AXIM BIOTECHNOLOGIES, INC. WHERE YOU CAN FIND MORE INFORMATION
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information required by the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with the
On our Internet website, http://www.aximbiotech.com, we post the following
recent filings as soon as reasonably practicable after they are electronically
filed with or furnished to the
When we use the terms "AXIM", "Company", "we", "our" and "us" we mean
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, the other reports, statements, and
information that the Company has previously filed with or furnished to, or that
we may subsequently file with or furnish to, the
Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. We do not undertake any obligation to publicly update any forward-looking statements. As a result, investors should not place undue reliance on these forward-looking statements.
Overview
Acquisition of
On
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Current Operations Following the Acquisition of
As we look forward to the next 12 months year with the acquisition of Sapphire Biotech, we anticipate that we will advance our mission of improving global cancer care through the development of novel therapeutics for controlling metastatic cancer spread, and diagnostics for early cancer detection, response to treatment, and for monitoring post-treatment recurrence. We have made significant progress with our lead therapeutic drug candidate, SPX-1009, having successfully completed in vitro studies. As we commence our animal studies, we plan to prove that SPX-1009 will demonstrate its ability to block cancerous tumor growth and the spread of metastasis in vivo, a key milestone for 2020. This year, we also anticipate completing the development of our universal companion diagnostic test to measure the efficacy of cancer treatment by tracking QSOX1 levels in blood.
Anticipated Milestones for 2020
Sapphire has been investigating the enzyme Quiescin Sulfhydryl Oxidase 1
(QSOX1), a master regulator of extracellular matrix remodeling, and its
overexpression by tumor cells. Overexpression of QSOX1 has been unambiguously
linked to promoting tumor invasion and metastasis. One of the Company's
co-founders,
The Company believes that its therapeutic drug development strategy targeting the metastatic spread is a unique, novel and pioneering approach to saving lives. The near-term objective of the Company is to demonstrate the ability of its lead anti-QSOX1 drug candidates to suppress tumor growth and metastasis and to advance them into pre-clinical studies.
Additionally, the Company believes that QSOX1 has a significant potential to be developed into an important biomarker for liquid biopsy cancer test. The Company anticipates that ongoing diagnostic product development in 2020 will result in a commercial prototype in early 2021 of a universal companion diagnostic to measure the efficacy of any ongoing cancer treatments based on measuring QSOX1 levels. Ultimately, the Company aims to develop a blood test that makes possible the early detection of cancer.
The Company's anticipated key milestone achievements for 2020 include:
Diagnostic Product Development
·Immunohistochemistry (IHC) Diagnostic Test
Development of an IHC test using existing proprietary anti-QSOX1 polyclonal antibodies and novel monoclonal antibodies. The company will test the top 3-4 proprietary antibodies on different tumor types, utilizing commercial tissue arrays for rapid screening and discovery, and subsequently, collaborate with pathology labs for evaluation by practicing oncologists. Status: Ongoing
·Universal Companion Diagnostic Test
The company has developed proprietary assays to detect QSOX1 levels in patients
undergoing cancer treatment. Sapphire has already tested over 200 bladder cancer
samples seeking to establish a correlation of QSOX1 levels with tumor
progression/regression. In addition, the Company's test is currently the subject
of an ongoing clinical trial relating to pancreatic cancer samples. Ongoing
testing in vitro and in vivo will continue throughout 2020. The Company has
signed an agreement with
Universal Cancer Biomarker
The Company continues research and development relating to QSOX1 with the objective of studying QSOX1 levels in the blood at various stages of cancer. QSOX1 overexpression in tissues of cancer patients has been documented in various studies, but additional work is required with the blood of cancer patients to make the correlation between QSOX1 levels with various cancer stages. The ultimate goal is to validate QSOX1 as a blood biomarker for cancer. Breast, lung and pancreatic cancer-focused validation studies are planned for 2020. Status: Ongoing.
