases, was also inhibited by the active moiety, prompting further study for the utility of this drug in diseases of the retina.

The first-in-human Phase 1 trials are expected to be conducted in healthy volunteers in Australia (the “Clinical Trial”) to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of SBI-100.

We are eligible under the AusIndustry research and development tax incentive program to obtain a cash incentive from the Australian Taxation Office.

The tax incentive is available to us based on specific criteria with which we must comply and is based on our eligible research and development spend in Australia.

The Company may be eligible for either a 43.5% refundable tax offset if it has aggregate turnover of less than $20 million per annum or a 38.5% non-refundable tax offset of eligible research and development expenditure up to $100 million if it has annual turnover of $20 million or more per annum.

Prior to August 2020, we executed several agreements and the work underlying those agreements was subsequently delayed to the second quarter of 2022.

Since August 2020, we have been focused on clinical enabling activities, notably:

• formulation and manufacturing of drug product to supply our Phase 1 clinical trial;

• initiating and completing good laboratory practice (“GLP”) toxicology studies to support our Phase 1 clinical trial;

• initiating and completing validation of a pharmacokinetic assay for both animal and human samples to support our preclinical and clinical studies;

• engaging our vendors and contractors to support the finalization of study-related materials for our Phase 1 study, including the finalization of the clinical study protocol and investigator's brochure.

The manufacturing of SBI-100 ophthalmic emulsion is conducted in the United States.

Formulation of the eye drop for testing is also performed in the United States but we rely on compendial excipients that can be sourced from countries outside the United States, such as China.

Due to the continuing effects of the COVID-19 pandemic, there could possibly be a negative impact on our ability to source materials that are part of the eye drop formulation, as well as negative impacts to our volunteer and/or patient recruitment in Australia for clinical studies.

Subsequent to the initiation of the Phase 1 study, we intend to file an investigational new drug ("IND") application with the United States Food and Drug Administration ("FDA") to study SBI-100 ophthalmic emulsion in a Phase 2 randomized, controlled, double-masked clinical trial in patients with glaucoma or ocular hypertension to obtain additional data to determine whether the topical delivery of SBI-100 ophthalmic emulsion is safe and well-tolerated, and whether the IOP is markedly different between SBI-100 and placebo.

Design of the Phase 2 clinical trial will be dependent upon the advice of our clinical advisory board, the FDA and other regulatory bodies.

We have initiated research activities to explore the utility of different formulations of SBI-200.

Manufacturing of SBI-100 OE has been conducted in the United States.

We completed the manufacture of the clinical trial material for our Phase 1 clinical trial in September 2022.

We rely on compendial excipients that can be sourced from countries outside the United States, such as China.

In June 2022, we received approval from Belberry Limited, a certified Australian Human Research Ethics Committee, to begin our Phase 1 clinical trial for the study of our lead product candidate, SBI-100 OE.

We subsequently notified the Australian Therapeutics Goods Administration of our intent to initiate our Phase 1 clinical trial through the Clinical Trial Notification scheme.

In connection with this marketing approval to initiate the first-in-human trial for SBI-100 OE, we triggered the first milestone payment under our License Agreement for UM 5050 with UM.

We commenced enrollment and dosing of the Phase 1 in November and December 2022.

We expect our Phase 1 study to complete enrollment in the first half of 2023.

The Company has announced that the safety review committee ("SRC") for this study reviewed safety data from the first and second cohorts of the single ascending dose arm of the Phase 1 and recommended advancing to the next cohort.

After the review of the second cohort of safety data, the SRC also provided its recommendation that the study progress to the second arm of the Phase 1 study.

During the third and fourth quarter of 2022, we manufactured the active pharmaceutical ingredient to be used in our Phase 2 clinical trial.

The formulation and packaging of SBI-100 OE for its planned Phase 2 trial will be conducted by NextPharma Oy at its Finnish facility.

NextPharma is a contract manufacturing organization with strong capabilities in preservative-free multi-dose and blow-fill-seal packaging of eye drop dispensers.

In December 2022 we obtained FDA clearance of our Investigational New Drug application to conduct clinical studies in the US, clearing the path to commence our Phase 2 trial in the United States without having to first complete our Phase 1 study.

