What changed in this filing

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Item 1. Business

2017-04-28 compared with 2016-04-29 · 122 added, 60 removed, 428 unchanged (30% of the section changed)

This annual report contains forward-looking statements.

These statements relate to future events or our future financial performance.

In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

This annual report of Pivot Pharmaceuticals Inc.

for the year ended January 31, 2017 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby.

To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition involve risks and uncertainties.

In particular, statements under the Sections;

Description of Business, Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward looking statements.

Where in any forward looking statements, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.

The following are factors that could cause actual results or events to differ materially from those anticipated, and include but are not limited to:

general economic, financial and business conditions;

changes in and compliance with governmental regulations;

changes in tax laws;

and the cost and effects of legal proceedings.

You should not rely on forward looking statements in this annual report.

This annual report contains forward looking statements that involve risks and uncertainties.

We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements.

Prospective investors should not place undue reliance on these forward looking statements, which apply only as of the date of this annual report.

Our actual results could differ materially from those anticipated in these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

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Triple-negative breast cancer (PVT-006)

Lower urinary tract symptoms including filling and voiding issues (PVT-002)

PVT-005 and PVT-006 are novel and patented anticancer small molecule drug candidates acquired through the acquisition of IndUS.

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They have shown significant synergies with platinum-based drugs such as cisplatin, and other drugs like topoisomerase II and I inhibitors (doxorubicin and camptothecin, respectively) and receptor tyrosine kinase (RTK) inhibitors – all or some of which are part of standard-of-care chemotherapeutic regimens to treat ovarian, breast, colorectal, non-small cell lung and other cancers that affect women’s health.

Our research and development strategy is focused on developing novel treatment options to address various unmet medical needs in women's health, including but not limited to 1) urological and gynecological disturbances such as lower urinary tract symptoms;

and 2) addressing unmet or under-served medical needs in women's cancers such as metastatic endometrial or triple-negative breast cancer that have inherent or acquired mutations rendering them resistant to existing treatment options and represent orphan drug designation opportunities.

Our research and development strategy is focused on developing novel treatment options to address various unmet medical needs in women’s health, including but not limited to urological issues and breast and gynecological cancers such as metastatic endometrial or triple-negative breast cancer that have inherent or acquired mutations rendering them resistant to existing treatment options and represent orphan drug designation opportunities.

Our management has prioritized the development of the two novel and patented anticancer drug candidates (PVT-005 and PVT-006) focused on the treatment of metastatic endometrial cancer and/or basal-like triple-negative breast cancers (BL-TNBC) in women.

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Anticipated Steps

PVT-005 and PVT-006

Intellectual Property

Patents issued in the US and other countries on composition of matter, methods of use for treatment of cancers and process of manufacture of the drugs.

Evaluation of drug delivery technologies for 'targeted' delivery of drugs

Patents issued in the US and other countries on composition of matter, methods of use for treatment of cancers and process of manufacture of the drugs.

Secure Rights to Drugs

Not required if drug selected in the delivery option is a generic drug

Pre-Clinical Testing

Significant nonclinical toxicity studies required for both drugs

Required to demonstrate pharmacological equivalence or differences

Significant nonclinical toxicity studies required for both drugs

Secure Investigational New Drug (“IND”) Approval or Equivalent

Targeted IND filing in the 2 nd half of 2017

Phase I Clinical Trials

Conducted in cancer patients

Bioavailability studies will need to be conducted in healthy volunteers

Conducted in cancer patients

Phase II Clinical Trials

Required in selected cancer patients

Phase III Clinical Trials

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Furthermore, approval rates for new drugs at each clinical trial stage are prohibitively low, which may require the sponsor to finance additional trials or abandon the drug under development altogether.

Our research and development strategy includes the development of novel anticancer drugs targeting subsets of women's cancer patients that have endometrial, triple-negative breast and/or ovarian cancer, to explore the opportunity of securing an orphan drug designation (intended for patient populations <200,000 in the US).

Our research and development strategy includes the development of novel anticancer drugs targeting subsets of women’s cancer patients that have metastatic endometrial, triple-negative breast and/or ovarian cancer, to explore the opportunity of securing an orphan drug designation (intended for patient populations <200,000 in the US).

