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| LLTP > SEC Filings for LLTP > Form 10-Q on 20-Dec-2012 | All Recent SEC Filings |
20-Dec-2012
Quarterly Report
FORWARD LOOKING STATEMENTS
Statements contained herein which are not historical facts are forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Such risks and uncertainties include without limitation: established competitors who have substantially greater financial resources and operating histories, regulatory delays or denials, ability to compete as a start-up company in a highly competitive market and access to sources of capital.
The following discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this form 10-Q. Except for the historical information contained herein, the discussion in this form 10-Q contains certain forward-looking statements that involve risk and uncertainties, such as statements of plans, objectives, expectations and intentions. The cautionary statements made in this form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this form 10-Q. The Company's actual results could differ materially from those discussed here.
DESCRIPTION OF BUSINESS
Lightlake Therapeutics Inc. ("Lightlake" or the "Company") is an early stage biopharmaceutical company using its expertise in opioid antagonists to develop innovative treatments for common addictions and related disorders. Currently we are focused on developing a treatment for overweight and obese patients with Binge Eating Disorder, which is thought to be the most common eating disorder in the US today, and a treatment for patients with Bulimia Nervosa, which is a condition estimated to be affecting five million people in the US at this time. For our future endeavors, we have patents that should allow us to widen our product pipeline to address patients with addictions to opioid painkillers, methadone, cocaine, and amphetamine.
In April 2012, Lightlake completed a Phase II clinical trial in Helsinki, Finland, to investigate the use of the opioid antagonist naloxone delivered intra-nasally as a treatment for Binge Eating Disorder. Our approach was unique, through using a single agent with known safety, delivered intra-nasally, in response to behavioral stimuli, and selectively addressing a subset of obese and overweight patients which was thought to represent up to 25% of this total patient cohort. We believed that our approach could deliver successful outcomes in a challenging area that has recently encountered several failures.
The science we are using to develop a treatment for Binge Eating Disorder is derived from the "Sinclair Method," for the treatment of alcohol dependency, which was developed by Dr. David Sinclair. In 1990, Dr. Sinclair discovered that the opioid antagonist naltrexone, when used correctly in the presence of drinking alcohol, resulted in a 78% success rate, with patients abstaining from alcohol or consuming it at safe levels. In 1989, Dr. Sinclair patented his "Method for Treating Alcohol Drinking Responses," also known as the "Sinclair Method," and in 1994, the FDA approved the use of naltrexone as a treatment for alcohol dependency. Since then, this form of treatment has been used by medical practices around the globe as an effective treatment for alcoholism.
Similar to how an alcoholic tends to perceive and consume alcohol, patients suffering from Binge Eating Disorder typically exhibit a lack of control eating foods typically high in sugar, fat or salt, are preoccupied with eating these types of foods and are able to override the feeling of fullness. When these patients eat foods with high levels of sugar, salt or fat, the opioidergic system is activated, which causes the firing of the neurons that release endorphins. The endorphins then bind to opioid receptors on other neurons and activate these opioid receptors, which reinforces the addictive behavior. By blocking these opioid receptors with an opioid antagonist, the effect these endorphins have each time these foods are eaten is counteracted.
We consider naloxone the optimal opioid antagonist to address Binge Eating Disorder as naloxone remains in the brain for two hours, which is the duration of a typical binge. Long-lasting opioid antagonists like naltrexone and nalmefene are sufficient for treating alcoholism and drug addiction, but the short-acting opioid antagonist naloxone however works to selectively remove only unhealthy eating responses. Moreover, we believe that our treatment is well-suited for treating Binge Eating Disorder as it is unlikely to be used in a truly chronic manner. We expect that patients will only administer the treatment when they have the urge to binge eat, and we expect that they will require less of the spray over time as they regain control of their eating habits.