We expect to begin our Phase 2 trial in the middle of 2023.

The Phase 2 study will be a randomized, controlled, double-masked clinical trial in patients with glaucoma or ocular hypertension to obtain additional data to determine whether the topical delivery of SBI-100 OE is safe and well-tolerated, and whether the IOP is markedly different between SBI-100 OE and the placebo.

In January 2023, our Phase 2 clinical trial protocol received study level approval from a central institutional review board (“IRB”).

Additionally, in February 2023 we announced an agreement with Lexitas Pharma Services, Inc.

(“Lexitas”), a leading full-service ophthalmic-focused contract research organization (“CRO”), to conduct our Phase 2a study for glaucoma and ocular hypertension.

We have initiated research activities to explore the utility of SBI-200.

Early studies of SBI-200 demonstrated analgesic, anti-inflammation, anti-fibrotic and anti-seizure properties, including the potential treatment and management of several eye diseases, such as uveitis, dry eye syndrome, macular degeneration and diabetic retinopathy.

Data we presented at the American Association of Pharmaceutical Scientists ("AAPS") meeting held in November 2017 revealed that an ocular formulation of SBI-200 was able to penetrate multiple compartments of the eye, including reaching the retina and the optic nerve.

Further testing will need to be conducted to further evaluate the possible utility of this compound as a therapeutic agent and we continue to advance our research studies related to SBI-200 to explore different therapeutic applications.

Data we presented at the American Association of Pharmaceutical Scientists ("AAPS") meeting held in November 2017 revealed that an early ocular formulation of SBI-200 was able to penetrate multiple compartments of the eye, including reaching the retina and the optic nerve.

We are further evaluating the possible utility and development of this compound as a therapeutic agent.

Cannabinoid Pharmaceutical Innovation Program (CPIP)

We are focused on the development of proprietary, synthetic cannabinoid derivatives that have been designed to improve the solubility, bioavailability and pharmacology of cannabinoids, while also providing the Company with strong intellectual property protection.

At the end of 2021, we announced that the Company would establish the Cannabinoid Pharmaceutical Innovation Program, or CPIP, that will focus on targeting important signaling pathways in the endocannabinoid system ("ECS") to realize the therapeutic potential of cannabinoids.

We are focused on the development of proprietary, synthetic cannabinoid derivatives that have been designed to improve the solubility, bioavailability and pharmacology of cannabinoids, with the goal of providing therapeutic benefits to fulfill unmet needs, while also providing the Company with strong intellectual property protection.

At the end of 2021, we announced that the Company would establish the Cannabinoid Pharmaceutical Innovation Program, or CPIP, to focus on targeting important signaling pathways in the endocannabinoid system ("ECS") which are relevant to various ocular pathologies and to identify possible new drug candidates to add to our development pipeline.

Moreover, new research continues to demonstrate that this cell signaling network can impact fundamental processes including synaptic plasticity, pain control, metabolism and immunity, highlighting that the ECS may be central to a wide range of diseases settings.

Thus, while our pipeline remains grounded in ophthalmology, the company may additionally explore ECS-modulating therapeutics to address pathologies beyond ocular disease.

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The CPIP reflects the Company’s continued commitment to expand its leadership in cannabinoid-based science and cutting-edge research that can be commercialized through new and existing technologies.

It leverages R&D initiatives with key opinion leaders with specialized research centers in the US and internationally, such as the UM, University of Cordoba and University of Eastern Piedmont.

It leverages R&D initiatives with key opinion leaders with specialized research centers in the US and internationally, such as UM, University of Cordoba and University of Eastern Piedmont.

As a first step in building the CPIP in October 2021, we announced the establishment of a new Exclusive Sponsored Research Agreement ("ESRA") with VivaCell Biotechnology España, S.L.U ("VivaCell"), (formerly known as Emerald Health Biotechnology España, S.L.U), focused on developing and characterizing novel molecules that can affect the ECS for therapeutic benefit.

This agreement deepens the commitment of Drs.

Munoz and Appendino, who will be the principal investigators and continue to lead our scientific advisory board.

This agreement deepens the commitment of Dr.

Eduardo Munoz, Professor of Immunology, Department of Cell Biology, Physiology and Immunology of the University of Córdoba, Spain, and Director of the inflammation and cancer research group at the Institute Maimonides for Biomedical Research Córdoba, and Dr.