Since our anticancer portfolio has novel drugs that will require the conduct of nonclinical and clinical studies for new molecular entities (NMEs);

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PVT-005 and PVT-006 provide novel treatment options in combination with existing chemotherapeutic regimens to address unmet medical needs in women’s cancers.

Our initial focus for PVT-005 is in patients with metastatic endometrial cancer, which harbors genomic mutations in DNA replication and repair pathways that render the cancer resistant to many existing chemotherapy options.

Our initial focus for PVT-005 is in patients with metastatic endometrial cancer, which harbors microsatellite (genomic) instability in DNA replication and repair pathways that render the cancer resistant to many existing chemotherapy options.

It is estimated that approximately 43,000 women in the United States have metastatic endometrial cancer that would become eligible for new therapy options following their initial treatments and PVT-005 will be added to the standard chemotherapeutic regimen(s) that will be used to treat metastatic endometrial cancer.

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It is estimated that approximately 170,000 women in the United States have triple-negative breast cancer.

Five different molecular subtypes of triple-negative breast cancer have been identified and the basal-like subtype of triple-negative breast cancer (BL-TNBC) affects up to 40,000 women in the United States.

Five different molecular subtypes of triple-negative breast cancer have been identified and the basal-like subtype of triple-negative breast cancer (BL-TNBC) affects at least 40,000 women in the United States.

PVT-006 is more likely to be effective in combination with existing anticancer agents, in basal-like triple-negative breast cancer subtype due to their mutations in DNA repair and replication pathways, which PVT-006 targets as its mechanism of action.

Preclinical safety studies will be conducted over the next 12 months to advance at least one of these candidates to an IND-stage to allow initiation of clinical studies in these highly unmet medical needs in women’s cancer.

Our product development initiatives will address two areas in women's health – oncology and urological conditions.

Lower Urinary Tract Symptoms Program

Lower urinary tract symptoms are the name given to a group of symptoms including, overactive bladder, dysuria and urinary incontinence.

Experts recommend making a specific diagnosis when possible and treating the symptoms and/or any underlying cause (if possible).

Lower urinary tract symptoms may be divided into:

Filling or irritation symptoms - eg, frequency, urgency, dysuria, nocturia, stress incontinence, urge incontinence;

Voiding or obstructive symptoms - eg, poor stream, hesitancy, terminal dribbling, incomplete voiding, overflow incontinence (due to chronic urinary retention).

Symptoms can be further divided into the following groups:

increased daytime urinary frequency, nocturia, urgency, incontinence, enuresis, continuous urinary leakage, interstitial cystitis;

Voiding symptoms:

urinary retention, poor stream, hesitancy, intermittent stream, straining, terminal dribble;

Postmicturition symptoms:

postmicturition dribble, feeling of incomplete emptying;

Symptoms associated with sexual intercourse:

dyspareunia, vaginal dryness, incontinence;

Symptoms associated with genitourinary prolapse:

feeling of 'something coming down', low backache, heaviness, dragging sensation;

Genital and lower urinary tract pain:

pain may be associated with bladder filling, micturition, and postmicturition, or continuous;

Genitourinary pain syndromes and lower urinary tract dysfunction:

symptom syndromes suggestive of lower urinary tract dysfunction may be those of an overactive bladder or of bladder outlet obstruction.

Urinary incontinence is, nevertheless, still the most familiar lower urinary tract symptom in women.

Estimates of prevalence range from a few percent to around 50% in different studies.

The wide variation in the reported prevalence can be explained by various reasons such as the use of different definitions, the heterogeneity of different study populations and also population sampling procedures.

Large cross-sectional population-based samples have however concluded that the prevalence of any female urinary incontinence ranges from 20% to 40% in young and middle-aged women, and then steadily increases with age.

Approximately half of the incontinence is stress type, about 10% is urge urinary incontinence (UUI) and one third is mixed incontinence.

Stress leakage occurs more frequently in younger women whereas urge and mixed urinary incontinence are more prevalent in the older women.

Urinary incontinence has been shown to have a negative effect on physical activities, confidence, self-perception and social activities, urge urinary incontinence and mixed incontinence being more detrimental than stress type in this respect.