In 2011, Lightlake commenced a randomized double-blind placebo controlled Phase II trial investigating the use of naloxone intra-nasally as a treatment for Binge Eating Disorder. 138 patients meeting the criteria for Binge Eating Disorder were randomly selected from over 900 applicants wanting to participate in the trial and 127 patients enrolled in the trial. While each patient was randomized to take either intranasal naloxone or a placebo nasal spray, all of the patients participated in an exercise program-a behavior that we believe can be reinforced through this approach. Some of the patients carried the A118G, which is a genetic variant for the Mu Opioid receptor, and we planned to determine whether their response to treatment differed. Lightlake contracted the Phase II trial operations to Lightlake Sinclair of Helsinki, Finland.
On August 8, 2012, Lightlake announced the final data from the Phase II trial investigating the use of naloxone intra-nasally as a treatment for Binge Eating Disorder. Results from this study have been very encouraging, whereby patients receiving naloxone demonstrated a significant reduction over placebo in reducing bingeing. In addition, the patients receiving the naloxone nasal spray lost weight in the second half of the study and it would appear that patients with the highest BMI tended to reduce their bingeing the most.
We now aim to collaborate with other parties to progress our drug development program for Binge Eating Disorder. We have identified suitable centers in the US and have plans for Imperial College London, United Kingdom, to be a major site for the EU. We currently have agreements to collaborate with Celesio AG and Lloyds Pharmacy, and we plan to pursue relationships to provide funding and strategic relationships that would help us reach key milestones. We aim to broaden our product pipeline, and anticipate commencing further trials based on our existing as well as potential patents that relate to the use of opioid antagonists. In particular, we are looking to commence Phase II trials to investigate an opioid antagonist-based treatment for Bulimia Nervosa at Kings College London as we are confident that we can apply the same science to develop a solution for this condition.
PLAN OF OPERATION
The Company was incorporated in the State of Nevada on June 21, 2005, as Madrona Ventures, Inc. and on September 16, 2009, the Company changed its' name to Lightlake Therapeutics Inc. The Company's fiscal year end is July 31 and is a Development Stage Company. Lightlake is an early stage biopharmaceutical company, currently developing a new approach for the treatment of overweight and obese patients with Binge Eating Disorder. Our strategy is to develop treatments to addictions and related disorders based on our expertise using opioid antagonists.
During the first quarter ended October 31, 2012, Lightlake carried out operations to utilize the patent and patent applications, including European Patent EP1681057B1 and US Patent Application 11/031,534 , that were acquired on August 24, 2009 from Dr. David Sinclair. The Company was informed on October 15, 2010, that the US Patent application was approved. The Company has successfully commenced and completed a Phase II Binge Eating Disorder trial. The Company has also planned to widen its pipeline through collaboration with Professor Strang, King's College London, to develop a treatment for overdose and develop a treatment for premenstrual syndrome overeating using our patented technology
In November 2009, Lightlake's clinical trial team in Helsinki, Finland was granted ethical approval to begin screening subjects for the Phase II clinical trials of the opioid antagonist-based nasal spray treatment for Binge Eating Disorder. From the approximately 900 people who contacted Lightlake wanting to participate in these trials, 298 of these applicants had gene samples analyzed and 138 subjects were subsequently selected. Of these, 127 entered the trial.
On May 6, 2010, Lightlake was granted ethical approval for the Phase II trials. A preliminary meeting with the FIMEA Regulatory Authority was held on May 7, 2010 and their requirements for approval were obtained. Moreover, these trials are being supervised under the direction of trial coordinator Professor Hannu Eero Rafael Alho, Professor of Addiction Medicine at the University of Helsinki. Crown CRO, a Finnish research organization, provided the external validation for the Phase II trial.
On November 29, 2010, Lightlake announced Dr. Michael Sinclair, a seasoned healthcare executive, as Lightlake's new Executive Chairman. His experience and capability in the healthcare industry is invaluable for Lightlake.
On December 16, 2010, Lightlake announced it had acquired US Patent 5,587,381, entitled: "Method for Terminating Methadone Maintenance through Extinction of the Opiate-taking Responses," using an opioid antagonist as treatment. The patent was acquired for 7,116,667 warrants to purchase the Lightlake's common stock at a price of $0.25 per share. The issuance date of these warrants was November 29, 2010 and they expire in 5 years. The potential to expand the product pipeline into this area is important progress for Lightlake as the Company aims to leverage its capabilities into new therapeutic areas in the future.
