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A Year End Letter From CEO Ben Lightburn

December 30, 2022
Dried magic mushrooms

Dear Filament Family,

As 2022 draws to a close, we are afforded the opportunity to reflect on the year’s accomplishments and set objectives for the coming period. If 2021 was a year of ‘firsts’ – first dealer’s licence, first patent, first clinical trial approval, first licensing agreement – 2022 has been a year of expansion and momentum building. Filament is now established as one of the leading, if not the leading supplier of GMP psilocybin globally.

Drug Development - Internal

Our partners at UCSF have been dosing subjects in our phase 1 study, the first to administer natural psychedelic drug candidates and the first to directly administer psilocin. We expect to have a data readout in the next few months. From this data we will form our future development plans. In the spring we completed a successful Pre-IND meeting with FDA for the developments of our botanical psilocybin for depression. Recently we announced that we had created the first-ever pharmaceutical-grade drug candidate based on ayahuasca, the traditional South American entheogenic brew. We plan to enter it into FDA clinical studies at UCSF in the near future.

Drug Development - External

At the start of 2022, we had a single clinical trial approval by way of our internal phase 1 trial at UCSF. Our drug candidates have since received authorization to enter more than a dozen clinical trials around the world, in Canada, the E.U., and the U.K. Some of these trials have begun providing us valuable data about our drug candidates and one trial, conducted by ATMA Journey, completed with very positive results. The trials are through a combination of commercial and academic partnerships with many leading academic institutions reaching out to us for study drugs. This is a service we provide free of charge although we do retain certain data rights which aid in our own development, and that of our licensees. In addition it helps us build our regulatory expertise as we notch more and more clinical trial approvals in additional jurisdictions.

We now have a total of five commercial licensing partnerships which have generated ~$450,000 of revenue so far. Notably, we recently deepened our partnership with Psyence Group, who will commercialise PEX010 (25mg psilocybin) in palliative care in exchange for up to $3 million in milestone payments and a low double-digit royalty on commercial sales.

Intellectual Property

We continue to enjoy a 100% issued patent to patent application success rate, far above the life sciences industry average of 48%. I am pleased to report that we now have ten issued and allowed patents in Canada and the US covering various aspects of our technology. Additionally, through conversations with multiple counterparties, understanding is growing around the benefits of botanical drugs in terms of their complexity and therefore extremely difficult reproducibility. Our IP forms the basis from which we can negotiate valuable licensing agreements.

Facilities and Licensing

In 2022 we upgraded our Health Canada Dealer’s Licence yet again to include additional substances and larger quantities. We hosted Health Canada several times for inspections, audits, and meetings. We were inspected for GMP compliance by Eurofins, a leading global regulatory consultancy as well as by a few licensees. In all cases the audits were successful.

We were proud to host the Honourable Sheila Malcomson, Minister of Mental Health and Addiction, for a tour of our facility and a discussion which focused on the need for better mental health therapies for British Columbians.

Special Access Program

In early 2022, Health Canada announced changes to the Special Access Program (SAP), restoring access to the restricted drugs psilocybin and MDMA through the program. The SAP allows the physicians of Canadians suffering from serious or life threatening conditions to request permission to prescribe experimental therapies. Because our psilocybin candidate is in Canadian clinical trials, it qualifies for this program. We have been in close collaboration with Health Canada and physicians across the country, laying a very good foundation for eventual legalisation by getting a head start on distribution. In addition we get to hear first-hand from doctors how much help our drugs can provide to patients in need. As far as we know we are the only company currently supplying the SAP in Canada, and in the US, the FDA has not yet allowed psilocybin to be prescribed via similar programs. It is important to note that our drugs are still experimental and that additional clinical development will be undertaken before full commercialisation. Supplying the SAP, which for the time being we are also doing free of charge, provides the team with very meaningful work and we are honoured to be able to do so.

Public Markets and Financing

In the summer we announced the closing of a $2.5 million non-brokered financing led by Negev Capital and NAMMEX. This was completed in a challenging market environment and demonstrated Filament’s ability to attract high-quality, long-term investors, who, along with the founders of FIlament, signed extensive voluntary lock-up agreements for their shares. Kostia Adamsky joined our Board as Negev’s representative. Greg Mills has stepped off the board but will continue to be available in an advisory capacity – we thank him for his service.

As we discussed in our Fall shareholder update, the public markets continue to be challenging for psychedelics and biotech companies. We share the same frustrations as many of you but remain more confident than ever that the continued execution of milestones will inevitably lead to success in the public markets.

Media

2022 saw impressive growth in our reach in the media, with notable appearances in the Wall Street Journal, Forbes, The Toronto Star, National Public Radio, and more. It is clear that Filament’s team of experts is being increasingly called upon to provide insight and commentary in leading outlets. A summary of the year’s media appearances is provided below, along with a recap of our important announcements.

It’s hard to believe that in 12 short months we went from a single clinical trial approval – the first for any natural psychedelic drug candidate–to more than a dozen trials using our product all around the world with leading academic and commercial partners. It’s also hard to believe that so soon after starting the company that we are manufacturing and distributing drug candidates to real patients in real need via the Special Access Program, building important relationships in the nascent psychedelics market and learning about how these substances work in the real world. 2021 was a year of important firsts for Filament as we set out to demonstrate that our goals were possible. 2022 was a year of expansion, as we demonstrated not just possibility, but probability that our mission will be successful. 2023 will be equally exciting, as we look forward to many more clinical trials kicking off, data from our ongoing clinical trial, additional internal drug candidates and clinical initiatives, legalisation in Oregon, expanded SAP in Canada, and more.

As always, thank you for your support on our journey to deliver upon our mission to see safe, natural psychedelics in the hands of everyone who needs them, as soon as possible.

Regards,

Benjamin Lightburn

CEO and Co-Founder

FILAMENT’S 2022 MILESTONES SUMMARIZED

SELECTED  PRESS COVERAGE

Wall Street Journalx 2, Forbes, NPR, Toronto Star, Freethink, Benzinga, DailyMail, DailyHive, San Francisco Standard