Our research and development efforts are focused on identifying novel treatments for lower urinary tract symptoms through leveraging either novel drug delivery treatment options for existing drugs and/or identifying novel biological pathways and new drugs that will address the limitations of existing treatment options for lower urinary tract symptoms in women.

Our Product Development Initiatives

Our product development initiatives will address unmet medical needs in metastatic endometrial, triple-negative breast and/or ovarian cancers.

Metastatic Endometrial Cancer

Endometrial cancer is the most common gynecological cancer in women and accounts for 6% of the cancers in women.

An estimated 43,470 cases of endometrial cancers were diagnosed in 2010 and 7950 deaths were associated with this cancer that year.

Endometrial carcinoma is divided into several histological categories based on cell type with endometrioid being the most common, which accounts for 75-80% of the cases.

Other aggressive pathological variants with a high risk of metastatic disease include papillary serous carcinoma (<10%), clear cell carcinoma (4%), squamous cell carcinoma (<1%), mixed (10%) and undifferentiated types.

Local and distal recurrences continue to remain a high risk for patients after they undergo surgery to remove the primary endometrial carcinoma.

Median time to recurrence is 2-3 years with 75-80% of the recurrence being extra-pelvic.

A small minority of patients with recurrent or advanced stage disease with solitary metastatic lesions may be amenable to radiation treatment with or without surgery.

Prognosis is poor for the remainder of women presenting with metastatic endometrial cancer with a median survival period of only 12 months.

The mainstay of treatment for metastatic endometrial carcinoma remains systemic hormonal therapy or cytotoxic chemotherapy.

Inactivating mutations of PTEN, a tumor suppressor gene, are found in 40-60% of endometrial cancers.

Loss of PTEN function results in constitutive activation of Akt which in turn upregulates mTOR activity resulting in cell proliferation.

Hormonal therapy is well tolerated in women with low-grade disease and those who are positive for estrogen receptor (ER+) and progesterone receptor (PR+).

Hormonal therapy includes agents such as progestins, which have an anti-estrogenic effect on the endometrium and produce marked changes in the glands and stroma.

Within the glandular epithelium of the endometrium, progesterone acts as an antagonist to the estrogen-mediated cell proliferation and also inhibits ER gene expression and increases degradation of ER.

Overall response rates following treatment with hormonal therapy using agents like medroxyprogesterone acetate or megestol acetate has been reported to be only 11-16% and progression-free survival (PFS) is only 4-6 months.

Low histologic grade coupled with expression of PR and an extended period between initial diagnosis and occurrence of metastatic disease have been shown to have better response rates to progestin therapy.

Response rates for PR+ endometrial cancer has been reported to be 37% compared to just 8% for PR-negative (PR-) endometrial carcinoma when treated with hormonal therapy.

Selective estrogen receptor modulators (SERMs) may also be used to treat low grade endometrial cancer.

Tamoxifen, which is used to both, prevent and treat breast cancer, has been shown to increase the incidence of endometrial cancer.

However, combination regimens with tamoxifen and progestins have been shown to have some benefit in low histologic grade endometrial carcinoma.

The use of aromatase inhibitors such as anastrazole and letrozole, for the treatment of advanced endometrial cancer in post-menopausal women, has shown poor response rates (<10%) with no correlation to the hormonal status.

The use of gonadotropin-releasing hormone (GnRH) agonists such as goserelin acetate also shown poor response rates and were deemed insufficient to treat metastatic endometrial cancer.

Cytotoxic chemotherapy is the mainstay for treatment of advanced metastatic endometrial cancer.

However, response rates are modest with progression-free survival (PFS) times of 4-6 months and overall survival of only approximately 12 months.

The most active classes of chemotherapy agents used for treating metastatic endometrial cancers are anthracyclines (doxorubicin, epirubicin), platinum compounds (cisplatin, carboplatin) and taxanes (paclitaxel, docetaxel) which produce response rates of approximately 20% as single agents.

Combination chemotherapy with multiple agents improves overall response rates to 33-57% depending on the combination.

Overall survival also improved slightly (approximately 15 months), but systemic gastrointestinal and myelotoxicity (Grade 3 and Grade 4) increased significantly in patients receiving such combination regimens.

Inhibitors of mTOR activity such as temsirolimus in combination with inhibitors of epidermal growth factor receptor (EGFR) and anti-angiogenic agents suppressing vascular endothelial growth factor (VEGF) are being evaluated for the treatment of metastatic endometrial cancer.

