Zelira Therapeutics Ltd (ASX: ZLD) is an Australian-based biopharmaceutical company that aims to treat important diseases and disorders using cannabinoid-based medicines.
Formerly known as Zelda Therapeutics, Zelira Therapeutics Ltd is a leading global therapeutic medicinal cannabis company focused on developing a portfolio of proprietary revenue-generating products and a pipeline of candidates undergoing clinical development that are positioned to enter global markets from 2020.
Zelira Therapeutics was formed through a merger of equals between Zelda and Ilera Therapeutics, who both went on to become Zelira Therapeutics LLC in late 2019.
Under the new name Zelira, the merged companies fused to create a global cannabis company with operations in Australia and the US, bringing together a portfolio of revenue-generating medicines and products that are expected to enter the market from 2020.
Zelira Therapeutic's launch, learn and develop' model will include commercializing unique products in order to target large addressable markets such as pain, sleep, and anxiety.
Zelda Therapeutics Lists on ASX
After successfully issuing 160 million shares at 2.5c, Zelda raised $4 million and announced that it would be listed on the Australian Securities Exchange under the code "ZLD" November of 2016. In the announcement, the company stated it would use the capital to fund pre-clinical and clinical trials across a range of medical conditions.
Zelda went on to note within the announcement that the company would be engaging in a partnership with California-based medicinal cannabis group, Aunt Zelda's, who would give Zelda Therapeutics exclusive access to high-quality human data. Zelda stated it would use this exclusive data to leverage a "scientific rationale for certain cannabis-based formulations and protocols to treat a variety of medical conditions."
At the time, the company identified sleep disorders such as insomnia, and dermatology indications such as eczema as priority areas to focus on, stating: "approximately 35% of the world's population suffers from insomnia and over 334 million people globally [suffer] with dermatitis conditions."
Zelda begins clinical trials in Chile and forms a partnership with CannPal
Zelda Therapeutics was founded by Dr. Stewart Washer, who co-founded AusCann with his father Mal Washer. Through this relationship, in 2017 Zelda was able to work alongside DayaCann, a joint venture of AusCann's and the only licensed grower of medical cannabis in Chile.
Chile served as fertile soil for Zelda's clinical trials, as the country was not only a cost-effective location but had also made significant headway in its approach to medical cannabis research, allowing for the production of medical cannabis to treat medical conditions since 2014. Zelda stated that the Chilean clinical trials would begin in the latter half of 2017 and would target insomnia and eczema, two large markets with a combined global value of approximately $8 billion in 2016.
Shortly after announcing the partnership, Zelda expanded its clinical trial program in Chile to include Autism Spectrum Disorder (autism), a condition of which 230,000 individuals suffer from in Australia alone. The global market for autism diagnosis and treatments was expected to grow to US$412.7 million by 2019.
Only a few days later, and Zelda announced it had entered into a strategic partnership with CannPal Pty Ltd, an Australian company focused on developing cannabis-based prescription and non-prescription medicines, and animal feed nutrition for the emerging global pet pharmaceutical market.
The partnership stipulated that Zelda would be issued options over 10% of fully diluted issued capital in CannPal, though no cash payments from either party would be made. Instead, CannPal would provide Zelda with meaningful exposure to the growing animal health market, and CannPal would gain access to certain data owned by Zelda including pre-clinical research protocols, formula innovation, and clinical trial designs.
Significant effects observed in Zelda's pre-clinical breast cancer studies
In November 2016, Zelda announced the positive results of its initial proof of concept study into the anti-cancer effects of its THC-rich medical cannabis formulation. The study was conducted by world-leading cannabis cancer researchers at the Complutense University of Madrid.
The study compared the anti-tumour responses of 100% pure tetrahydrocannabinol (THC), compared to Zelda Therapeutics' unique formulation of THC-rich oil and also compared with a chemotherapy drug, Lapatinib. The study revealed that Zelda Therapeutics' formulation was significantly more effective at reducing tumour growth than pure THC and was on par with Lapatanib in reducing tumour growth.
The study effectively vindicates Zelda's aspiration to continue pursuing clinical trials using cannabinoid medicines to treat different forms of cancer.
Zelda Therapeutics enters into an agreement with Telethon Kids Institute & Zelda expands to study brain cancer
In November 2016, Zelda announced that it had entered into a collaboration with one of Australia's leading medical research institutes, Perth-based Telethon Kids Institute. The announcement stated that the collaboration would focus on pre-clinical testing of Zelda's formulations in the area of children's brain cancer, utilizing the Institute's validated cell and animal models for the studies.
The collaboration follows on from Zelda's pre-clinical research activities at Complutense University Madrid, headed by researchers Professor Manuel Guzmán and Professor Cristina Sánchez. The new collaboration with the Telethon Kids Institute demonstrates the Company's forward trajectory continuing on the path of validating the anecdotal patient responses to medical cannabis, with the end-goal of producing industry-standard data packs and trial data.