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Therapeutic Product Development
·Pre-Clinical Animal Studies/Stage 1: SPX-1009 Safety & Efficacy
The Company has signed an agreement with TD2 to determine the effectiveness of its lead drug candidate SPX-1009 to block the spread of metastasis. The animal studies will be conducted in a mouse model of triple-negative breast cancer using human tumor xenografts. The study will entail the injection of human tumor cells into the mice to grow as a primary tumor that will also metastasize to the lungs. Mice will be administered SPX-1009 and SBI-183 to measure tumor growth/metastasis as compared with control mice. Concurrently a pharmacokinetics (pK) study will be conducted with SPX-1009 to evaluate its absorption, distribution, metabolism and excretion profile early in development. Status: Animal studies to begin mid-April, 2020 with an expected duration of 5-6 weeks.
·Pre-Clinical Animal Studies/ Stage 2: SPX-1009 Efficacy in Combination Therapy.
The Company plans to conduct Stage 2 Animal Studies with SPX-1009 at the TD2
facility. The study will test the concept of combination therapy of SPX-1009
with several cytotoxic drugs. The purpose is to assess tumor cell survival and
invasion in the presence of several cytotoxic drugs and immune checkpoint
inhibitor antibodies in combination with SPX-1009 in 2 breast cancer and 2
pancreatic cancer cell lines. The determination will be made regarding the
synergy or additive effects occurring during the administration of SPX-1009 and
several cytotoxic drugs. Status: Estimated to begin
·Clinical Human Studies
Upon successful completion of Pre-Clinical Animal Studies Stages 1 & 2, we
anticipate identifying an
Milestones 2019 to Date
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Cannabinoid Development
Although AXIM is transitioning its focus from a cannabinoid biotech to a cancer biotech company there is still a crossover and a potential large market opportunity. That is because cannabinoids are showing to exert various palliative effects in cancer patients and cannabinoids are proving to inhibit the growth of different types of tumor cells, in laboratory animals. Additionally, drug cocktails are a promising strategy for diseases such as cancer, because cocktails can be more effective than individual drugs and can overcome problems of drug resistance. A recent study showed that mice treated with both CBD oil and chemotherapy survived almost 3x longer than chemotherapy alone.
Other studies in vitro and in vivo focusing on pancreatic cancer found that cannabinoids can help slow tumor growth, reduce tumor invasion, and induce tumor cell death. A 2019 study indicated that CBD could provoke cell death and make glioblastoma cells more sensitive to radiation, but with no effect on healthy cells. A study in experimental models of colon cancer in vivo suggests that CBD may inhibit the spread of colorectal cancer cells. Other research demonstrated the efficacy of CBD in pre-clinical models of metastatic breast cancer. The study found that CBD significantly reduced breast cancer cell proliferation and invasion.
However, there is a huge problem, cannabinoids are not water-soluble.
Cannabinoids are lipophilic molecules (i.e., oil-based compounds that are not soluble in water). This means that when you place extracted hemp oils into water, they float. Cannabionoids in their natural lipophilic state do not mix with water and will not dissolve in the water. This has always been the problem for oil-based compounds-because the human body is 60% water, they have difficulty dissolving, and more importantly, absorbing these molecules.
The term "water solubility" refers to a compound's ability to dissolve into water at a specific temperature. The term bioavailability refers to the amount of active ingredient in the compound, which makes it into the bloodstream. If an ingredient is injected directly into the bloodstream, it is 100% bioavailability.
When CBD is ingested, it is absorbed by the digestive system. From the stomach, the compounds enter the hepatic portal system, where they are carried through into the liver. The liver then metabolizes the CBD molecules, in what's referred to as the "first pass effect." Here, CBD can be significantly broken down before reaching the blood.
Other reasons for decreased oral bioavailability include destruction of the drug by gastric acidity, intestinal membrane enzymes, complexion with food constituents or bacterial enzymes. Foods, especially fat, can slow gastric emptying. Absorption can be limited by the short transit period of the drug through the small intestine (2-4 hours). These functions act on CBD, reducing the concentration of the compounds before passing on what remains to the bloodstream. The first pass metabolism effects a large portion of the CBD and its metabolites are excreted, which means that a lot of the benefits are literally flushed away. Lastly there are questions about liver toxicity, especially in large doses.