Giovanni Appendino, Professor of Organic Chemistry, Department of Pharmaceutical Sciences at the University of Eastern Piedmont, Novara, Italy, who are the principal investigators and continue to lead our scientific advisory board.

Under the terms of the ESRA the Company will approve and fund designated projects and have exclusive rights to all data and products, and any intellectual property resulting from this research collaboration will be owned by the Company.

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Our Competitive Strengths

We are developing novel, proprietary cannabinoid derivatives that have the potential to treat ophthalmic disorders and other disease with unmet needs.

Our lead product candidate, SBI-100, is being developed for the treatment of glaucoma and ocular hypertension.

Currently, most approved drugs for glaucoma target similar molecular receptors, and have similar mechanisms of action, and as a result there is a significant unmet medical need to develop new drugs that target different receptors using novel mechanisms of action.

SBI-100 has the potential to meet these needs.

The eye is rich in cannabinoid receptors, including CBR1, which is the main target for SBI-100.

Our studies, along with multiple studies from other institutions, have demonstrated that activation of CBR1 can not only result in reduction of IOP in the eye, but also have anti-inflammatory, anti-fibrotic and anti-neovascular effects.

As a novel agent for the potential treatment of glaucoma and ocular hypertension, SBI-100 represents a new treatment opportunity for physicians and patients and we are leading the field in this area of research.

With the implementation of the CPIP, we intend to leverage the potential success of SBI-100 to discover and develop additional novel cannabinoid derivatives capable of targeting multiple cannabinoid receptors in the eye for the treatment of ocular diseases.

Combined with the experience of our management team, scientific and clinical advisors, this provides significant strategic advantage in the marketplace over our competitors.

We are developing novel, proprietary cannabinoid derivatives that have the potential to treat ophthalmic disorders and other diseases with unmet needs.

Our lead product candidate, SBI-100 OE, is being developed for the treatment of glaucoma and ocular hypertension.

Currently, most approved drugs for glaucoma target similar molecular receptors and have similar mechanisms of action.

As a result there is a significant unmet medical need to develop new drugs that target different receptors using novel mechanisms of action.

SBI-100 OE has the potential to meet these needs.

The eye is rich in cannabinoid receptors, including CBR1, which is the main target for SBI-100 OE.

Our studies, along with multiple studies from other institutions, have demonstrated that activation of CBR1 can not only result in reduction of IOP, but also have anti-inflammatory, anti-fibrotic and anti-neovascular effects, which may offer potential benefits in other eye diseases beyond glaucoma.

As a novel agent for the potential treatment of glaucoma and ocular hypertension, SBI-100 OE may represent a new treatment opportunity for physicians and patients and we are leading the field in this area of research.

With the implementation of the CPIP, we intend to leverage the potential success of SBI-100 OE to discover and develop additional novel cannabinoid derivatives capable of targeting multiple cannabinoid receptors in the eye for the treatment of ocular diseases.

The combined experience of our board of directors, management team, scientific and clinical advisors provides a significant strategic capability as we work to define and build our competitive advantage.

Our Business Strategy

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• selection and licensing of potential clinical targets based on internal and external published data, access to appropriate cannabinoids, and the impact of both developmental and market conditions;

• prioritization of product candidates based on the potential clinical utility and market for associated target indications;

• prioritization of product candidates based on their potential clinical utility and the market and competitive dynamics of the associated target indications;

• development and execution of an intellectual property strategy;

• clinical development and advancement of our current product pipeline;

• outsourcing services, such as use of clinical research organizations ("CROs") and contract manufacturers for the active pharmaceutical ingredient, where possible and cost effective;

• outsourcing activities such as clinical trial management and drug manufacturing via clinical research organizations ("CROs") and contract manufacturers, where possible and cost effective;

• obtaining regulatory direction and approval from the FDA, European Medicines Agency ("EMA"), and other regulatory agencies for our product candidates;

• discovery, research and development of additional cannabinoid-based drugs for future product candidates; and

• partnering, out-licensing, or selling our product candidates to pharmaceutical companies to maximize profits and to bring our state-of-the-art therapeutics to patients in need.