Since novel Pivot compounds such as PVT-005 show “synthetic lethality” with chemotherapy agents such as cisplatin in tumors that have loss of tumor suppressor function in p53 or PTEN, such combinations would provide novel chemotherapy options for the treatment of metastatic endometrial cancers.

Triple-Negative Breast Cancers

Triple-negative breast cancers (TNBC) are defined as tumors that lack the expression of estrogen receptor (ER), progesterone receptor (PR) and HER2.

Approximately 12-17% of women with breast cancer have TNBC, representing approximately 170,000 breast cancer patients.

These patients have a relatively poor outcome and cannot be treated with endocrine therapies or agents targeted to epidermal growth factor receptor type 2 (HER2).

A close cousin of TNBC is basal-like breast cancer (BLBC) which is characterized by absence or low level expression of ER and absence of HER2 expression.

Many tumors may meet the definition of both TNBC and BLBC.

Both TNBC and BLBC occur more commonly in young women, particularly Black and Hispanic women, when compared to women from other racial and ethnic backgrounds.

Approximately 75% of women with TNBC or BLBC have a mutation in BRCA1, a breast cancer susceptibility gene.

Because TNBC is a heterogenous disease, many pathological and immunohistochemical sub-classification systems have been proposed to provide greater homogeneity within TNBC subtypes.

Recently five molecular subtypes have been proposed for TNBC to allow improved clinical development strategies to stratify TNBC patients.

These include:

1) basal-like TNBC characterized predominantly by mutations in DNA damage repair deficiency and some growth factor pathway expression:

2) mesenchymal-like TNBC (ML-TNBC) with epithelial-to-mesenchymal transition (EMT) and cancer stem cell (CSC) features;

3) immune-associated TNBC (I-TNBC);

4) luminal/apocrine TNBC (LA-TNBC) with androgen receptor (AR) overexpression;

and 5) HER2-enriched TNBC (HER2e-TNBC).

The predominant grouping of TNBC is basal-like (BL-TNBC) which constitutes between 25-80% of all TNBC.

Within the basal-like subtype, there are two subgroups and basal-like 1 (BL1-TNBC) is enriched in cell cycle related genes and DNA-damage repair pathways.

Nearly 25% of breast cancers harbor a mutation in DNA repair, mainly in homologous recombination (HR) when double-stranded (DS) breakage occurs – which appears similar to the genetic deficiencies of BRCA1 or BRCA2 mutation carriers.

Alterations in DNA-damage response or repair mechanisms usually lead to genomic (microsatellite) instability and carcinogenesis.

In addition to DNA-damage response deficiencies, 85% of BL-TNBC patients have mutations in p53 which results in a loss of tumor suppression.

Since TNBC are aggressive tumors, chemotherapy regimens include targeting DNA repair complex (like platinum agents and taxanes), p53 (like taxanes), cell proliferation (like anthracyclines) and targeted therapy.

BL-TNBC appears to have good response rates to chemotherapy regimens containing platinum agents (such as cisplatin and carboplatin).

In addition to administration in the adjuvant setting (after surgery), several studies have evaluated the combination chemotherapeutic regimens in neoadjuvant setting.

For instance, cisplatin as a single agent in the neoadjuvant setting gives a pathological response rate of nearly 22%;

which improves to 28% when cisplatin is administered in combination with paclitaxel;

and further improves to 65% when a triple combination of cisplatin:paclitaxel;epirubicin is administered to TNBC patients in the neoadjuvant setting.

However, response rates in metastatic TNBC are lower for single- or double agent chemotherapy in TNBC, and it remains a high unmet medical need.

Given the molecular subtype of BL-TNBC, using agents that target DNA-damage repair deficiencies appears to be a good strategy to combine novel drugs with platinum containing regimens to improve response rates.

For instance, combination of platinum drugs with novel agents targeting poly-ADP ribose polymerase (PARP), have been evaluated in TNBC patients.

Chemotherapy regimens combining novel pyrrolobenzodiazepine dimers (PBDs) from Pivot (PVT-006) with cisplatin or carboplatin to target BL-TNBC will offer novel therapeutic regimens to improve response rates and progression-free survival (PFS) in metastatic BL-TNBC patients.

