What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-09-27 compared with 2020-09-25 · 107 added, 104 removed, 409 unchanged (34% of the section changed)

5 unchanged sentences

Risks Related to Our Industry and Operations

The Novel Coronavirus (COVID-19) Outbreak And Additional Outbreaks Due to Variants Could Materially Adversely Affect Our Financial Condition and Results of Operations .

COVID-19 and variants such as the Delta variant may impact supply chain and product sales.

Our Cesium supply comes from Russia and while at this time we are not aware of any shutdowns of nuclear facilities in Russia or limited staffing due to ongoing risk of virus transmission, this may occur in the future.

We also depend on overseas flights, which were previously curtailed and are still not at their pre-pandemic levels, and any further flight cancellations may impact our supply chain.

While our surgeries are not considered elective, in areas where hospitals are using most available space for COVID-19 or other chronic conditions, surgeries required to implant our seeds may be postponed or cancelled.

If conditions worsen with the COVID-19 pandemic, including any variants, this may have a material adverse effect on our business.

The continued precautions due to COVID-19 and its variants has caused us to modify our business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers.

There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed.

These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.

In addition, quarantines, stay-at-home, executive and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, could impact personnel at third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain.

Our ability to obtain licensure at new locations has been subject to significant delays due to COVID-19.

The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically.

While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, it has introduced significant volatility into the global financial markets.

A recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

The ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems or the global economy as a whole.

However, the effects could have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely.

Our Revenues Depend Upon One Product with Multiple Applications .

13 unchanged sentences

We Rely Heavily On One Supplier for Our Cesium-131 and Limited Suppliers for Other Components We Require.

Our Only Supplier Is In Russia And We Periodically Must Rely Solely On Only One Nuclear Reactor From Time to Time.

Beginning in the third quarter of fiscal year 2019, all of our Cesium-131 is now supplied through JSC Isotope from two reactors located in Russia.

Our current contract terminates on December 31, 2021.

Our Only Supplier Is In Russia And We Must Rely Solely On Only One Nuclear Reactor From Time to Time.

Beginning in the third quarter of fiscal year 2019, all of our Cesium-131 has been supplied through JSC Isotope from two reactors located in Russia.

Our current contract terminates on March 31, 2023.

Management will seek to negotiate favorable pricing at each contract extension but there is no assurance as to the outcome of these negotiations.

37 unchanged sentences

In July 2019, CMS proposed a significant change to the way Medicare currently pays for radiation services in an out-patient setting.

The Radiation Oncology Alternative Payment Method (RO APM) proposed a single, bundled payment for a 90-day episode of radiation therapy including LDR brachytherapy, IMRT, SBRT, proton therapy, and HDR brachytherapy.

The Radiation Oncology Alternative Payment Model (RO APM) proposed a single, bundled payment for a 90-day episode of radiation therapy including LDR brachytherapy, IMRT, SBRT, proton therapy, and HDR brachytherapy.

The RO APM proposal applied the same payment levels to services provided in physician offices, free-standing centers, and hospital outpatients.

2 unchanged sentences

All comments regarding the RO APM were due to CMS by mid-September 2019 and the Company submitted its comments prior to the deadline.

The final rule was published on September 18, 2020 with an effective date of January 1, 2021.

The final rule was published on September 18, 2020 with an initial effective date of January 1, 2021;

however, CMS subsequently delayed the effective date to July 1, 2021.

The Consolidated Appropriations Act, 2021 enacted December 27, 2020 included a provision that delayed the effective date to January 1, 2022.

As published, the rule is effective for randomly selected Core-Based Statistical Areas (CBSAs) and the participating zip codes are included in the final rule.

The selected zip codes include approximately thirty percent of all eligible Medicare fee-for-service (FFS) radiotherapy episodes nationally.

The RO APM could prove beneficial to the Company if clinics and physicians transition to brachytherapy options and away from more expensive IMRT and other non-brachytherapy options.

However, if clinics and physicians determine to use less costly iodine brachytherapy this would have a negative impact on the Company as the costs of our Cesium-131 seeds are higher than iodine seeds.

Management is currently evaluating the impact the final rule may have on our business, financial condition, or results of operations, but it is uncertain whether this rule will have a favorable or unfavorable impact on our business.

In July 2021, CMS proposed changes to the RO APM which includes removing brachytherapy from the list of included modalities under the RO Model so that brachytherapy would still be paid under the current fee-for-service (FFS) model.

In the proposed rule, CMS explains the exclusion of brachytherapy from the RO APM is to ensure that providers would not be incentivized to forego brachytherapy in situations where a combination of brachytherapy and EBRT is clinically indicated.

Additionally, the proposed rule includes a five year performance period for select zip codes of January 1, 2022 through December 31, 2026.

Management is currently evaluating the impact the proposed rule may have on our business, financial condition, or results of operations.

Brachytherapy seeds have two CMS codes – one code for loose seeds and a second code for stranded seeds.

7 unchanged sentences

We rely on our reimbursement consultant to assist us to improve the rate of reimbursement so that our product reimbursement will create greater incentives to be used.