It is estimated that the bioavailability of CBD is as low as 5-10 percent going through the stomach into the bloodstream.
Axim's New Solution
We have been working for the last several months in the laboratory to develop water soluble polyfuncitional cannabinoids. We recently perfected our reaction process and have filed for a new patent. It shows that our CBD molecule is about 338x more water-soluble than CBD. To put it into perspective, if one dissolves 1G of CBD in water-octanol mixture, only 3.9 micrograms of it will end up in water; while for 1G of our new polyfunctional CBD 1,318 micrograms will go into water. We believe this could be a game changer for the entire cannabinoid world.
Anticipated Milestones for 2020
We now plan to generate next generation multifunctional cannabinoid constructs that may produce more potent response then individual cannabinoid molecules with an added benefit of being more water-soluble and bioavailable. The newly generated compounds will then be tested in several cell-based assays alongside with corresponding individual cannabinoids and mixtures thereof.
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Another advantage of such hybrid systems is that bioactive compounds can be specifically tailored to have a broad spectrum of receptor affinities via single administration of a chimeric compound instead of a specific ratio of two different compounds. This is especially true for heterobifunctional compounds comprised of CBD and CBG molecules. While action of CBD is well understood and includes anti-epileptic, anti-inflammatory, anti-biotic and other activities, the biological function of CBG is still poorly understood. It is believed that CBG is beneficial for cardiac health, helps heal inflammatory bowel disease and, most important, inhibits growth of colon cancer. The CBD-CBG hybrid may prove to have synergystic effects, which combined with improved solubility and bioavailability will provide a general new platform for the design of future cannabinoid-based drugs.
Bifunctional Cannabinoids
Next we are planning to synthesize combinations of cannabinoids: (1) CBD-CBD; (2) CBD -CBG; and (3) CBG-CBG. Three differently sized linkers will be used to determine best possible balance between water-solubility and activity. Hence, 9 different compounds will be produced in this section. These new chemical entities will be tested side by side with individual CBD/CBDA and CBG/CBGA molecules for solubility and activity (see below).
Multifunctional Cannabinoids
We plan to expand the bifunctional strategy to include three, four, … and more poly-valent CBD/CBG constructs over the next 12 months. Such linkers can be modified with the same or different cannabinoid molecules, which will further enhance their effectiveness, may produce unexpected and diverse effects, while at the same time supporting good water solubility and bioavailability. Additionally, such multifunctional constructs will allow labeling with different tracers. For example, a unique feature is the ability to add two cannabinoid molecules and a fluorescent or radioactive label. This will give us a unique opportunity to track biodistribution of the cannabinoid hybrids throughout cells or even live animals.
Biological Activity
The biological activity of the resulting compounds will be tested against native (unconjugated) CBD, CBG, CBDA and CBGA in functional binding, antibacterial/antifungal, and cancer proliferation assays as follows.
Antimicrobial assays: DH10B E. coli cells will be grown in our lab overnight, at 37C at 270 rpm rotation in LB medium with streptomycin (0.1%) to a cell density of 2 x 106 CFUmL-1. In control experiments, the above procedure will be repeated with no compound in the culture as a negative control.
Cancer proliferation assay and Cancer cell migration assay tests are planned using human breast cancer cell lines, MDA-MB-231 and MCF-7, The assays will be performed exactly as specified by the manufacturer's protocol.
Pre-Clinical Animal Studies/ Stage 1: Polyfunctional Cannabinoids Efficacy in
Combination Therapy. Axim plans to conduct Stage 1 Animal Studies with our
polyfunctional cannabinoids together with drug compound SPX-1009 and several
cytotoxic drugs at the TD2 facility. The purpose is to assess tumor cell
survival and invasion in the presence of several cytotoxic drugs and immune
checkpoint inhibitor antibodies in combination with our polyfunctional
cannabinoids, SPX-1009 in 2 breast cancer and 2 pancreatic cancer cell lines.