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Zelda Begins Trading in the USA on the OTCQB Venture Market
In January 2018, Zelda increased its international footprint by trading on the US public market; the OTCQB Venture Market (OTCQB) under the symbol "ZLDAF."
The company's entrance into the US market gives Zelda access to the largest pool of investors in the world, while allowing United States investors to have access to the same high-quality information that is available to investors in Australia.
Harry Karelis, Chairman of Zelda said: "We are pleased to announce our new trading relationship with OTCQB. As part of our ongoing strategy to introduce Zelda Therapeutics to a broader international audience, this milestone will provide greater visibility, better access to the US investment community, and improved convenience of trading in Zelda's ordinary shares."
Partnership with Hapa & Enters Germany
In September 2018, Zelda Therapeutics entered a strategic partnership with German medicinal cannabis company HAPA Medical that allows HAPA to manufacture and distribute Zelda's clinically validated formulations into the rapidly growing German market.
Managing Director of Zelda, Dr. Richard Hopkins stated, "This partnership re-enforces the global breadth of Zelda's relationships and shows our focus on commercializing our clinically validated formulations. This is also important because Germany is expected to become the world's single largest market for medicinal cannabis."
Zelda Develops Oral Cannabinoid spray
In December 2018 Zelda entered into an agreement with SUDA Pharmaceuticals Ltd (ASX: SUD) to develop novel oral spray formulations which would effectively deliver Zelda's pharmaceutical-grade cannabis medicines.
On the agreement, Zelda Therapeutics Managing Director Dr. Richard Hopkins said, "Our aim is to improve upon existing market-approved oral-mucosal formulations that have proven very effective for delivering cannabis medicines in patients. This agreement provides Zelda with an option to license a proprietary technology for oral-mucosal delivery of medicinal cannabis. Having access to proprietary technologies strengthens our competitive position and helps accelerate our path to commercialisation."
Partnership with Ilera & Forming of Zelira Therapeutics
In October 2019, Zelda Therapeutics announced a proposed merger of equals with Ilera Therapeutics LLC, a private medicinal cannabis company based in the United States. The all-scrip transaction included a nearly $9m upfront payment and 725 million performance rights.
According to Zelda, the merger was intended to "bring together a leading pipeline of clinical candidates, revenue-generating medicines, and a combined strategy to disrupt global medicinal cannabis and pharmaceutical markets."
Based in Pennsylvania and Louisiana, Ilera has clinical networks and distribution channels that stretch across North America, giving the company access to over 130,000 currently registered medicinal cannabis patients in Pennsylvania.
The company is developing a pipeline of formulations and proprietary platform technologies designed for specific conditions, targeting sleep, pain, anxiety, calmness & focus, as well as running an Observational Autism Trial.
Under the new name Zelira Therapeutics, the merged companies combined to create a global cannabis company with operations in Australia and the US, bringing together a portfolio of revenue-generating medicines and products that are expected to enter the market from 2020.
Through the newly merged company, Zelira Therapeutics would have access to Ilera's HOPE range of medicinal cannabis products, which will be acquired as part of the merger. Following news of the announcement, ZLD stock was up as much as 7.5% to 8.6 cents.
Zelira Therapeutics' Journey To Clinical Validation
Zelira Therapeutics' stated goal is to build a portfolio of clinically-validated assets (typically cannabinoid-derived formulas) to treat a wide range of diseases. In pursuing this goal, Zelira has formed a series of strategic partnerships throughout Australia and abroad.
Zelira will be undertaking human clinical trials focused on insomnia, autism and opioid reduction with activities in Australia and the USA, as well as pre-clinical research that will examine the effect of cannabinoids in breast, brain and pancreatic cancer as well as the potential for cannabinoids to treat diabetes-associated cognitive decline.
Below you'll find the progress on Zelira's development pipeline.
In April 2017, then Zelda Therapeutics announced it would be expanding its clinical trial program in Chile to include Autism Spectrum Disorder.
Then, in September that same year, the company announced that its autism trial in Chile had revealed that cannabis extracts were significantly more effective than conventional medicines when attempting to treat autism.
Patients in the study were treated over a 12-week period and had not responded well previously to conventional treatments. Through using cannabis extracts, patients demonstrated significant improvements in at least one major form of social interaction such as language or repetitive behaviors in 71.4% of cases. In total, 66.7% of treated patients showed significant general overall improvement.
Shortly after, in December that same year, Zelda brought the autism trial to the States, through a research agreement with Children's Hospital of Philadelphia (CHOP). The research would build upon the company's previous trials in Chile.
By August 2019, the company announced the successful enrolment of its 100th participant for the autism trial with the final target of 150 expected by early 2020. The trial is ongoing and currently, the cannabis treatments have been associated with parent-reported improvements in many autism-related behaviors including anxiety, sleep, irritability and hyperactivity. The extent of improvement has differed depending on the various combinations of CBD and THC administered to patients.
