Greetings Fellow Shareholders,

I hope this note finds everyone well!

As we settle into the new year, I wanted to wish everyone and their families a healthy and prosperous 2023 on behalf of our team at Shackelford Pharma. I am pleased to share with you a brief but very significant update to start the year.

As you are aware, our initial focus is the field of epilepsy, based upon Dr. Shackelford’s real-world experience and the considered opinion of our world-class R&D team. This database that Dr. Shackelford has generated, by treating many patients suffering from epileptic conditions, is amongst the most valuable assets in our portfolio. I’m delighted to share with you these very recent and very exciting results derived from his real-world database of more than 25,000 patient interactions.

Patients taking Dr. Shackelford’s cannabinoid-based treatment (we are calling it SP1707) for at least one year resulted in clinically significant positive outcomes in adult and pediatric patients with a specific seizure type (our first indication). The analysis of results (as of January 12, 2023) is shown in the table below. (Published data from Jazz Pharmaceutical Inc.’s cannabidiol (“CBD”) based product, EPIDIOLEX®, is shown as a comparator.)

Here are the key insights from this analysis:

• Cumulatively, we have collected over 350 patient years of real-world data in epilepsy from Dr. Shackelford’s database. Patients, both adult and children, had been suffering from epilepsy for up to 46 years, and 16 years respectively, prior to being treated with the active ingredient in our drug candidate (SP1707), suggesting that this has been a treatment for a hard-to-treat population of patients. 

• Responder rates (meaning the percentage of patients who responded to treatment that had at least a 50% reduction in seizure frequency over a 1-year treatment period) were 71% in adults and 60% in pediatrics — which is aligned with the response rates initially seen with the [now] commercially available epilepsy drugs such as FINTEPLA® (fenfluramine) open label studies, and better than those observed with the CBD based drug EPIDIOLEX®. 

• Importantly, one-year seizure remission rates (patients without a seizure for a year), were similar between adults (44%) and children (40%), and were greater than those observed with EPIDIOLEX®.  Compared to baseline or expected one-year seizure remission rates for this type of seizure, SP1707 elicited an approximate 9-fold improvement. 

• The safety and tolerability data for SP1707 has been positive, with only 2% of adult patients and no children reporting any adverse events. This compares favorably to EPIDIOLEX® and other FDA approved antiepileptic medicines.

KEY:
EAP: Expanded Access Program      RCT: Randomized Controlled Trials        SZ: Seizures    
N/A: Not Available                             LGS: Lennox-Gastaut Syndrome             DS: Dravet Syndrome
TSC: Tuberous Sclerosis Complex   TRE: Treatment Resistant Epilepsy   
SP1707 is the development name/number of the Company's first drug candidate undergoing clinical development that contains the active ingredient used by Dr. Shackelford in his real-world experience treating patients. The initial Phase 2 study of SP1707 in epilepsy patients will use an immediate-release oral formulation of SP1707 that will mimic the release characteristics of the cannabinoid that Dr. Shackelford used in treating his patients. Ultimately SP1707 is being developed as a proprietary extended-release oral cannabinoid formulation that is amenable to being dosed once daily in patients.

Bringing all this data to life is one of the best Pharma development teams around. In almost all business, it is always about the team. In our case we are not only fortunate to have all of Alan’s clinical data and results but also a Pharma development team that is second to none.

Given there is much to discuss here, we expect to follow this update with an open invitation investor webinar, which we aim to host this quarter. It will feature members of our executive and R&D team, and allow for detailed discussion of these findings, along with opportunities for Q&A.

As Sue has said, our primary focus now is to prepare for the start of a Phase 2 trial with our patent-pending epilepsy drug candidate, SP1707. We expect the trial to start this year (subject to funding) and following the FDA’s endorsement of our IND, which is also expected to be submitted in the 2^nd half of 2023. This trial will focus on a portion of the epilepsy population where current medications fall short. Most anti-epileptic drugs have varying degrees of efficacy with about 36% of patients not responding well to their medication, resulting in uncontrolled seizure activity. There are approximately 50 million people with epilepsy around the world, with an estimated 5 million more added every year, which means many people suffering from epilepsy are left looking for an effective treatment.

Our hope and expectation, based upon Dr. Shackelford’s real-world experience as shared above, is that patients may be able to replace, reduce or potentially eliminate the traditional drugs they are taking (which in many cases, have terrible side effects). 

In 2023, we will also be looking to expand our Board of Directors to support our incredible team. Our mission has attracted the best of the best and we anticipate that we will be adding the same quality of individuals to our board. We hope to add additional experience to supplement our incredible R&D team led by Dr. Susan Learned, and our Scientific Advisory Board — which includes some of the world’s leading epileptologists, (including the person who set the standards for epilepsy within the FDA), the individual responsible for de-scheduling CBD in the USA, and our world class experts on the endocannabinoid system.

Following our initial meeting with the FDA last September, we are now preparing the critical work necessary for filing the IND application to the FDA sometime in the second half of this year. Assuming endorsement by the FDA, we will then be allowed to start our Phase 2 clinical trial.

