Mr. Robert Farrell reports

KALYTERA APPLIES FOR $5 MILLION R&D GRANT FROM IIA

Kalytera Therapeutics Inc. has applied for a $5-million grant from the Israel Innovation Authority (IIA) to finance development of its portfolio of novel cannabidiol (CBD) pro-drugs.

IIA, formerly known as the Office of the Chief Scientist of the Ministry of Economy (or MATIMOP), which is responsible for the country's innovation policy, is an independent and impartial public entity that operates for the benefit of the Israeli innovation ecosystem and Israeli economy as a whole.

Many of the world's top-tier biopharmaceutical scientists, CROs and expert research facilities specializing in cannabis are located in Israel, including several of Kalytera's senior scientific staff and advisers. Accordingly, Israel is widely acknowledged as the global centre for Food and Drug Administration and EMEA-compliant (Europe, the Middle East and Africa) pharmaceutical research on cannabis and its molecular constituents such as CBD. It is the ideal location for Kalytera, the business model of which is to develop cannabidiol-derived, FDA-approved medicines for global distribution.

Kalytera has applied for the grant to support further development of its portfolio of novel cannabidiol pro-drugs, all of which were invented by Kalytera. Kalytera's CBD pro-drugs are listed below:

• K-1012, indicated for acute respiratory distress syndrome (ARDS), with an estimated 280,000 patients just in the United States and a $700-million addressable market;
• K-1022, indicated for ulcerative colitis (also known as irritable bowel syndrome, or IBS), with an estimated 800,000 U.S. patients and a $10-billion addressable market;
• K-1032, indicated for acne vulgaris, with an estimated 45 million patients in the U.S. and the five other major markets with a $4-billion addressable market;
• K-1052, being studied as an inducible nitric oxide synthase inhibitor, indicated for sepsis associated renal failure and severe traumatic brain injury (TBI) with an estimated 216,000 patients in the U.S. and the five other major markets with a $2.4-billion addressable market.

In addition to its portfolio of pro-drugs, the company is developing a portfolio of CBD analogue or synthetic derivative drugs for the treatment of bone disease or disorders:

• KAL436 and KAL439, two compounds Kalytera is investigating to assess their potential ability to improve bone fracture healing. KAL436 and KAL439 are both synthetic derivative compounds of CBD that have been structurally modified to enhance solubility in water to improve potency.

In the U.S., bone fractures account for an estimated 10.2 million visits to hospitals and physician offices. Worldwide, more than 50 million fractures occur every year. Osteoporosis is the most common cause of fractures and the prevalence of it and low bone mass is expected to increase in coming years due primarily to the aging of the population.

KAL671 is a unique synthetic fatty acid amide and an endocannabinoid-like molecule that may restore bone in persons suffering from osteoporosis, the most common bone disease. The global osteoporosis drugs market was valued at $8.4-billion in 2013 and is projected to reach $8.9-billion by 2020.

The company anticipates receiving a decision from the IIA on its grant application in the third quarter of this year. The grant, if approved, will be non-dilutive to shareholders in the form of a conditional, non-recourse loan to be paid back from future royalties.

Commenting on its recent IIA grant application, Dr. Andrew L. Salzman, chief executive officer of Kalytera, said: "Kalytera is developing an entirely new generation of CBD-derived medicines -- for FDA and EMEA pathways to commercialization -- offering increased efficacy and far less side effects (improved safety profile) to treat serious and chronic disease. Our science is viewed favourably by the biotechnology industry and is a strong candidate for grants such as those offered by the IIA.

"We have a world-class management team and boards of directors and advisers, composed of cannabis biotech industry leaders in Israel and the U.S. enabling Kalytera to capitalize on opportunities worldwide to bring our proprietary pipeline of drugs to clinical stage and commercialization," he added. "Concurrently with our research on the pro-drugs and synthetic compounds, we are advancing our clinical research on CBD to treat GvHD, whose data from a recent phase 2a study announced Feb. 22 were encouraging."

About Kalytera Therapeutics Inc.

Kalytera is a clinical-stage pharmaceutical company pioneering the development of a next generation of cannabinoid therapeutics. Through its proven leadership, drug development expertise and growing intellectual property portfolio, Kalytera seeks to establish a leading position in the development of novel cannabinoid medicines for a range of important unmet medical needs -- with an initial focus on graft versus host disease (GvHD).

Kalytera is also developing a new class of proprietary cannabidiol (CBD) therapeutics.

Kalytera is developing innovative CBD formulations and pro-drugs intended for commercialization as FDA and EMEA-approved prescription medications in an effort to overcome these limitations, and to target specific disease sites within the body.

We seek Safe Harbor.