Benzinga | Mar 24, 2021 08:35AM EDT

180 Life Sciences CEO Issues Letter To Shareholders (Full Letter)

Dear Fellow Stockholder,

It has been a busy and productive few months here at 180 Life Sciences. As you may recall, I previously authored a letter to you mid-November 2020, on the heels of our going public through the closing of a merger with KBL Merger Corp IV ("KBL"), resulting in 180 Life Sciences becoming a stand-alone publicly-traded company and its common stock being listed on The NASDAQ Capital Market under the symbol "ATNF".

Since then, we have been hard at work addressing legacy related issues and strengthening our balance sheet. I am pleased to report that we have been successful on both fronts. Thanks to the hard work of our Audit Committee, our interim CFO, Ozan Pamir, and our auditors, we have restated the previously filed financials of KBL and completed an $11.7 million private placement. We are also pleased to report that the Company's convertible debt of over $5M, has now been reduced to just $316k. We had also inherited preferred equity of $3M, which has been fully converted to equity. With the $11.7 million private placement that the Company closed in February 2021, we further strengthened our balance sheet and are able to expedite some of our clinical trials which are not funded by grants. We anticipate reducing a portion of accrued salaries held by insiders in the near future by converting such debt into common stock, further aligning their goals with those of all of our stockholders.

Additionally, we are in the process of adding two independent directors to our board, which is expected to bring the Company in compliance with NASDAQ's continued listing requirements.

As we have been working our way through these matters in the recent months, our belief that management is one of a company's most important assets and often the key to its ultimate success has been solidified. I have previously told you about myself and why I have taken on this role at this point in my career. I also have told you about the world class team of scientists, physicians, and executives that we have put together that now comprise our management team and board of directors.

Before I discuss what has occurred since my last communication, I'd like to briefly reiterate a little about my background, along with that of our team. As you may recall, I have dedicated my life to the medical profession, having more than 25 years of biomedical research and management experience. I was the founding CEO and served as the Chairman at OncoMed Pharmaceuticals, Inc. I served as President at Roche Bioscience in Palo Alto, California, the former Syntex Pharmaceuticals, where I was responsible for all bioscience research and development, ranging from genetics and genomics to clinical development of numerous new pharmaceuticals.

I started my career in biotech as the Chief Scientific Officer and Senior Vice President of Research and Development at Centocor, where I led the team responsible for developing Remicade(r), the very first of the TNF (tumor necrosis factor) inhibitor biologics. This was in collaboration with Prof. Sir Marc Feldmann, one of the founders of 180 Life Sciences and current Co-Chairman of our Board of Directors. Marc and I go back a long way, to the late 70s. Remicade(r) was a breakthrough product, it was the first anti-TNF to show dramatic efficacy and triggered the "antibody revolution," according to a report in Fierce Pharma. Remicade sales topped $7 billion USD in 2016 and were $5 billion in 2019.

While I believe my experience gives me a unique background to lead 180 Life Sciences, I continue to fundamentally believe in the importance of having a high-quality team around me to help ensure we reach our collective goal of creating sustainable stockholder value. The rest of our management team consists of highly regarded and accomplished executives, scientists, and physicians whose backgrounds really speak for themselves:

* Prof. Sir Marc Feldmann, Co-Founder, Co-Chairman of the Board of Directors -- A leading immunologist, professor at the University of Oxford and the inventor of anti-TNF therapy, which according to Research and Markets, is the world's biggest-selling drug class, with sales of approximately $40 billion in recent years. With his team, he discovered the advantages of targeting TNF, as well as using combination therapies. Working with Sir Ravinder Maini and myself, Centocor Biotech (now Janssen Biotech, a part of Johnson & Johnson) licensed Prof. Feldmann's key patent to develop Remicade(r), which is one of the best-selling drugs in the world according to Fierce Pharma, and AbbVie licensed his patents for use with Humira, cited as the world's best-selling drug by BioProcess International. Sir Marc is intimately involved in the development of 2 of the 3 projects being developed by 180 Life Sciences, new uses of anti-TNF and synthetic cannabidiol analogues. He is a Fellow of the Royal Society and a foreign Member of the National Academy of Sciences, USA.

* Prof. Lawrence Steinman, Co-Founder, Co-Chairman of the Board of Directors -- Professor of Neurology and Pediatrics at Stanford University. Prof. Steinman's work led to the development of TYSABRI, a highly effective treatment for multiple sclerosis and inflammatory bowel disease. TYSABRI was sold to Biogen for $3.25 billion in 2013. He also founded Neurocrine Biosciences, a NASDAQ-listed company with an approximately $8.6 billion market cap. His lab at Stanford University is dedicated to understanding the pathogenesis of autoimmune diseases, particularly multiple sclerosis. He served on the Board of Centocor and currently serves as an advisor to Atreca. Prof. Steinman received a B.A. from Dartmouth College and M.D. from Harvard Medical School, and is a Member of the National Academy of Sciences, USA.