On December 29, 2010, Lightlake announced that it had appointed Mary K. Pendergast J.D., LL.M., as its advisor for Regulatory and Strategic Matters. She is President of Pendergast Consulting, a legal and regulatory consulting firm founded in 2003. Her background consists of a distinguished pedigree in her field including serving as Deputy Commissioner and Senior Advisor at the US Food and Drug Administration. Her appointment is a significant addition to the team as her expertise as well as her wealth of knowledge will assist Lightlake in navigating through an increasingly challenging regulatory environment
On October 15, 2010, Lightlake was informed by the Examiner at the US Patent Office that our US Patent Application, 11/031,534, was approved, and that our US patent would be granted. On March 22, 2011, our Patent was officially issued-the patent number is 7,910,599.
On April 17, 2012, Lightlake appointed Mr. Kevin A. Pollack to its board of directors. Mr. Pollack is a Managing Director at Paragon Capital, an investment firm based in New York City, and also the President of Short Hills Capital LLC, a FINRA broker-dealer based in New York City. He previously specialized in corporate finance and mergers and acquisitions at Banc of America Securities, and he also practiced corporate, securities and mergers and acquisitions law at Sidley Austin (formerly Brown & Wood), a global law firm. Mr. Pollack graduated magna cum laude from The Wharton School of the University of Pennsylvania and holds J.D. and M.B.A. degrees from Vanderbilt University, where he graduated with Beta Gamma Sigma honors.
On August 8, 2012, Lightlake announced the final data from the Phase II trial that investigated the use of naloxone intra-nasally as a treatment for Binge Eating Disorder. The randomized, double-blind, placebo-controlled trial was conducted between August 2011 and March 2012 in Helsinki, Finland, Binge Eating Disorder is a psychiatric condition that is manifested by recurrent episodes of eating unusually large amounts of food in a short period of time associated with a sense of lack of control over food intake. Patients receiving the naloxone nasal spray achieved the study's primary endpoint by exhibiting a statistically significant reduction in time spent per week binge eating compared to those patients who received a placebo nasal spray, reducing their bingeing by 125 minutes per week compared to 84 minutes per week for placebo-treated subjects (p=0.024). The effect of the naloxone nasal spray was especially pronounced when comparing the baseline bingeing with the level of bingeing during the last week of treatment, with the patients receiving naloxone reducing their bingeing by 158 minutes per week compared to 101 minutes per week for placebo-treated subjects (p=0.018) during this period. For those patients with a BMI>35 (regarded to be severely obese) the results were particularly impressive, with these patients reducing their bingeing by 210.8 minutes per week compared to 83.8 minutes per week for the placebo-treated subjects at the last week of the trial, (p=0.004). This 75.2% reduction in bingeing was achieved without patients receiving any dietary advice or psychotherapy. In fact, patients were instructed to continue eating as they would normally. This contrasts with other treatments that aim to reduce overeating-these require the patient adopt a modified diet. It also was observed that for those patients taking naloxone, the BMI decreased significantly from week 12 to week 24 (p=0.015) and there was a statistically significant reduction in the percentage of body fat (p=0.004) while the placebo did not have a substantial effect in this regard. By the end of the study, the naloxone group also showed significant decreases in their reported desire to binge (p<0.001), in their time spent thinking about binge eating (p<0.001), and in their reported level of depression (p=0.043), though these effects were not significantly better than in the placebo group.
On September 24, 2012, Lightlake announced that it had appointed Dr. David Kessler as a strategic advisor. Dr. Kessler was the US Food and Drug Administration Commissioner under Presidents George H. W. Bush and Bill Clinton, where he directed a number of new programs including the regulation of marketing and sale of tobacco products to children and nutrition labeling for food. He is a graduate of Amherst College, the University of Chicago Law School, and Harvard Medical School, and has been the dean of the medical schools at Yale and the University of California, San Francisco. He currently serves on the board of various organizations including the National Center for Addiction and Substance Abuse at Columbia University as well as Drug Strategies, a non-profit research institute that promotes more effective drug abuse prevention, education and treatment. Dr. Kessler is also the author of "The End of Overeating: Taking Control of the Insatiable American Appetite," which examines how our bodies and minds are changed when we consume foods that contain sugar, fat, and salt.
