ARTELO BIOSCIENCES INC

Previous wording

We commenced enrolment and dosed the first patient in CAReS, our Phase 1b/2a clinical study of cancer-related anorexia with ART27.13 in April 2021, and we completed enrolling patients in the Phase 1b during the first quarter 2023. Data from the Phase 1b stage was used to determine the most effective and safe dose selected as the starting dose for the Phase 2a portion of CAReS. We received approval from the regulatory authorities in the UK, Ireland and Norway to increase the daily dose from 650 micrograms to 1,000 micrograms after 4 weeks and up to 1,300 micrograms initiated at 8 weeks in patients for whom intra-patient dose escalation is expected to be well tolerated. We also received approval from the regulatory authorities to enroll 40 patients to the Phase 2a stage with a 3:1 randomization of ART27.13 to placebo. We initiated the Phase 2a portion of CAReS during April 2023 and are planning for up to 14 sites from five countries to participate in the Phase 2a. As of March 2024, nine clinical sites are open and full enrollment is projected by the end of 2024.

Current wording

We commenced enrolment and dosed the first patient in CAReS, our Phase 1b/2a clinical study of cancer-related anorexia with ART27.13 in April 2021, and we completed enrolling patients in the Phase 1b during the first quarter 2023. Data from the Phase 1b stage was used to determine the most effective and safe dose selected as the starting dose for the Phase 2a portion of CAReS. We received approval from the regulatory authorities in the UK, Ireland and Norway to increase the daily dose from 650 micrograms to 1,000 micrograms after 4 weeks and up to 1,300 micrograms initiated at 8 weeks in patients for whom intra-patient dose escalation is expected to be well tolerated. We also received approval from the regulatory authorities to enroll 40 patients to the Phase 2a stage with a 3:1 randomization of ART27.13 to placebo. We initiated the Phase 2a portion of CAReS during April 2023 and are planning for up to 14 sites from five countries to participate in the Phase 2a. As of July 2024, 13 clinical sites are open and full enrollment is projected near the end of 2024 or early 2025.

Previous wording

Based upon positive pre-clinical evidence from five separate studies showing promising activity and a differentiated mechanism-of-action for the prevention and treatment of painful neuropathies, including diabetic neuropathy and Chemotherapy Induced Peripheral Neuropathy (“CIPN”), we have prioritized CIPN as the initial indication for development of our lead product candidate among our library of FABP5 inhibitor compounds, ART26.12. Treatment and/or prevention of CIPN is a significant unmet need, often resulting in anti-cancer treatment delays or discontinuations, and there are currently no approved treatments for CIPN by the regulatory authorities in the US, UK or EU. The ART26.12 program is undergoing regulatory-enabling studies. We anticipate first-in-human studies could begin in the second half of 2024 depending, in part, on the ability of selected contract research organizations to source materials and resources, including animals, in order to perform required studies, and the review and approval process with the regulatory authorities, such as the US Food and Drug Administration (the “FDA”).

Current wording

Based upon positive pre-clinical evidence from five separate studies showing promising activity and a differentiated mechanism-of-action for the prevention and treatment of painful neuropathies, including diabetic neuropathy and Chemotherapy Induced Peripheral Neuropathy (“CIPN”), we have prioritized CIPN as the initial indication for development of our lead product candidate among our library of FABP5 inhibitor compounds, ART26.12. Treatment and/or prevention of CIPN is a significant unmet need, often resulting in anti-cancer treatment delays or discontinuations, and there are currently no approved treatments for CIPN by the regulatory authorities in the US, UK or EU. We submitted an Investigational New Drug (IND) application for ART26.12 to the US Food and Drug Administration (the “FDA”) on 10 th of June 2024 and received a study may proceed notice from the FDA on the 8 th of July 2024. We anticipate first-in-human studies to begin in the second half of 2024 depending, in part, on the staff and resource availability at our selected contract research organization, to perform such studies.