Metastatic Ovarian Cancer

Ovarian cancer is the most lethal gynecological cancers and is the fifth leading cause of deaths in women in the United States.

It is usually diagnosed at a late stage and has a 5-year survival rate of approximately 30%.

The majority of ovarian cancers are diagnosed after they have spread into the peritoneal cavity and the major cause of ovarian cancer-associated mortality is believed to be due to therapy-resistant metastatic disease.

It is estimated that 21,290 new cases of ovarian cancer were diagnosed in 2015 and 14,180 ovarian cancer patients died that year.

Current treatment strategies for advanced ovarian cancer consist of aggressive surgery (referred to as cytoreduction or tumor debulking).

In order to clear the tumor from the pelvis, the surgery often involves en bloc resection of the ovarian tumor, reproductive organs and the sigmoid colon, and primary bowel reanastamoses.

The surgical goal is to remove as much tumor burden as possible, since cytoreduction has been associated with improved survival.

Post-operatively, most ovarian cancer patients will receive chemotherapy with platinum- (usually carboplatin) and taxane- (usually paclitaxel) containing regimens.

While these agents are administered intravenously, there is some evidence that administration of these regimens through the intraperitoneal route improves overall survival benefit in such patients.

The World Health Organization (WHO) has categorized ovarian cancers into four subtypes based on their histology:

1) serous-papillary ovarian carcinoma which resembles the papillary architecture of the fallopian tubes;

2) endometrioid carcinoma which is often associated with endometriosis and resembles endometrioid carcinoma of the uterus;

3) mucinous carcinoma resemble either the endocervical glands or gastrointestinal epithelium;

and 4) clear cell carcinoma of the ovary which is a rare subtype and shares morphological features of both, serous and endometrioid carcinomas.

In the last few years, there have been some more genetic insights into various ovarian cancers and two molecular subtypes of ovarian cancers have been identified.

Type 1 ovarian cancers affect younger patients and are comprised of low-grade serous-papillary and endometrioid carcinomas and have low grade resistance to carboplatin-taxol chemotherapy regimen, but have indolent disease and tend to have a median survival of 82 months.

Type 2 ovarian cancer is most prevalent in post-menopausal women, and it is initially very sensitive to platinum-containing chemotherapy regimens, but median survival is only 30 months.

Type 1 serous-papillary ovarian tumors typically have mutations in BRAF, KRAS, ERBB2 and have microsatellite (genomic) instability.

Type 1 endometrioid, mucinous and clear cell ovarian cancers have similar mutations to the serous-papillary ovarian carcinoma and in addition have additional mutations in b -catenin and PTEN.

The most frequent (50-80%) mutations in high-grade (Type 2) serous ovarian cancers involve the tumor suppressor gene, p53.

Other important genetic changes in high-grade serous tumors include changes in BRCA1 and BRCA2 and amplification of AKT2 serine/threonine kinase and PI3K mutations.

The biological behavior of ovarian carcinomas and its confinement to the peritoneal cavity provides us with an opportunity to develop novel chemotherapeutic combination regimens using novel Pivot pyrrolobenzodiazepine dimers (PBDs) in combination with carboplatin and paclitaxel, especially via the intraperitoneal route to minimize systemic toxicity.

Furthermore, due to the genetic similarity of abdominal ovarian cancers, it provides us an opportunity to shrink all types of metastatic ovarian tumors with such novel combination regimens.

Clinical Trial Phases

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Because of their size and comparatively long duration, Phase III trials are the most expensive, time-consuming and difficult trials to design and run, especially in therapies for chronic medical conditions.

It is common practice that certain Phase III trials will continue while a regulatory submission is pending at the appropriate regulatory agency.

It is common practice that certain Phase III trials may continue while a regulatory submission is pending at the appropriate regulatory agency.

This allows patients to continue to receive possibly lifesaving drugs until the drug can be obtained commercially.

Other reasons for performing trials at this stage may include "label expansion" (to show the drug is suitable for additional types of patients/diseases beyond the original use for which the drug was approved for marketing), obtaining additional safety data, or to support marketing claims for the drug.

