Alterola Biotech (ABTI) Risk Analysis

While cannabis and some cannabinoids are controlled substances under the CSA in the United States, we plan to initially focus our drug development projects using cannabinoids and other molecules that are produced from a variety of sources: (1) produced via chemical synthesis and / or (2) produced biosynthetically and / or (3) produced via botanical means. A number of cannabinoid-containing medicines, such as Marinol or Syndros (containing dronabinol), or Epidiolex (containing botanically-derived cannabidiol) or Cesamet (containing nabilone) have been approved by the FDA for various indications. In the USA, while cannabis-derived cannabinoids with a THC content greater than 0.3%, – during development - are categorized as Schedule I substances under the CSA, the scheduling changes once a medicine has been approved by the FDA. Marinol, a capsule formulation which contains synthetic tetrahydrocannabinol, or THC when formulated is a Schedule III medicine. Syndros (which also contains synthetic THC, dronabinol) is a liquid formulation as is classified as Schedule II. Epidiolex was initially a Schedule V medicine when it was introduced in 2018, but was descheduled by the DEA in 2020. It was completely de-scheduled on April 06, 2020. It is our intention to produce pipeline drug candidates via synthetic, and / or biosynthetic and / or botanical means, which may produce complex mixtures and /or extracts or purified drug substance as API. Depending upon the content of our selected API(s), and their subsequent controlled drug status in the USA, and if the company conducts preclinical studies or clinical trials in the United States, we will become subject to the Controlled Substances Act (CSA) laws and regulation in addition to FDA regulations. If the Company decides to proceed with APIs which are controlled drugs, it will evaluate where it is best to conduct its research and preclinical and clinical trials. This may or may not be the USA. Nevertheless, our finished drug products may contain controlled substances as defined in the CSA. Pipeline drug candidates which contain controlled substances are subject to a high degree of regulation under the CSA, which establishes, among other things, certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered by the Drug Enforcement Agency (DEA). The DEA classifies controlled substances into five schedules: Schedule I, II, III, IV or V substances. Schedule I substances, by definition, have a high potential for abuse, have no currently "accepted medical use" in the United States, lack accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the United States. Pharmaceutical products approved for use in the United States may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest potential for abuse or dependence and Schedule V substances the lowest relative risk of abuse among such substances. Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements and criteria for importation. In addition, dispensing of Schedule II drugs is further restricted. For example, they may not be refilled without a new prescription. While cannabis and some of its derivatives and certain cannabinoids are Schedule I controlled substances, drugs approved for medical use in the United States that contain cannabis, cannabis extracts or certain cannabinoids must be placed in Schedules II - V, or unscheduled, since approval by the FDA satisfies the "accepted medical use" requirement. If, and when any of our pipeline drug candidates receive FDA approval, for those that are considered controlled substances under the CSA, the DEA will make a scheduling determination and place it in a schedule other than Schedule I for it to be prescribed for patients in the United States. If approved by the FDA, depending upon the products potential for abuse amongst other factors, the finished dosage forms of any of our pipeline drug candidates may be listed by the DEA as a Schedule II-V controlled substance. Consequently, their manufacture, importation, exportation, domestic distribution, storage, sale, and legitimate use may be subject to a significant degree of regulation by the DEA (in the USA) and the corresponding competent authorities around the world. The scheduling process may take one or more years beyond FDA approval in the USA, thereby significantly delaying the launch of our drugs / medicines. However, the DEA must issue a temporary order scheduling the drug within 90 days after the FDA approves the drug and the DEA receives a scientific and medical evaluation and scheduling recommendation from the Department of Health and Human Services. Furthermore, if the FDA, DEA or any foreign regulatory authority determines that any of our drugs may have potential for abuse, it may require us to generate more clinical data than that which is currently anticipated, which could increase the cost and/or delay the launch of our drugs / medicines or APIs (or food or cosmetic ingredients outside of the USA).

Our assets or our business activities may be subject to disputes that may result in litigation or other legal claims. We may be subject to allegations through press, social media, the courts or other mediums that may or may not be founded. We may be required to respond to or defend against these claims and/or allegations, which will divert resources away from our principal business. There can be no assurance that our defense of such claims and/or allegations would be successful, and we may be required to make material settlements. This could have a material adverse effect on our business prospects, results of operations, cash flows, financial condition and corporate reputation.

Any positive results from future preclinical testing of our pipeline drug candidates and potential future clinical trials may not necessarily be predictive of the results from Phase 1, Phase 2 or Phase 3 clinical trials. In addition, our interpretation of results derived from clinical data or our conclusions based on our preclinical data may prove inaccurate. Frequently, pharmaceutical and biotechnology companies have suffered significant setbacks in clinical trials after achieving positive results in preclinical testing and early phase clinical trials, and we cannot be certain that we will not face similar setbacks. These setbacks may be caused by the fact that preclinical and clinical data can be susceptible to varying interpretations and analyses. Furthermore, certain pipeline drug candidates may perform satisfactorily in preclinical studies and clinical trials, but nonetheless fail to obtain FDA approval, a marketing authorization granted by the European Commission, or appropriate approvals by the appropriate medicines regulatory authorities in other countries. If we fail to produce positive results in our clinical trials for our pipeline drug candidates, the development timeline and regulatory approval and commercialization prospects for them and as a result our business and financial prospects, would be materially adversely affected.

If we lose the services of key personnel or fail to replace the services of key personnel who depart, we could experience a severe negative effect on our financial results and stock price. The loss of the services of any key personnel, marketing or other personnel or our failure to attract, integrate, motivate and retain additional key employees could have a material adverse effect on our business, operating and financial results and stock price.