Previous wording

Presently, we have two US patents, one pending US patent application, three foreign patents (Mexico, Japan and Taiwan) and six pending foreign patent applications (Australia, Brazil, Canada, China, Europe, and South Korea) directed to our cocrystal composition of CBD. Composition claims are generally known in the pharmaceutical industry as the most desired type of intellectual property and should provide for long lasting market exclusivity for our synthetic CBD cocrystal drug product candidate. In addition, due to the reasons outlined above, we believe that our synthetic CBD cocrystal will continue to demonstrate a superior set of pharmaceutical properties compared to non-cocrystal CBD compositions. We plan to develop ART12.11 for multiple potential indications where CBD has shown activity of such anxiety disorders, including PTSD, depression, and other potential uses such as epilepsy, insomnia, and Inflammatory Bowel Disease (“IBD”).

Current wording

Presently, we have two US patents, one pending US patent application, six foreign patents (Australia, Brazil, China, Mexico, Japan and Taiwan) and three pending foreign patent applications (Canada, Europe, and South Korea) directed to our cocrystal composition of CBD. Composition claims are generally known in the pharmaceutical industry as the most desired type of intellectual property and should provide for long lasting market exclusivity for our synthetic CBD cocrystal drug product candidate. In addition, due to the reasons outlined above, we believe that our synthetic CBD cocrystal will continue to demonstrate a superior set of pharmaceutical properties compared to non-cocrystal CBD compositions. We plan to develop ART12.11 for multiple potential indications where CBD has shown activity of such anxiety disorders, including PTSD, depression, and other possible uses such as epilepsy, insomnia, and Inflammatory Bowel Disease (“IBD”).

Previous wording

Our objective is to develop and commercialize ethical pharmaceutical products that provide physicians access to the therapeutic potential lipid signaling of modulators, including modulating the ECS. We intend to pursue technologies and compounds that offer promising therapeutic approaches to known and validated signaling pathways, specifically lipid signaling which includes compounds that promote the effectiveness of the ECS. While many of our programs are directed towards improving the lives of people suffering with cancer and cancer treatments, the Company’s portfolio may ultimately be used to treat a wide range of diseases and conditions where leveraging the ECS is particularly promising, including pain, inflammation, various neurological diseases, epilepsy, anxiety disorders, and dermatologic conditions.

Current wording

Our objective is to develop and commercialize ethical pharmaceutical products that provide physicians access to the therapeutic potential lipid signaling of modulators, including modulating the ECS. We intend to pursue technologies and compounds that offer promising therapeutic approaches to known and validated signaling pathways, specifically lipid signaling which includes compounds that promote the effectiveness of the ECS. While many of our programs are directed towards improving the lives of people suffering with cancer and cancer treatments, our portfolio may ultimately be used to treat a wide range of diseases and conditions where leveraging the ECS is particularly promising, including pain, inflammation, various neurological diseases, epilepsy, anxiety disorders, and dermatologic conditions.

Previous wording

Our operating expenses, for the three months ended March 31, 2024, were $2.6 million compared to $2.3 million for the same period in 2023. The increase in operating expenses for the three months ended March 31, 2024, was primarily the result of an increase of research and development expense associated with payments to third-party subcontractors upon performance of the related work.

Current wording

Our operating expenses, for the three months ended June 30, 2024, were $2.5 million compared to $1.8 million for the same period in 2023. The increase in operating expenses for the three months ended June 30, 2024, was primarily the result of an increase of research and development expense resulting from tax credits received from the UK Government during the three months ended June 30, 2023 of which a similar credit had not yet been received in the current period, offset by a decrease in general and administrative expense mainly related to a decrease in the service cost of stock-based compensation, a non-cash expense.

Previous wording

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. Our net loss was $2.5 million for the three months ended March 31, 2024. In November 2021, we completed an equity offering which generated net proceeds of $18.3 million. Additionally, in May 2022, we entered into a purchase agreement and a registration rights agreement (the “Equity Line”) with an institutional investor, providing for the sale of up to $20.0 million worth of the Company’s Common Stock, over the thirty-six (36) month term of the purchase agreement. Under the terms and subject to the conditions of the purchase agreement, we have the right, but not the obligation, to sell to the institutional investor, and the institutional investor is obligated to purchase, up to $20.0 million worth of shares of the Company’s Common Stock. As of March 31, 2024, in accordance with the Equity Line, the Company issued 372,012 shares of the Company’s Common Stock with aggregate proceeds to the Company of $622, of which 38,741 shares were issued for proceeds to the Company of $55 during the three months ended March 31, 2024.