The determination will be made regarding the synergy or additive effects
occurring during the administration of polyfunctional cannabinoids, SPX-1009 and
several cytotoxic drugs. Status: Estimated to begin
Clinical Human Studies
Upon successful completion of Pre-Clinical Animal Studies with Polyfunctional
Cannabinoids, we anticipate identifying an
Anticipated Expenses
During the next twelve months we anticipate incurring costs related to: (i) filing Exchange Act reports, (ii) contractual obligations, (iii) clinical trials, and (iv) continued research and development.
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Intellectual Property
Currently, our intellectual property includes patents, trademarks and other
proprietary, confidential and/or trade secret information. Our patent
applications include fourteen (14) patent application families for oral care
compositions, sugar alcohol kneading method, cosmetics, THC extraction method,
antimicrobial compositions, nicotine dependence treatment gum, opioid dependence
treatment gum, restless leg treatment gum, suppositories, method to treat
psoriasis, method to treat atopic dermatitis, method to treat vitiligo, chewing
gum for treatment of migraine, and polyfunctional cannabinoids. Eleven (11) of
our patent applications are in non-provisional stage in the
We have twenty nine (29) trademark applications some of which are registered
trademarks, received Notices of Allowance, or are pending in front of the United
States Patent and Trademark Office: Axim, A Axim Biotech, Cannanimals, CanQuit,
CannaCoal, CanChui, CanShu, Oraximax, ReneCann, OpthoCann, Cannonich, Cannocyn,
HempChew, SuppoCann, CanChew, CanChew Hemp CBD Gum, CanChew Rx, MedChew, CanChew
Plus, CanQuit OC, MedChew GP, MedChew RL, CanChew +, CanChew +10, CanChew +50,
CanChew +100, Hangover Gum, Wellness Gum, and Hole in One. Corresponding
trademark applications have been filed in other jurisdictions have received
registration or are pending. We also recently acquired a
Market, Customers and Distribution Methods
Our focus is on the development of innovative pharmaceutical, nutraceutical and cosmetic products focusing on diseases and conditions for which currently there are no known efficient therapeutic ingredients or delivery systems for known active pharmaceutical ingredients. The body of knowledge regarding therapeutic use of cannabinoid-based formulations is steadily increasing. We plan to be an active player in this field of biosciences with our extensive R&D and pipeline of innovative products.
Our target customers are primarily end consumers via Internet sales, direct-to-consumer health and wellness stores, collectives, cooperatives, affiliate sales and master distributors. Secondarily, we are targeting manufacturers of products that can readily replace their raw base materials with our materials, making the products more environmentally friendly and sustainable. Next, we will target retail stores with major distribution companies who have preexisting relationships with major retail chain stores. As we continue to develop our business, these markets may change, be re-prioritized or eliminated as management responds to consumer and regulatory developments.
Competition
There are many developers of hemp-based consumer products, many of which are under-capitalized which we consider to be viable acquisition targets. There are also large, well-funded companies that currently do not offer hemp-based products but may do so in the future.
Source and Availability of Raw Materials
The Company currently has arrangements with multiple reputable suppliers which
are expected to meet the projected needs for materials for the upcoming year.
These suppliers are based in
Government Regulation
On
As a consequence of the 2018 Farm Bill, hemp has now been permanently removed
from the Controlled Substances Act (CSA). It is now deemed an agricultural
commodity, no longer able to be classified as a controlled substance, like
marijuana. Furthermore, by redefining hemp to include its "extracts,
cannabinoids and derivatives,"
Accordingly, the
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We believe that the 2018 Farm Bill should give comfort to federally regulated institutions, pharmacies, banks, merchant services, credit card companies, e-commerce sites and advertising platforms, to conduct commerce with the hemp and hemp CBD industry.
