180 Life Sciences Corp. (NASDAQ:ATNF) is a clinical-stage biotechnology company focused on the development of therapeutics for unmet medical needs in chronic pain, inflammation, fibrosis, and other inflammatory diseases. The company has three product development platforms: fibrosis and anti-tumor necrosis factor (TNF), drugs which are derivatives of cannabidiol (CBD) or cannabigerol (CBG) analogues (SCAs), and alpha 7 nicotinic acetylcholine receptor (α7nAChR).

Business Overview

180 Life Sciences was founded in 2019 and is headquartered in Palo Alto, California. The company's mission is to develop innovative therapies to address significant unmet medical needs in chronic pain, inflammation, fibrosis, and other inflammatory diseases. 180 Life Sciences' three product development platforms leverage the company's expertise in inflammation, fibrosis, and pain.

The fibrosis and anti-TNF platform focuses on developing therapies to treat fibrotic diseases, which are characterized by the excessive accumulation of extracellular matrix proteins, leading to organ dysfunction and failure. The company's lead candidate in this platform is a novel anti-TNF therapy. TNF is a key cytokine involved in the inflammatory process and has been implicated in the pathogenesis of various fibrotic diseases.

The SCA platform explores the therapeutic potential of CBD and CBG analogues for the treatment of chronic pain and inflammation. These compounds have demonstrated promising anti-inflammatory and analgesic properties in preclinical studies. The company is currently evaluating several SCA drug candidates in this platform.

The α7nAChR platform investigates the role of the alpha 7 nicotinic acetylcholine receptor in modulating inflammation and pain. Activation of this receptor has been shown to have anti-inflammatory and analgesic effects in preclinical models. However, due to resource constraints, the company has suspended further research and development activities in this program for the time being.

Financials

For the fiscal year ended December 31, 2023, 180 Life Sciences reported an annual net loss of 19,935,112, with no revenue generated. The company's annual operating cash flow and free cash flow were both -10,922,223.

In the first quarter of 2024, the company reported a net loss of 1,069,744, a decrease of 78% compared to the net loss of 4,762,078 in the same period of the prior year. This improvement was primarily driven by a reduction in general and administrative expenses, which decreased by 61% to 1,556,740, as well as a significant increase in other income, which rose to 1,022,724 from 41,767 in the prior-year quarter.

Research and development expenses for the first quarter of 2024 were 365,186, down 37% from 578,309 in the same period of 2023. This decrease was due to a reduction in expenses related to a change in a tax credit and lower stock-based compensation. Research and development expenses related to related parties also decreased by 23% to 170,542 in the first quarter of 2024, compared to 216,684 in the prior-year quarter.

As of March 31, 2024, 180 Life Sciences had a cash balance of 675,977 and a working capital deficit of 2,225,359. The company's cash used in operating activities for the first quarter of 2024 was 1,033,417, a significant improvement from 3,869,891 in the same period of the prior year.

Liquidity

180 Life Sciences has historically funded its operations through equity and debt financings, and the company expects to continue to rely on these sources of capital to support its ongoing research and development activities. The company's primary uses of capital include compensation and related expenses, third-party clinical research and development services, license payments or milestone obligations, laboratory and related supplies, clinical costs, potential manufacturing costs, legal and other regulatory expenses, and general overhead costs.

As of March 31, 2024, the company had an accumulated deficit of 128,413,401 and a working capital deficit of 2,225,359. The company's ability to continue as a going concern is dependent on its ability to raise additional capital, as it expects to continue to incur significant cash outflows from operations. While the company has raised additional capital in recent years, including 6.0 million in July 2022, 5.5 million in December 2022, 2.7 million in April 2023, 2.7 million in August 2023, and 0.8 million in November 2023, as well as the recent reimbursement of 2.27 million from AmTrust International Underwriters DAC in April 2024 and 300,140 in May 2024, the company expects to require significant additional funding in the future to support its ongoing operations and development activities.

Risks and Challenges

180 Life Sciences faces several risks and challenges that could impact its ability to successfully develop and commercialize its product candidates. These include the inherent risks associated with the development of novel pharmaceutical products, such as the uncertainty of clinical success, regulatory approval, and commercial viability. The company also faces competition from other biotechnology and pharmaceutical companies, as well as potential pricing and reimbursement challenges.

Additionally, the company is subject to the risks associated with being a smaller reporting company, including limited resources, potential difficulties in attracting and retaining qualified personnel, and challenges in meeting the regulatory requirements for public companies. The company's ability to continue as a going concern is also dependent on its ability to raise additional capital, which may be difficult to obtain on favorable terms, if at all.

Recent Developments

In recent months, 180 Life Sciences has taken several steps to strengthen its financial position and advance its product pipeline. In April 2023, the company raised 2.7 million through a securities offering, and in August 2023, the company raised an additional 2.7 million. The company also recently entered into an amendment to the August 2023 offering, which provided the company with an additional 0.8 million in net proceeds.

Additionally, the company has made progress in its legal proceedings, including a recent court ruling that requires the company's directors' and officers' insurance providers to advance certain defense costs related to ongoing litigation. While the ultimate outcome of these legal matters remains uncertain, the company believes these developments are positive steps forward.

Outlook

Looking ahead, 180 Life Sciences remains focused on advancing its product candidates through clinical development and exploring strategic alternatives to maximize value for its shareholders. The company is currently evaluating all options to monetize its existing assets, in addition to exploring other strategic transactions, such as acquisitions, mergers, or licensing agreements.

Conclusion

180 Life Sciences is a promising biotechnology company with a diverse pipeline of product candidates targeting significant unmet medical needs in chronic pain, inflammation, fibrosis, and other inflammatory diseases. While the company faces several challenges, including the need for additional capital and the inherent risks of drug development, its recent progress in advancing its product pipeline and strengthening its financial position suggest that it is well-positioned to navigate these obstacles and create value for its shareholders over the long term.