PreveCeutical Medical Inc. (CSE: PREV) (OTCQB: PRVCF) (FSE: 18H) Deploys Winning R&D Strategy

• Smaller companies achieve higher R&D productivity
• Collaboration with academia key to R&D success
• Diverse projects increase chance of success

Big Pharma is losing the game in drug development. A decade ago, McKinsey & Company sounded the alarm, warning that the biopharma industry was afflicted by “diminishing R&D productivity.” Despite a doubling of investment in research and development, approvals of “new molecular entities” had fallen precipitously (http://ibn.fm/jUNpt). Nothing appears to have changed since then. A recent report by Deloitte laments the continued decline of returns on R&D investment. While R&D costs have generally remained the same, product revenues are falling, in part because many products never make it to “blockbuster” status (i.e. sales of a billion dollars or more). With narrower margins squeezing profits in the industry, these consultants suggest increasing “the number of drug programs to which a pharmaceutical company has access, without increasing, to the same degree, the capital or resource investment required to access them.”

PreveCeutical Medical Inc. (CSE: PREV) (OTCQB: PRVCF) (FSE: 18H) has taken this advice to heart. The health sciences company has three distinct research programs underway. Top of the line is a non-opioid pain treatment based on cannabinoids to be administered through a proprietary nose-to-brain, soluble gel (Sol-gel) drug delivery system. The research team is also out to identify peptides and proteins derived from the venom of the Caribbean blue scorpion that may have therapeutic use. The company is also working on a smart RNA dual gene therapy for the treatment of type 2 diabetes and obesity.

Expected returns on investment in research and development (R&D) for the top 12 pharma companies fell from 10.1 percent in 2010 to just 3.7 percent in 2016, according to a study by Deloitte’s Centre for Health Solutions (http://ibn.fm/ZWD9Y). From 2010-2016, the R&D divisions of the top 12 pharmaceutical companies were able to advance 376 products to late-stage development. With total forecast sales of $1.7 trillion, each drug was projected to be a blockbuster; average sales for the 376 candidates were $4.5 billion.

It is unlikely that more than just a handful have lived up to expectations. Of 667 new biopharmaceuticals launched in the U.S. over the past 20 years, only 19 drugs, less than three percent, have reached the $1 billion mark (http://ibn.fm/o7QWT). However, averages, like most generalizations can mislead. Deloitte found “a negative correlation between company size and both predicted returns and cost per product.” Big Pharma may be getting it wrong, but smaller biopharmas like PreveCeutical appear to be using models that achieve higher R&D productivity.

Perhaps increased collaboration with academia may be an aspect of PreveCeutical’s innovative approach. The company is working with the University of Queensland in Australia on two major research projects. The cooperation, which is being undertaken through UniQuest Pty. Ltd., the development arm of the university, is centered on PreveCeutical’s Sol-gel system and its Smart RNA Dual Gene Therapy.

The Sol-gel system is an innovative nose-to-brain drug delivery platform that holds the promise of making medication regimens more effective. When therapeutic compounds are taken orally (as many are), they travel through the stomach and intestines and are metabolized, reducing their effectiveness. However, the Sol-gel system works via nasal administration and delivers the therapeutic agent to the mucosal tissue, where it forms a gel and is time released to the brain, increasing bioavailability. It will be used initially for a cannabidiol-based agent designed to provide relief across a range of indications such as pain, inflammation, seizures and neurological disorders. Additionally, the gel stays in the nasal passages, slowly releasing the CBD while keeping it active for up to seven days. This ease of application and its long-lasting effects may be attractive for patients when compared to other delivery systems.

Another project in the development pipeline involves the identification of peptides and proteins in the venom of Caribbean blue scorpion, with the object of engineering ‘Nature Identical™’ compounds. Synthesizing compounds that are identical to the natural venom is expected to facilitate more commercially viable formulations. PreveCeutical already has an over-the-counter (OTC), commercially available oral solution of scorpion venom, CELLB9, on the market. CELLB9 has been used to treat inflammation, bacterial infections, pain and tumors.

PreveCeutical is also working on a Smart RNA Dual Gene Therapy for the treatment of type 2 diabetes and obesity. Gene therapy involves the substitution of defective genes in a cell with genetically altered genes. The team has already put five genes implicated in diabetes and obesity on a target short-list.

In June 2018, the company raised C$6.5 million ($4.9 million) to continue its ambitious research focused on preventative compounds using organic and nature-identical compounds, according to a Crystal Equity update (http://ibn.fm/ykwy1).

For more information, visit the company’s website at www.PreveCeutical.com

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