We anticipate launching Phase II trials to investigate the application of our technology as a treatment for Bulimia Nervosa, and we are seeking funding to facilitate the launch of these trials. We have made arrangements with Kings College London, UK, to conduct these trials at the institution. In working with Kings College, which has an internationally renowned eating disorder unit, we believe that we will considerably strengthen our already distinguished research and development team. Professor Janet Treasure, head of the Eating Disorders Unit at the South London and Maudsley NHS Trust and author of several well-regarded books on eating disorders, and Professor Ulrike Schmidt, a consultant psychiatrist for the Eating Disorders Service and a fellow of the Academy for Eating Disorders, would serve as tremendous guides for these Phase II trials. We also are considering other trials leveraging off of our patent portfolio.
We also are aiming to develop partnerships with leading addiction institutions in an effort to commence an overdose program that will further leverage our expertise using opioid antagonists by applying a novel technique to enhance the current treatment for overdose.
We have not attained profitable operations and are dependent upon obtaining financing.
We anticipate that additional funding will be required in the form of debt financing and/or equity financing from the sale of our common stock. However, we may not be able to raise sufficient funding to fund our operations.
There has been no bankruptcy, receivership or similar proceeding.
There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business.
We are required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the clinical testing and manufacturing of pharmaceutical product.
We are required to apply for or have any government approval for our products or services.
LIQUIDITY AND CAPITAL RESOURCES
Our cash reserves are not sufficient to meet our obligations for the next twelve month period. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to obtain sufficient funding from the sale of our common stock to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing. We may also seek to obtain short-term loans from our directors to meet our short term funding needs.
RESULTS OF OPERATIONS
We did not have any revenues during the three month period ending October 31, 2012 and have generated no revenues since inception. We have incurred operating expenses in the amount of $971,704 and $4,406,596 for the three month period ending October 31, 2012 and 2011, respectively. The difference in the year over year change was due primarily due to stock based compensation issued during 2011. Additionally we have incurred expenses in our product development. We do not anticipate a decrease in our research and development, however, our development process is dependent on our abilities to raise capital.
Our net loss for the three month period ending October 31, 2012 and 2011 and since inception was $1,095,973, $4,720,100 and $25,024,868, respectively. Included in our net loss were significant recognition of interest expense, derived from the issuance of convertible notes payable. We have recognized debt discounts and beneficial conversion features to our derivative debt contracts. It is uncertain whether these notes are to be converted into equity.
We have not attained profitable operations and are dependent upon obtaining financing to pursue the clinical trials in Binge Eating Disorder and develop the other parts of our pipeline, In their report on our audited financial statements as at July 31, 2011, our auditors raised substantial doubt about our ability to continue as a going concern .
SIGNIFICANT ACCOUNTING POLICIES
It is suggested that these financial statements be read in conjunction with our
July 31, 2012 audited financial statements and notes thereto, which can be found
in our Form 10-K annual filing and amendments thereto, on the SEC website at
www.sec.gov under our SEC File Number 333-139915.
Our significant accounting policies are as follows:
PATENT OWNERSHIP
· The user patents that were acquired by the Company from Dr. David Sinclair, in exchange for 20,333,333 restricted common shares on August 24, 2009. (see Exhibit 5, Sinclair Agreement Form 10-K) The safe and effective treatment is a proprietary patented pharmaceutical medicine-based behaviour program pioneered by Dr. David Sinclair.
· On December 16, 2010, the Company announced it had acquired US Patent 5,587,381, entitled: 'Method for terminating methadone maintenance through extinction of the opiate-taking responses', using an opioid antagonist as treatment. The Company aims to leverage its' capabilities into new therapeutic areas. The potential to expand the product pipeline into this area is important progress for Lightlake Therapeutics. The patent was acquired for 7,116,667 warrants to purchase the Company's common stock at a price of $0.25 per share. The issuance date of these warrants was November 29, 2010 and they expire in 5 years.
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