Current wording

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. Our net loss was $4.9 million for the six months ended June 30, 2024. In November 2021, we completed an equity offering which generated net proceeds of $18.3 million. Additionally, in May 2022, we entered into a purchase agreement and a registration rights agreement (the “Equity Line”) with an institutional investor, providing for the sale of up to $20.0 million worth of our Common Stock, over the thirty-six (36) month term of the purchase agreement. Under the terms and subject to the conditions of the purchase agreement, we have the right, but not the obligation, to sell to the institutional investor, and the institutional investor is obligated to purchase, up to $20.0 million worth of shares of our Common Stock. As of June 30, 2024, in accordance with the Equity Line, we issued 372,012 shares of our Common Stock with aggregate proceeds of $622, of which 38,741 shares were issued for proceeds of $55 during the six months ended June 30, 2024.

Previous wording

In July 2023, the Company filed a $75.0 million shelf registration statement on Form S-3 which became effective on July 14, 2023. The shelf registration statement is effective for three years and permits the Company to sell, from time to time, up to $75.0 million in aggregate value of the Company’s Common Stock, preferred stock, debt securities, warrants and/or units subject to a limit of one-third (1/3) of the Company’s public float within a twelve (12) month period. The shelf registration statement was intended to provide the Company with flexibility to access additional capital when market conditions are appropriate.

Current wording

In July 2023, we filed a $75.0 million shelf registration statement on Form S-3 which became effective on July 14, 2023. The shelf registration statement is effective for three years and permits us to sell, from time to time, up to $75.0 million in aggregate value of our Common Stock, preferred stock, debt securities, warrants and/or units subject to a limit of one-third (1/3) of our public float within a twelve (12) month period if the public float of the Company is less than $75,000. The shelf registration statement was intended to provide us with flexibility to access additional capital when market conditions are appropriate.

Previous wording

As of March 31, 2024, we had cash, cash equivalents, and investments of $7.6 million.

Current wording

As of June 30, 2024, we had cash, cash equivalents, and investments of $5.6 million.

Previous wording

Our existing cash resources are expected to provide sufficient funds to carry out our planned operations into the second half of 2025. We continue to face challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to: delays in execution of our development plans; the scope and timing of our investment in our sales, marketing, and distribution capabilities; changes we may make to the business that affect ongoing operating expenses; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; changes we may make in our business strategy; changes we may make in our research and development spending plans; our need to implement additional infrastructure and internal systems; the impact of the COVID-19 pandemic, the conflicts in Eastern Europe the Middle East and in other countries; and other items affecting our forecasted level of expenditures and use of cash resources including potential acquisitions.

Current wording

Our existing cash resources are expected to provide sufficient funds to carry out our planned operations into the fourth quarter of 2025. We continue to face challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to: delays in execution of our development plans; the scope and timing of our investment in our sales, marketing, and distribution capabilities; changes we may make to the business that affect ongoing operating expenses; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; changes we may make in our business strategy; changes we may make in our research and development spending plans; our need to implement additional infrastructure and internal systems; the impact of the conflicts in Eastern Europe, the Middle East and in other countries; and other items affecting our forecasted level of expenditures and use of cash resources including potential acquisitions.

Previous wording

Until such time as we can generate significant revenue, if ever, we will continue to require substantial additional capital to fund operations for the foreseeable future. We intend to obtain such capital through public or private equity offerings or debt financings, credit or loan facilities or a combination of one or more of these funding sources. We may also seek additional financing opportunistically. We may be unable to raise additional funds on favorable terms or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the COVID‑19 pandemic, recent and any potential future financial institution failures, the conflicts in Eastern Europe, the Middle East and in other countries, and otherwise. Our failure to raise additional capital, if needed, would have a negative impact on our financial condition and our ability to execute our business plan.

Current wording

Until such time as we can generate significant revenue, if ever, we will continue to require substantial additional capital to fund operations for the foreseeable future. We intend to obtain such capital through public or private equity offerings or debt financings, credit or loan facilities or a combination of one or more of these funding sources. We may also seek additional financing opportunistically. We may be unable to raise additional funds on favorable terms or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and, recent and any potential future financial institution failures, the conflicts in Eastern Europe, the Middle East and in other countries, and otherwise. Our failure to raise additional capital, if needed, would have a negative impact on our financial condition and our ability to execute our business plan.

