The human body naturally produces endocannabinoids, or endogenous cannabinoids.

Discovered in the 1990s, the endocannabinoid system is still not completely understood, but is linked to mood, sleep, metabolism, and fertility. Endocannabinoids bind with two prime receptors: CB1, primarily found in and related to the central nervous system; and CB2, largely found in the immune system and tied to the peripheral nervous system.

Beyond human-produced endocannabinoids like Anandamide and 2-AG, the endocannabinoid system also interacts with plant-produced cannabinoids. THC binds to both receptors, but the scientific jury's still out on the interaction between CBD and the endocannabinoid system.

For Artelo Biosciences, Gorgas says the endocannabinoid system holds the key to "a treasure trove of drug development opportunities."

Gorgas, after an exit at his previous company, was introduced to Artelo (NASDAQ: ARTL) by investors. It was then "a public shell" of a company that had formed in 2011, but was being repositioned around pharmaceuticals that showed potential "modulating the endocannabinoid system."

"At first I said no, because I didn't know much about cannabinoids," says Gorgas. "They said, 'No, no, no, we're talking about classic drug development.'"

That angle intrigued and ultimately won over Gorgas. At the time, however, there weren't any pharmaceuticals on the market with cannabinoids among their active ingredients, says Gorgas, as GW Pharmaceuticals' Epidiolex debuted a year later.

"In the environment in which we created the company, it was a little bit the wild, wild West," says Gorgas. "If you can bring order and streets and civil government to the wild, wild West, you can create cities and towns and countries. We set out on a mission to take a biopharmaceutical approach towards this, which means we set ourselves up to be a little bit different. And today, there's only about five companies that are up on NASDAQ with the same sort of mission statement that Artelo has."

After raising $800,000 in a Series A financing round in late 2017, Artelo in-licensed two compounds and invented and filed for a patent on a novel one within a year.

The first, ART27.13, was in-licensed from AstraZeneca. "They had spent about $18 million developing it and it had been in 205 subjects . . . in five Phase I studies," says Gorgas. "This is a full agonist to the CB1 and CB2 receptors in the endocannabinoid system.

AstraZeneca" hadn't seen anything more powerful in their entire drug development process -- this was selected from 75,000 candidates in the drug screen -- they hadn't seen anything more powerful as an anti-pain drug. That's why they invested so much in it."

But that same strength meant it could have unintended psychoactive effects, leading to the need to peripherally restrict it from the CB1 receptors in the central nervous system. That reduced its efficacy treating pain, says Gorgas, "but an observed effect was profound weight gain" in clinical trials.

The second compound in Artelo's pipeline, ART26.12 was in-licensed from Stony Brook University in New York. Gorgas says it shows promise for the treatment of cancer, inflammation, and pain. "What this is is a chaperone inside the cell that chaperones things like fatty acids and endocannabinoids, your self-made cannabinoids," he explains. "If you are able to stop the destruction of your endocannabinoids by blocking this protein, then your body can then accumulate more of your self-made cannabinoids and address things like pain and inflammation. The data looks very, very promising there."

He continues, "Cancer also gets fed by these lipids, or fatty acids, and when cancer gets starved . . . then you can starve cancer of its nutrients and its growth. We have high hopes for this second program."

In-house, Artelo developed ART12.11, a novel CBD cocrystal that could be used to treat PTSD, insomnia, and a variety of diseases. "Cocrystals aren't new to pharma, but they're new to the cannabinoid space," says Gorgas. "We got the first and only composition-of-matter patent for a cocrystal of CBD here in the U.S. from the U.S. Patent Office. You can't patent a plant -- you don't own the plant or the chemicals in the plant -- but in fact, we did. We created a cocrystal that basically puts a straightjacket on the CBD and holds it in a specific shape."

That's important in the pharmaceutical industry. CBD has an issue in the pharmaceutical industry due to its solid polymorphism, meaning it can exist in more than one solid state.

"Composition of matter is everything with pharmaceutical drug development," he says. "CBD naturally has multiple shapes. If you have those multiple shapes, the FDA wants you to control for it. The way to do that is: Put a straightjacket on it to hold it in a particular shape."

Artelo's technology involves a plant-based extract that makes "a nice tight bond" with the CBD, says Gorgas. "When it's released in the body, it's like the Space Shuttle: It breaks apart and you deliver pure CBD."

Both ART26.12 and ART12.11 are currently pre-clinical (2021 is the "funding-dependent" target for Phase I trials for both), whereas ART27.13 is moving into Phase IB/IIA clinical trials. "That takes it into cancer subjects," says Gorgas. "Six out of every 10 suffer from profound anorexia.

If the compounds are clinically validated, formulation and manufacturing will be outsourced to U.K.-based Quay Pharma, AMRI in New York, and other partners.

While Artelo has three full-time employees in La Jolla, the company relies largely on a network of 30 contractors. The company also has an office in Dublin, Ireland, and a Canadian subsidiary.

Challenges: The pandemic interrupted several of Artelo's studies and slowed the start of others. "We can sit on our cash and smolder on it," says Gorgas. "Our burn has gone down because we're not enrolling patients in a clinical study, but we'd rather COVID calm down. . . . We had to move our manufacturing of the pilot batches of the drug outside Stony Brook University."

Shipping CBD cocrystals outside the U.S. has proven problematic due to the FDA's schedule. "We've done it and are continuing to do it, but there are paperwork delays," says Gorgas.

Opportunities: More than 350,000 cancer patients could benefit from weight gain, meaning ART27.13 could vie for a piece of a $1 billion market in the U.S. as it stands now. "This is a golden opportunity for us," says Gorgas. "None of these regulatory bodies have approved a drug that treats cancer anorexia."

The pipeline reflects ambitious goals for Artelo, and Gorgas sees the company's licenses and patents as providing a good amount of runway. "We believe by getting the protection we have, it gives us the ability to go after major diseases," he says. "We've prioritized major diseases or conditions across our entire portfolio."

Needs: Broadly, more research for the industry and education for the public, says Gorgas. "Just like me, I've been in biopharmaceuticals for 30-plus years and I really didn't know anything of substance about the endocannabinoid system at all," he notes. "Even though it's been taught in medical schools for 30 years, I didn't know very much about it because it wasn't a focus of the activities at my previous employers. There's been a lot of information, misinformation, slightly misinformation for the general population. . . . Who's educating you? Is it the budtenders? Is it your pharmacist? Is it your neighbor or friend who's doing multi-level marketing selling CBD?"

Another need: "We're always looking for good partners, good collaborators, people who have the ability to do cutting-edge science in partnership with us," says Gorgas.