* Dr. Jonathan Rothbard, Co-Founder, Chief Scientific Officer -- Responsible for helping to establish a variety of biotech startups, including Amylin Pharmaceuticals (which was sold to AstraZeneca and Bristol-Myers Squibb for $7 billion), ImmuLogic, CellGate and Cardinal Therapeutics. Dr. Rothbard completed his post-doctoral fellowship with Dr. Gerald Edelman at Rockefeller University and served as Head of the Molecular Immunology laboratory at the Imperial Cancer Research Fund in London, England, before returning to Stanford University.

Prof. Steinman and Dr. Jonathan Rothbard are developing the Alpha 7, agonists to ?7 Nicotinic Acetylcholine receptor.

We previously announced the appointments of Larry Gold M.D., and Donald McGovern Jr., to our Board of Directors. They are very experienced and highly regarded in the biotech industry and corporate world. We anticipate the appointment of two new independent directors in the coming weeks, which we expect to satisfy NASDAQ's continued listing requirements.

I'd like to now tell you a little about our exciting pipeline which includes three clinical programs addressing the following indications:

2 Early Dupuytren's contracture, a fibrotic disease of the hand, which is in Phase 2b/3 clinical trial, with results expected in the 2H 2021. The timing of our results has been impacted by restrictions caused by COVID-19. Dupuytren's disease is estimated to impact over 11 million Americans, and about the same number in the European Union. Our trial, which is the largest ever clinical trial conducted on Dupuytren's Disease, is focused on treating early-stage disease and preventing the progress of the disease to avoid the hand contracture disability. All other therapies are aimed at treating patients once the finger disability has occurred. This trial is entirely grant funded.

4 Frozen shoulder, with a grant to initiate the clinical study recently awarded by the National Institute for Health Research, U.K. Due to COVID-19, we plan to start the trial in Q3 2021. Again, we plan to try and avoid patients from experiencing the pain and disability associated with frozen shoulder by treating the condition early, as all other therapies are aimed at treating the disability.

6 Post-operative cognitive delirium disorder and dysfunction, a major unmet clinical need occurring in the elderly patient population, most commonly following lengthy surgical procedures, for example, during hip fracture repair or after CABG (Coronary Artery Bypass Graft). We hope to be able to reduce or prevent this dysfunction by treating patients with anti TNF agents at the time of surgery.

Additionally, our pre-clinical discovery programs include:

2 Nonalcoholic steatohepatitis (NASH), which started preclinical studies with Celgene-BMS in human tissue in Q2 2020. NASH is most commonly caused by non-alcoholic fatty liver disease (NAFLD), which is estimated to affect ~30% of the US population. Stay tuned for more on this.

4 A program focused on the development of unique, Food and Drug Administration (FDA)-approved, pharmaceutical-grade oral synthetic cannabidiol analogs to treat pain that is specifically focused on arthritis. This project is run in Israel and Oxford, England. We are working with one of the foremost authorities on Cannabis chemistry and the discoverer of the body's own "cannabinoids", Prof. Raphael Mechoulam, who is also a co-founder of this program. To optimize uptake and bio-availability, we are working with specialists in cannabinoid drug delivery, Prof. Avi Domb and Prof. Amnon Hoffman in Jerusalem, Israel.

6 The ?7nAChR program, which aims to develop ?7nAChR agonists for the treatment of inflammatory diseases, initially ulcerative colitis induced in ex-smokers.

At 180 Life Sciences, we continue to move forward on all fronts. Including efforts to increase visibility for our team and its mission. We are proactively working on telling our story through a steady flow of participation in investor conferences, thought leadership opportunities through earned media, and continued amplification through social media channels.

We look forward to the results of our Phase 2b/3 study on Dupuytren's contracture, a disease that as discussed above, impacts a large total addressable market estimated to comprise over 22 million in the US and EU. We anticipate these results in the fourth quarter of 2021. We believe that if we are able to successfully commercialize this drug, of which there can be no assurance, it has the potential to generate significant revenues for the Company.

It is important to note that our business model itself is unique for a biotech company. Almost all our clinical studies to date have been funded in full through grants. While ultimately, we intend to fund some studies internally, we anticipate our operating expenses will remain low relative to our peers. There are many advantages of doing clinical development mostly with academic leaders, both in cost, efficiency and credibility.

I'd like to close by telling you that while recent months have been challenging at times, my personal goal for 180 Life Sciences remains the same as always. My goal and the goal of the other members of management, is to benefit patients and build stockholder value by developing world leading products to solve unmet medical needs. As management and insiders currently own over 50% of the Company, we believe our goals are directly aligned with the stockholders of the Company.

We are now looking forward and focused on execution. We are a team who have developed not one but many blockbuster drugs. Our goal for 180 Life Sciences is to execute on a model we all know well, building upon past success, experience, and relationships to bring our pipeline candidates to market. We look forward to working hard for our collective benefit and communicating with you regularly moving forward. Thank you again for your invaluable support.

Sincerely,

James Woody MD, PhD

CEO, 180 Life Sciences