Other reasons for performing additional trials at this stage may include “label expansion” (to show the drug is suitable for additional types of patients/diseases beyond the original use for which the drug was approved for marketing), obtaining additional safety data, or to support marketing claims for the drug.

Studies in this phase are categorized by some companies as “Phase IIIB studies”.

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Triple-negative breast cancer (PVT-006)

Female Lower Urinary Tract Symptoms (PVT-002)

Sales are conservatively estimated for US only, incidence of indication, modest pricing and market penetration.

Sales are conservatively estimated for US only, using the estimates of incidence and prevalence of the oncology indication, and assuming modest pricing and market penetration.

Research and Development

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In this section and throughout this annual report, the term “FDA” means the United States Food and Drug Administration.

Our current and future operations and research and development activities are or will be subject to various laws and regulations in the countries in which we conduct or plan to conduct our business, including but not limited to the United States, Canada, India and potentially member countries from the European Union.

Our current and future operations and research and development activities are or will be subject to various laws and regulations in the countries in which we conduct or plan to conduct our business, including but not limited to the United States, Canada, India, United Kingdom and potentially other member countries from the European Union.

These laws and regulations govern the research, development, sale and marketing of pharmaceuticals, taxes, labor standards, occupational health and safety, toxic substances, chemical products and materials, waste management and other matters relating to the pharmaceutical industry.

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Clinical Trials

If a company wants to conduct clinical trials in the United States to test a new drug in humans, an IND Application must be prepared and submitted to the FDA.

If a company wants to conduct clinical trials in the United States to test a new drug in humans, an Investigational New Drug (IND) Application must be prepared and submitted to the FDA.

The IND Application becomes effective, if not rejected or put on clinical hold by the FDA, within 30 days of filing the application.

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New Drug Application

After completion of clinical trials, if there is substantial evidence that the drug is both safe and effective, a New Drug Application is prepared and submitted for the FDA to review.

After completion of clinical trials, if there is substantial evidence that the drug is both safe and effective, a New Drug Application (NDA) is prepared and submitted for the FDA to review.

The New Drug Application must contain all of the essential information on the drug gathered to that date, including data from pre-clinical studies and clinical trials, and the content and format of a New Drug Application must conform with all FDA regulations and guidelines.

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When appropriate, we intend to seek orphan status for certain indications that may be treated with our products.

We cannot predict the ultimate impact, if any, of orphan status on the timing or likelihood of FDA approval on any of our potential products.

Importantly, if a company obtains orphan drug designation for a drug and indication equivalent to one of our products (i.e.

the same underlying drug applied to the same indication), our product may not be approved for the same indication for up to seven subsequent years.

It is our intent to file for orphan disease status for our novel pyrrolobenzodiazepine dimer (PBD) drugs that are intended to treat metastatic endometrial, ovarian and/or triple-negative breast cancers.

We cannot predict the ultimate impact, if any, of orphan status on the timing or likelihood of FDA approval on any of our products.

The Hatch-Waxman Act

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Clinical Trials

In common with the United States, the various phases of pre-clinical and clinical research in the European Union are subject to significant regulatory controls.

Similar to the United States, the various phases of pre-clinical and clinical research in the European Union are subject to significant regulatory controls.

The regulatory controls on clinical research in the European Union are now largely harmonized following the implementation of the Clinical Trials Directive 2001/20/EC, or CTD.

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While we cannot predict whether such legislative bills will become law, their enactment could have a material adverse effect on our business, financial condition and results of operations.

In the following section, all references to "CMS" refer to the Centers for Medicare and Medicaid Services.

In the following section, all references to “CMS” refer to the Center for Medicare and Medicaid Services.

We expect that in the United States, some or a majority of the patients who are treated with our products will be Medicare beneficiaries.

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the administering physician bills Medicate directly for the product.

Currently, topical products are considered "usually self-administered";

therefore, coverage under Part B would require a specific determination that any of our products differ from most topical products and should therefore be covered under Part B.

There can be no guarantee that we will obtain such a determination.

For the reasons discussed below, the failure to obtain such a determination could materially and adversely affect our ability to generate revenue.

If there is not a national coverage decision, the local Medicare contractors that are responsible for administering the Part B program on a regional basis may have the discretion to decline coverage and reimbursement for a drug or to issue a local coverage decision (an “LCD”).

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business