Thank you again Dr. Shackelford for all your incredibly pioneering work, and the skillful devotion of our R&D team for making all this possible! As we progress this year, you will be the first to know, so keep an eye on your inbox for our shareholder updates.

Our R&D Team had a very busy year - here are some of the highlights:

• Completed full due diligence on the company portfolio priorities and associated recommendations based on that due diligence;
• Completed scientific and clinical assessments to determine a prioritized portfolio project;
• Recruited a world-class R&D team and Scientific Advisory Board (“SAB”);
• Worked with our intellectual property lawyers, drafting, and filing a provisional patent supporting our prioritized portfolio project within company-requested timelines;
• Performed RFP (Request for Proposal) and due diligence assessments for selection of a Phase 2 supply clinical development partner;
• Performed substantial due diligence and IP evaluations on potential final proprietary formulation options (and clinical development partners) and initiated a 3-prong strategy to identify and progress proof of concept protypes;
• Led formation of a formal Disclosure Committee within Shackelford;
• Completed all preclinical, Chemistry, Manufacturing and Controls (“CMC”) and clinical Pre-IND (Investigational New Drug)-enabling activities and reports, including conducting of a comprehensive preclinical literature search on effects of SP1707 in epilepsy;
• Together with Shackelford’s SAB, designed and drafted a Phase 2 protocol synopsis for inclusion in the Pre-IND briefing book for the FDA;
• Prepared for and held two critical SAB meetings based upon feedback received from FDA with respect to our Pre-IND package, resulting in several ongoing actions to improve the submission for the upcoming IND;
• Established further enhancements for provisional patent strength and augmenting future clinical investigator engagement;
• Conducted third-party, independent company valuation for forthcoming financing;

And of course, of greatest importance:

• Completed a deep data dive on additional real-world experience from Dr. Shackelford’s patient records which produced strong evidence of the potential of SP1707 and gave us further insights into other potential indications beyond our initial target.

Developing an actual medicine that medical doctors prescribe is an extremely expensive exercise as you know. If successful, however, medicines are amongst the most valuable assets anyone can own, which is why pharmaceutical companies are amongst the most valuable companies in the world.

In our case, we are most fortunate to have Dr. Shackelford’s real-world experience. A significant portion of the expense in drug development is found in the discovery process, which generally happens in a chemistry lab. As you know, we are unique. Thanks to Dr. Shackelford’s work, our discoveries come from actual patient interactions from his medical practice. However, the next stage, which is the regulatory pathway, is expensive, and this path is determined by the FDA.

Our Phase 2 trial will cost approximately $30 million. This covers the manufacture of clinical trial supplies, which is significant. It also encompasses all the necessary work establishing trial sites and enrolling participants into the trial based upon the criteria accepted by the FDA and Institutional Review Boards. Our trial is expected to run approximately 24 months, with interim results announced halfway through the trial.

Our plan is to tackle this funding requirement in two steps, starting with a Regulation A crowdfunding round, just like our initial financing. We expect this new round will launch in the coming days. As investors in Shackelford, we will open this new offering to our existing shareholders first, so please keep your eyes open for our next email, where we expect to share more details along with an invitation to participate if you wish¹.

In anticipation of this financing, we engaged a respected international firm that focuses specifically on pharmaceutical company valuations. This independent, 3^rd-party opinion valued our company between USD $70-million and USD $187 million. Recognizing the soft macro market conditions that have affected the capital markets over the last year, we chose to value our company at the lower end of this valuation, and set the price at USD $1.50 per share, which correlates to a pre-raise market cap of about USD $70-million.

Our Regulation A funding round will be open for up to a total of USD $12 million.

We are working on the balance of the funding by targeted institutional investors and funds, and we are in discussions with several parties who are interested in our target indication, our team and our approach, and have started due diligence to learn more about Shackelford and the opportunity. While we are committed to helping as many people as we can who suffer from epilepsy, we are also committed to making sure that our shareholders have an opportunity to benefit from the increase in value of our Company as we progress as well. This may be as a private, or public entity, depending upon how we can best raise capital and maximize shareholder value.

As mentioned above, we will be hosting an investor webinar early this year, where I will invite key members of our team to attend. This will allow anyone who attends the opportunity to hear directly from the Shackelford team, and more importantly, provide a venue to ask questions and learn more about what I have described above. I hope you are all able to join us. We’ll be sure to record it and share it as well if you cannot.

THANK YOU again, to each of you reading this and for your support, without which we would not be here. We are on the precipice of an exciting new chapter in our Company’s development, and we owe much of this progress to you.

On behalf of YOUR team, I wish everyone an incredible 2023!!

Onwards!!

Mark Godsy
Co-Founder, CEO and Chairman

Contact US  

If you have any questions or wish to connect for any reason, please feel free to reach out to us via email at investors@shackelfordpharma.com or by calling us at 1-888-377-4225 Ext.1.

Thank you for taking the time to read our update - and for your ongoing support of Shackelford Pharma.

[1] This is not an offer for sale of shares. Appropriate offering documents will be issued when a financing is launched.