Invest

Invest

Executive Summary
Lohocla Research Corporation is a research, pre-clinical and early-stage clinical trials organization developing medications to treat chronic pain and addictions.

Business Summary
Lohocla Research Corporation established itself in Colorado in 2000 with funding from its founder and NIH-SBIR grant support. Lohocla continues to be privately held and its activities are currently supported by an NIH medications-development grant for treatment of alcohol addiction (“Nezavist”) from the National Institute on Alcohol Abuse and Alcoholism (NIAAA) ($5M), and a UG3 from the National Institute on Drug Abuse (NIDA). The NIDA award is $15M over five years. The purpose of the NIDA award is to bring the Company’s pain- and opiate-sparing medication, “Kindolor” to and through Phase 1 Trials with humans.

Solution, Technology, Product
Kindolor is a drug designed by Lohocla Research Corporation to specifically and simultaneously target three of the main mechanisms for conducting and amplifying pain signals from the periphery to the CNS. Kindolor is an effective, non-addicting and safe alternative to opiates for treatment of chronic pain. Kindolor inhibits targets that become overactive during the development of chronic pain syndromes. Voltage sensitive sodium channels (Nav1.7 and Nav1.8) that are located on sensory neurons and NMDA receptors in peripheral sensory terminals (nociceptors) and in sensory ganglia are upregulated, leading to peripheral sensitization to stimuli that usually do not produce pain. Kindolor, by inhibiting these peripheral NMDA receptors and voltage sensitive sodium channels, blocks the conduction and amplification of chronic pain signals. By acting in the periphery, Kindolor possesses little CNS activity, thereby avoiding incoordination and sedation as well as addiction. However, Kindolor can effectively potentiate centrally (CNS)-acting analgesics for controlling chronic pain. It can also be given in combination with opiates to reduce the dose of opiates 3-5 fold (via a synergistic effect), thus reducing opiate side effects, addiction potential, tolerance, and mortality.

Market
As a stand-alone product, Kindolor can effectively supplant drugs like Neurontin and Lyrica® that are used to treat chronic pain. Neurontin® has become a means for amplifying the “highs” experienced with opiates and benzodiazepines and may well become a controlled substance (already Schedule 5 in Kentucky). Lyrica is also classified currently as Schedule 5, inducing a potential for abuse. Both Neurontin and Lyrica have substantial side effects. 64 million prescriptions were written for Neurontin in 2016 and sales of Lyrica (brand name drug) in 2017 were $5.1 billion. Concerns regarding abuse, low efficacy, and side effects make the gabapentinoids an attractive target for competition. The positioning of Kindolor as a combination therapy to reduce opioid use and addiction is also a viable option even though the DEA has imposed quotas on prescribing such combinations. It should be noted that current combinations of oxycodone or hydrocodone with acetaminophen are no more effective than the opioid alone, but the use of Kindolor in combination with opiates may generate a new paradigm.

Marketing Strategy
Partnering with, or licensing to, a large pharmaceutical company with excellent manufacturing, marketing, sales, and distribution capacities. Lilly and Pfizer are examples of companies who have lost or will lose patent protection for their drugs used to treat chronic pain.

Value Proposition
Global painful diabetic neuropathy (PDN) drug sales currently amount to $4.8 billion and are projected to attain $8.9 billion by 2026. Lyrica (patent ending in 2018) accounts for the largest market share in 2017. Pfizer’s revenue from Lyrica in 2017 was $5.1 billion and it is estimated that 30-35% of these sales were for treatment of neuropathic pain, particularly that arising from PDN ($1.5 billion). Projections of growth for Lyrica are bleak because of entry of generic versions of pregabalin (Lyrica) into the market. However, the generics will be saddled with current evidence for abuse potential of pregabalin and mortality when combined with large doses of opiates. A novel medication, significantly more effective than Lyrica, with no measurable abuse potential and fewer side effects should be able to capture the PDN market share currently held by Lyrica. Entry into other chronic pain markets (e.g., osteoarthritis, fibromyalgia) impacted by Lyrica offers additional revenue opportunities. The current discounted cost of a month’s supply of Lyrica is ≈$414. We estimate that commercial production of Kindolor would result in pricing in the range of $250 for a one-month supply.

Business Model
Lohocla prides itself in conceptualizing novel approaches (molecules) for solving difficult medical problems such as chronic pain and addiction. Lohocla completes proof-of-concept pre-clinical studies and Phase 1, with the assistance of NIH grant funding and early stage investors. Lohocla then seeks partners or a licensor to sponsor the post-IND Phase 2 clinical trials and take the product to market. Currently, there are public companies with failed Phase II studies that need new candidates for their pipelines. If working with a partner lacking sales and distribution capacity, Lohocla and its partner will seek to engage with pharma companies that have these capacities as well as established expertise in the chronic pain market segment (e.g., Lilly, Pfizer, Purdue).

Exit Strategy
Lohocla has pipelines for products in two areas, chronic pain treatment/prevention and addiction treatment. Licensing our IP in either or both areas at a point that we have Phase II-ready medications, will generate capital and income. The strategy at that point will be determined by the remaining strength of the pipeline and the consideration will be to go public or be acquired on terms highly favorable to our investors.