Building upon the initial proof of concept results announced in November 2016, Zelda Therapeutics performed a series of in vitro studies in June 2017 and announced that they had again confirmed a statistically significant anti-cancer effect using both THC-rich and CBD-rich oils on breast cancer patients.
The results once again vindicated Zelda's efforts by establishing benefits that may be achieved in using cannabinoid medicines to treat a broad spectrum of breast cancer types including hormone receptor-positive, HER2+ and Triple Negative cancer types.
Most recently, in February 2019, a member of Zelda's Medical Advisory Board, Professor Cristina Sanchez, published a paper in the prestigious Proceedings of the National Academy of Sciences, which identified a new target in the endocannabinoid system for treatment of HER2+ breast cancer. The study showed how the cannabinoid receptor, CB2, can bind the HER2 receptor to form a novel complex.
Similarly, Zelda's initial results acquired at the Telethon Kids Institute in Perth, Western Australia displayed that increasing doses of pure THC or pure CBD can also have an anti-cancer effect on pediatric brain cancer by reducing the proliferation of cancer cells.
In anticipation to the release of Zelira's clinically validated formulations, the company entered into a strategic collaboration with Australia-based Emerald Clinics in July 2019 in order to access clinical data from patients treated with medicinal cannabis for pain and insomnia. The data shared through the collaboration is intended to inform Zelira Therapeutics' ongoing clinical trial strategy to treat insomnia and other diseases.
Zelira's insomnia trial attempts to use a formulation containing a combination of THC and CBD in order to overcome or improve insomnia.
The trial would be randomized, double-blinded, placebo-controlled, involving 24 patients and Zelira's proprietary insomnia formulation and a placebo formulation delivered sublingually. The cannabis-derived medicine for the trial was manufactured to pharmaceutical grade GMP standards by a Europe-based specialty manufacturer.
On the 7th of November, the company announced that it had fully enrolled volunteers for its clinical insomnia trial, which would be led by the University of Western Australia Centre for Sleep Science. Most recently, in December 2019, Zelira Therapeutics announced that the final patient had completed dosing in the insomnia trial, with no noted negative effects reported at the time.
Zelira expects to provide interim results for the insomnia trial by February 2020.
In November 2018, then Zelda Therapeutics announced the expansion of its human clinical trial program to include opioid reduction through a partnership with St Vincent's Hospital in Melbourne. The trials were intended to explore the capacity of cannabinoid medications as a replacement for chronic, high dose opioid pain management therapy. Cannabis-derived medicines are increasingly being used as a substitute for opioids, and opioid use goes down in states which have legalized cannabis. This is particularly important given the opioid epidemic occurring throughout many countries worldwide, which also contributes to a significant portion of global deaths.
In July 2019, Zelda Therapeutics was formally approved by the St Vincent's Hospital Ethics and Governance Committees to conduct a Phase I Opioid Reduction Trial.
The Phase I trial was intended to determine the efficacy and viability of using a whole plant extract in nine patients with chronic non-cancer pain on long-term opioid analgesia. The results of the opioid trial have not yet been released.
Disclaimer: Past performance is not an indicator of future performance.
Should I buy Zelira Therapeutics Stock?
Right off the bat, there are some elements of concern for investors looking at the ZLD stock.
As covered in the Company's most recent investor presentation, the company is not yet profitable and has about a years worth of cash in the bank. This means Zelira will likely have to do a capital raise sometime in the near future.
With that said, however, there are certainly upsides to ZLD stock.
Firstly, the company has developed a number of partnerships that give it access to distribution networks in Spain, Germany, Australia, and the US, as well as acquiring the rights to Ilera's proprietary formulation HOPE which is currently being sold in Pennsylvania.
The company also announced that it will bring the HOPE formulation range to the state of Louisiana through an agreement that is expected to generate immediate revenue through a licensing arrangement.
Furthermore, the recent merger with Ilera gave the company access to a combined portfolio of revenue-generating medicines and products that are expected to enter the market from 2020, should they be successfully clinically validated.
While there's a lot of speculation surrounding the future profitability of ZLD stock, the company is targetting an array of conditions that each provide a massive total addressable market (TAM), some of which are in the billions. Should even one of these conditions go through clinical validation, the company will provide investors with significant returns.
The distribution networks already established by ZLD will then allow for the validated product to be dispersed across the US, Europe, the UK and Australia.
In the first half of 2020, the company will be releasing the results of its Insomnia phase II trial and Opioid sparing trial, as well as seeing some initial revenues from its licensing deal in the US for its HOPE formula.
Much of the success of Zelira Therapeutics rests upon these upcoming clinical trial results slated to arrive throughout 2020, which will dictate whether this company will sink or swim.
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