• discovery, research and development of additional novel cannabinoid-based molecules for future product candidates; and

• partnering, out-licensing, or selling our product candidates to pharmaceutical companies to focus on core strengths, maximize profits, and to bring our state-of-the-art therapeutics to patients in need.

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Sales and Marketing

We have not established a sales, marketing or product distribution infrastructure because our lead product candidates are still in research, discovery or preclinical development stages.

We are evaluating what we believe to be the optimal commercialization path for the Company, the respective product candidates, and patients.

Commercialization paths may include licensing, selling, or partnering with other commercial partners.

We will continue to proactively evaluate the best path to commercialization on an ongoing basis.

We have not established a sales, marketing or product distribution infrastructure because our lead product candidates are still in research, discovery, pre-clinical or clinical development stages.

We are evaluating what we believe to be the optimal commercialization path for the Company, our product candidates, and patients.

Commercialization paths may include licensing/partnering with or selling assets to other commercial enterprises.

Manufacturing

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We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, as well as for commercial manufacture of any products that we may commercialize.

For all of our future product candidates, we aim to identify and qualify manufacturers to provide the active pharmaceutical ingredient ("API") and fill-and-finish services prior to submission of a New Drug Application ("NDA") to the FDA.

For all of our future product candidates, we aim to identify and qualify manufacturers to provide the active pharmaceutical ingredient ("API"), formulation, and fill-and-finish services prior to submission of a New Drug Application ("NDA") to the FDA.

We expect to continue to develop drug candidates that can be produced cost-effectively at contract manufacturing facilities.

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The patents that we license cover composition of matter and preparation of SBI-100 and other cannabinoid receptor modulators, and their methods of use.

The expiration date of the US patent for SBI-100 is expected to expire in 2029.

The US patent for SBI-100 is expected to expire in 2029.

Additionally, in July 2020 the United States Patent and Trademark Office granted a patent for SBI-200.

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We also face competition from third parties in recruiting and retaining qualified personnel, establishing clinical trial sites and enrolling patients for clinical trials, and in identifying and acquiring or in-licensing new products and product candidates.

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Government Regulation

Government authorities in the United States, at the federal, state and local level, and in other countries, extensively regulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, import and export of pharmaceutical products such as those we are developing.

Government authorities in the United States, at the federal, state and local level, and in other countries, extensively regulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, import and export of pharmaceutical products such as those we are developing.

The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources.

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Regulation of Controlled Substances

DEA Regulation

Drug Enforcement Administration (DEA) Regulation

Certain cannabinoids are regulated as “controlled substances” as defined in the Controlled Substances Act (the “CSA”), which establishes registration, security, recordkeeping, reporting, storage, distribution and other requirements administered by the DEA.

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SBI-100 remains a Schedule I controlled substance, pending a request to re-schedule SBI-100 after marketing authorization by the FDA.

Food and Drug Administration

Food and Drug Administration (FDA)

In the United States, pharmaceutical products are subject to extensive regulation by the FDA.

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Failure to comply with the applicable U.S.

requirements at any time during the product development process, approval process or after approval, may subject us to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

The process required by the FDA before a drug may be marketed in the United States generally involves the following:

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hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

The process required by the FDA before a drug may be legally marketed in the United States, generally involves the following:

• completion of preclinical laboratory tests, animal studies and formulation studies in compliance with GLP regulations;

• submission of an Investigational New Drug application ("IND") to the FDA , which must be authorized as open before human clinical trials may begin;

• submission of an Investigational New Drug application ("IND") to the FDA , which must be authorized as open before clinical trials may begin;

• approval and oversight of each study by an institutional review board ("IRB") before each clinical site may initiate the trial(s);

• performance of adequate and well-controlled clinical trials in accordance with good clinical practice ("GCP") requirements to establish the safety and efficacy of the proposed drug for each indication;

• conduct of adequate and well-controlled clinical trials in accordance with good clinical practice ("GCP") requirements to establish the safety and efficacy of the proposed drug for each indication;

• submission of an NDA to the FDA;

• satisfactory development and completion of a FDA pre-approval inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and

• satisfactory development and completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

• satisfactory development and completion of an FDA BioResearch Monitoring (BIMO) inspection of the clinical study sites which participated in the studies supporting the NDA application;

• FDA review and approval of the NDA.