On
Despite the approvals by the FDA and DEA for Epidiolex, any of these foregoing factors, many of which are beyond our control, could jeopardize our ability to obtain regulatory approval for and successfully market our planned products. Moreover, because our business is almost entirely dependent upon these product candidates, any such setback in our pursuit of regulatory approval would have a material adverse effect on our business and prospects.
Employees
As of
Costs and effects of compliance with environmental laws
The expense of complying with environmental regulations is of minimal consequence.
Results of Operations
The following discussion of our financial condition and results of operations
for the period ended
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Comparison of the six months and three months ended
For the six months periods ended
Six months Six months
Period Ended Period Ended
30-June-20 30-June-19 $ Change % Change
Research and development $ 126,292 $ - $ 126,292 100.00%
Depreciation 5,124 1,678 3,446 205.36%
Advertising and promotions 362,487 86,683 275,804 318.18%
Travel and entertainment
expenses 14,349 46,463 (32,114) (69.12%)
Office/Other expenses 73,698 72,181 1,517 2.10%
Impairment and amortization 6,763 3,158 3,605 114.15%
Licenses and permits 54,271 3,340 50,931 1,524.88%
Legal and other fees 221,882 109,470 112,412 102.69%
Offices salary and wages 294,399 85,500 208,899 244.33%
Consulting fees 33,000 47,500 (14,500) (30.53%)
Compensation costs 8,200 1,365,000 (1,356,800) (99.40%)
Audit fees 81,703 74,000 7,703 10.41%
Filing fees 4,898 6,558 (1,660) (25.31%)
Insurance expense 62,166 50,843 11,323 22.27%
Directors fees 40,000 105,000 (65,000) (61.90%)
Total Operating expenses from
continuing operations $ 1,389,232 $ 2,057,374 $ (668,142) (32.48%)
Our operating expenses from continuing operations for the six months periods
ended
For the three months periods ended
Three months Three months
Period Ended Period Ended
30-June-20 30-June-19 $ Change % Change
Research and development $ 121,437 $ - $ 121,437 100.00%
Depreciation 4,285 839 3,446 410.73%
Advertising and promotions 42,476 37,943 4,533 11.95%
Travel and entertainment expenses 1,303 31,074 (29,771) (95.81%)
Office/Other expenses 30,348 46,119 (15,771) (34.20%)
Impairment and amortization 3,125 - 3,125 100.00%
Licenses and permits 1,270 940 330 35.11%
Legal and other fees 134,014 53,288 80,726 151.49%
Offices salary and wages 189,399 30,000 159,399 531.33%
Consulting fees 24,000 23,500 500 2.13%
Compensation costs - 227,500 (227,500) (100.00%)
Audit fees 61,703 16,500 45,203 273.96%
Filing fees 3,508 5,236 (1,728) (33.00%)
Insurance expense 30,994 25,504 5,490 21.53%
Directors fees 15,000 85,000 (70,000) (82.35%)
Operating expenses from
continuing operations $ 662,862 $ 583,443 $ 79,419 13.61%
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Our operating expenses from continuing operations for the three months periods
ended
Other (Income) expenses:
During the three months ended
Our interest expense of continuing operations for the three and six months ended
The Company incurred
Going concern
The Company's unaudited condensed consolidated financial statements have been
presented assuming that the Company will continue as a going concern. As shown
in the financial statements, the Company has negative working capital of
The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
Liquidity and Capital Resources
Six months ended
Net Cash Provided by/Used in Operating Activities
Net cash used in continuing operating activities and discontinued operating
activities was
Net Cash Provided by Investing Activities
Net cash provided by investing activities during the period ended
Net Cash Provided by Financing Activities
Net cash provided by financing activities during the six months period ended
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Critical accounting policies
The preparation of financial statements in conformity with
Recently issued accounting standards
In
The Company has a long-term operating lease, and the long-term operating lease
only took effect in
In
In
In
In
Other recent accounting pronouncements issued by the FASB and the
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Foreign Currency Transactions
Our Foreign currency gain (loss) were
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