Previous wording

Our expected future capital requirements depend on many factors including expansion of our product portfolio and the timing and extent of spending on sales and marketing. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

Current wording

Our expected future capital requirements depend on many factors including expansion of our product portfolio and the timing and extent of spending on sales and marketing. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt or additional equity financings that we complete may contain terms that are not favorable to us or our stockholders.

Previous wording

Our total current assets as of March 31, 2024, were $8.2 million as compared to total current assets of $11.0 million as of December 31, 2023. The decrease in current assets was primarily due to the funding of our operating activities.

Current wording

Our total current assets as of June 30, 2024, were $6.2 million as compared to total current assets of $11.0 million as of December 31, 2023. The decrease in current assets was primarily due to the funding of our operating activities.

Previous wording

Our total current liabilities as of March 31, 2024, were $0.7 million as compared to total current liabilities of $1.3 million as of December 31, 2023.

Current wording

Our total current liabilities as of June 30, 2024, were $0.9 million as compared to total current liabilities of $1.3 million as of December 31, 2023.

Previous wording

During the three months ended March 31, 2024, cash used in operating activities was $2.9 million compared to $2.2 million during the three months ended March 31, 2023. Cash used in operating activities during the three months ended March 31, 2024, was attributed to a net loss of $2.5 million and a non-cash gain of $0.1 million associated with the Company’s trading of marketable securities and decreases in operating assets and liabilities of $0.6 million offset by stock-based compensation of $0.2 million. Cash used in operating activities during the three months ended March 31, 2023, of $2.2 million was attributed to a net loss of $2.2 million, increases in operating assets and liabilities of $0.3 million and offset by stock-based compensation of $0.3 million.

Current wording

During the six months ended June 30, 2024, cash used in operating activities was $5.0 million compared to $3.8 million during the six months ended June 30, 2023. Cash used in operating activities during the six months ended June 30, 2024, was attributed to a net loss of $4.9 million and a non-cash gain of $0.2 million associated with our trading of marketable securities and decreases in operating assets and liabilities of $0.3 million offset by stock-based compensation of $0.4 million. Cash used in operating activities during the six months ended June 30, 2023, of $3.8 million was attributed to a net loss of $3.8 million, decreases in operating assets and liabilities of $0.3 million and a non-cash adjustment for a non-cash gain of $0.3 million associated with our trading marketable securities, offset by stock-based compensation of $0.6 million.

Previous wording

During the three months ended March 31, 2024, cash provided by investing activities was $1.3 million compared to $2.2 million during the three months ended March 31, 2023. Cash flows provided by investing activities of $1.3 million was the result of $1.8 million received from dispositions of trading marketable securities offset by $0.5 million from purchases of trading marketable securities. During the three months ended March 31, 2023, cash flows provided by investing activities of $2.2 million was the result of $6.5 million received from dispositions of trading marketable securities and $1.5 million received from the maturity of available-for-sale securities, offset by $5.8 million from purchases of trading marketable securities.

Current wording

During the six months ended June 30, 2024, cash provided by investing activities was $3.0 million compared to $2.6 million during the six months ended June 30, 2023. Cash flows provided by investing activities of $3.0 million was the result of $3.5 million received from dispositions of trading marketable securities offset by $0.5 million from purchases of trading marketable securities. During the six months ended June 30, 2023, cash flows provided by investing activities of $2.6 million was the result of $9.2 million received from dispositions of trading marketable securities and $1.5 million received from the maturity of available-for-sale securities, offset by $8.2 million from purchases of trading marketable securities.

Previous wording

During the three months ended March 31, 2024, cash flows provided by financing activities was comprised of proceeds from the issuance of common stock of $0.1 million. During the three months ended March 31, 2023, cash provided by financing activities was $0.0 million.

Current wording

During the six months ended June 30, 2024, cash flows provided by financing activities was comprised of proceeds from the issuance of common stock of $0.1 million. During the six months ended June 30, 2023, cash provided by financing activities was $0.0 million.