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The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

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Reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur.

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For some products, such as our product candidates, an additional step of DEA review and scheduling is required.

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Post-Approval Requirements

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Section 505(j) establishes an abbreviated approval process for a generic version of approved drug products through the submission of an Abbreviated New Drug Application ("ANDA").

An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product.

An ANDA provides for marketing of a generic drug product that has the same active ingredients,

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dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product.

ANDAs are termed “abbreviated” because they are generally not required to include preclinical (animal) and clinical (human) data to establish safety and efficacy.

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however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

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Orphan Drug Designation and Exclusivity

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Competitors, however, may receive approval of different products for the same indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication than that for which the orphan product has exclusivity.

Federal and State Fraud and Abuse and Data Privacy and Security Laws and Regulations

Federal and State Fraud and Abuse Data Privacy and Security Laws and Regulations

In addition to FDA restrictions on marketing of pharmaceutical products, federal and state fraud and abuse laws restrict business practices in the pharmaceutical industry.

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Applicable manufacturers are also required to report annually to the government certain ownership and investment interests held by physicians and their immediate family members.

In addition, certain states require implementation of commercial compliance programs and compliance with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, impose restrictions on marketing practices, and/or tracking and reporting of gifts, compensation and other remuneration or items of value provided to physicians and other health care professionals and entities.

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certain states require implementation of commercial compliance programs and compliance with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, impose restrictions on marketing practices, and/or tracking and reporting of gifts, compensation and other remuneration or items of value provided to physicians and other health care professionals and entities.

We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.

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In addition, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed bills designed to, among other things, reform government program reimbursement methodologies.

We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures.

For example, on August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap;

imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023);

and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years.

For that and other reasons, it is currently unclear how the IRA will be effectuated.

Additional state and federal healthcare reform measures

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may be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products once approved or additional pricing pressures.

Foreign Regulation

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We believe that we are in conformity with all applicable laws in all relevant jurisdictions.

As of the date of this Annual Report, we have a total of nine full-time employees.

As of the date of this Annual Report, we have a total of eleven full-time employees.

None of our employees are represented by a labor union or covered by a collective bargaining agreement.

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Information contained on our website is not incorporated by reference into, and should not be considered a part of, this Annual Report.

FORWARD-LOOKING STATEMENTS

Statements in this Annual Report on Form 10-K contain forward-looking statements that are based on management’s current expectations and assumptions and information currently available to management and are subject to risks and uncertainties.

If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition and stock price could be materially and negatively affected.

In some cases, you can identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will,” “would” or the negative of these terms or other comparable terminology.

Factors that could cause actual results to differ materially from those currently anticipated include those set forth in the section below titled “Risk Factors,” including, without limitation, risks relating to:

• the results of our research and development activities, including uncertainties relating to the discovery of potential product candidates and the preclinical and clinical testing of our product candidates;

• the early stage of our product candidates presently under development;

• our need for substantial additional funds in order to continue our operations, and the uncertainty of whether we will be able to obtain the funding we need;

• our ability to obtain and, if obtained, maintain regulatory approval of our current product candidates, and any of our other future product candidates, and any related restrictions, limitations, and/or warnings in the label of any approved product candidate;

• our ability to retain or hire key scientific or management personnel;

• our ability to protect our intellectual property rights that are valuable to our business, including patent and other intellectual property rights;

• our dependence on University of Mississippi, third party manufacturers, suppliers, research organizations, testing laboratories and other potential collaborators;

• our ability to develop successful sales and marketing capabilities in the future as needed;

• the size and growth of the potential markets for any of our approved product candidates, and the rate and degree of market acceptance of any of our approved product candidates;

• competition in our industry;

• the duration and impact of the novel coronavirus ("COVID-19") pandemic, or responses to the pandemic on our business, clinical trials or personnel;

• regulatory developments in the United States and foreign countries.

We operate in a rapidly changing environment and new risks emerge from time to time.

As a result, it is not possible for our management to predict all risks, such as the COVID-19 outbreak and associated business disruptions including delayed clinical trials and laboratory resources, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur.

Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

The forward-looking statements included in this report speak only as of the date hereof, and except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business