CTT Pharmaceutical Holdings, Inc.

What they do

CTT Pharma, a wholly owned subsidiary, develops fast-dissolving oral thin wafers as a carrier for pharmaceutical agents, including natural and synthetic cannabis extracts (THC, cannabinoids, terpenes). The wafer is an orally administrable film that mixes a film-forming agent with an aqueous solution and is exposed to heating and cooling cycles. The company states it has abandoned all previous business operations, including its prior mining business, which ceased in 2013.

Revenue drivers

• Cannabis-based oral wafer — The company intends to develop a cannabis-based wafer for pain relief and side effects of cancer treatment, but it generated no revenues during the three and nine months ended September 30, 2015.
• Licensing or joint venture — Management states it will discuss a joint venture or licensing agreement with large U.S. pharmaceutical companies rather than pursue FDA approval itself, citing costs, and does not anticipate starting this process for at least 24 months.
• Other pharmaceutical agents — The wafer platform is described as a carrier for pharmaceutical agents generally; the wafer's rapid dissolution is cited as attractive for pediatric and geriatric patients who have difficulty swallowing tablets and capsules.

Recent performance

For the three and nine months ended September 30, 2015, CTT incurred net losses of $(290,864) and $(990,572), compared with $(43,196) and $(11,424) for the comparable 2014 periods. The increase was attributed to 2015 consulting fees of $127,680 and $490,894, investor relations expenses of $123,822 and $245,958, and $123,284 of marketing costs for the nine months, with no comparable 2014 expenses. At September 30, 2015, cash was $32,121, current assets were $922,038, current liabilities were $183,954, and working capital surplus was $738,084. Full-year net losses were $672,162 in 2014, $18,911 in 2013, and $1.0 million in 2012; operating cash flow was negative $72,250 in 2014 and negative $209 in 2013.

Strategy

Management's stated plan is to complete development of the cannabis-based wafer and to seek a joint venture or licensing arrangement with large U.S. pharmaceutical companies rather than fund U.S. regulatory approval itself. The company has budgeted $600,000 in operating costs for the next year and $1,880,000 for the second year. It states it will need a significant infusion of capital, has no commitment for additional funding, and that without it, fully implementing the business plan is highly unlikely. Canada's legislation permitting licensed companies to produce and export cannabis products is cited as relevant to the company's direction.

Risks

• Going concern — At September 30, 2015 the company had a retained deficit of $(1,918,408), and it states that material uncertainties may cast significant doubt on its ability to continue as a going concern.
• No revenue and limited operating history — The company generated no revenues during the three and nine months ended September 30, 2015 and describes itself as a development-stage company with limited operations since its organization in March 2007.
• Financing need — Management states it needs a significant capital infusion, has no commitment for additional funding, and has budgeted $600,000 for the next year and $1,880,000 for the second year.
• Regulatory and cannabis risk — The company cites regulatory compliance and testing for a new delivery system, plus issues surrounding cannabis use, as a significant financial burden, and does not plan to pursue U.S. regulatory approval at this time.

Outlook

Management states it does not anticipate starting a licensing or joint venture process with large pharmaceutical companies for at least 24 months. The company has no commitment for additional funding, and it states that without a capital infusion it is highly unlikely to fully implement its business plan. It cites Canada's legislation permitting licensed cannabis production and export as relevant to its planned product.