Effective October 1, 2020, new codes will take effect and now CMS will be able to track the additional cost of the Cesium-131 seed itself and be able to reimburse the hospital through the DRG payment system for this additional costs when an in-patient brachytherapy procedure is performed.

There is no assurance we will obtain the increase necessary to keep certain procedures viable and improve the margins of others.

Effective October 1, 2020, new codes took effect and now CMS can track the additional cost of the Cesium-131 seed itself and reimburse the hospital through the DRG payment system for this additional costs when an in-patient brachytherapy procedure is performed.

There is no assurance we will obtain the increases necessary to keep certain procedures viable and improve the margins of others.

Historically, private insurers have followed Medicare guidelines in establishing reimbursement rates.

12 unchanged sentences

Although Cleared To Treat Any Malignant Tissue, Our Product Is Primarily Used To Treat A Single Type Of Cancer Which Is In A Flat Market.

Currently, the Cesium-131 seed is used almost exclusively for the treatment of prostate cancer (approximately eighty-six percent of our sales).

We have been treating brain cancer which amounted to approximately nine percent of our sales, gynecological cancer which amounted to approximately one percent of our sales, head and neck cancer which amounted to approximately one percent of our sales, lung cancer which amounted to approximately one percent of our sales, and other cancers including pelvic cancer and colorectal cancer that combined constituted approximately two percent of our sales in fiscal year 2020.

Currently, the Cesium-131 seed is used almost exclusively for the treatment of prostate cancer (approximately seventy-eight percent of our annual sales in fiscal 2021).

We have been treating brain cancer which amounted to approximately fourteen percent of our sales, lung cancer which amounted to approximately three percent of our sales, gynecological cancer which amounted to approximately one percent of our sales, head and neck cancer which amounted to approximately one percent of our sales, and other cancers including pelvic cancer and colorectal cancer that combined constituted approximately three percent of our sales in fiscal year 2021.

Management believes the Cesium-131 brachytherapy seed will continue to be used to treat other types of cancers as the Company identifies existing delivery systems that can be utilized or develops new delivery methods for the product, however these delivery systems may not prove as effective as anticipated.

15 unchanged sentences

We Rely Heavily On Three Customers.

Approximately forty-one percent (41%) of the Company’s revenues are dependent on three customers and approximately twenty-seven percent (27%) on one customer.

Approximately forty-two percent (42%) of the Company’s revenues are dependent on three customers and approximately twenty-five percent (25%) on one customer.

The loss of any of these customers would have a material adverse effect on the Company’s revenues which may not be replaced by other customers particularly as these customers are in the prostate sector which is facing substantial competition from other treatments.

The Recent Novel Coronavirus (COVID-19) Outbreak Could Materially Adversely Affect Our Financial Condition and Results of Operations .

COVID-19 may impact supply chain and product sales.

We also depend on overseas flights which have been curtailed and any further flight cancellations may impact our supply chain.

While our surgeries are not considered elective, in areas where hospitals are devoted to COVID-19 or other chronic conditions, surgeries required to implant our seeds may be postponed or cancelled, as occurred in late March and continued through June at numerous locations.

If conditions worsen with the COVID-19 pandemic this may have a material adverse effect on our business.

The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, and suppliers.

There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed.

These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition.

The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically.

While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, it has significantly disrupted global financial markets, and may limit our ability to access capital, which could in the future negatively affect our liquidity.

A recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

The ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change.

We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems or the global economy as a whole.

However, the effects could have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely.

Doctors And Hospitals May Not Adopt Our Product And Technologies At Levels Sufficient To Sustain Our Business Or To Achieve Our Desired Growth Rate.

29 unchanged sentences

If the cost of key components or raw materials increases, and we are unable fully to recover these increased costs through price increases or offset these increases through other cost reductions, we could experience lower margins and profitability.

Due to anticipated future growth and to assure adequate supply for our Cesium-131, we are investing in bringing a second supply of Cesium-131 online.

We have invested in additional enriched barium to facilitate bringing a second reactor online.

We expect that during the initial setup of the new reactor we will be ordering additional isotope to handle the potential start up variability in isotope supply and this will lower gross margins for the the six-month period ended December 31, 2021, and there is no assurance that future quarters will not require additional purchases to assure we have sufficient supplies of Cesium-131.

Significant increases in the prices of raw materials or sub-assemblies that cannot be recovered through productivity gains, price increases or other methods could adversely affect our results of operations.

5 unchanged sentences

hospital, clinic and physician purchasing decisions often impacted by vacation schedules of our primary physician customers;

research and development and manufacturing expenses;

research and development, raw materials, and manufacturing expenses;

patient outcomes from our product and unfavorable recommendations related to PSA testing;

44 unchanged sentences

The market share for brachytherapy continues to decline as a result of this pressure from increasing usage by oncologists of external beam radiation.

In addition, centers that wish to offer the Cesium-131 seed must comply with licensing requirements specific to the state, province, and/or country in which they do business and these licensing requirements may take a considerable amount of time to comply with.

Within the brachytherapy industry itself, our Cesium-131 seed is more expensive and receives less favorable reimbursement in many cases than use of iodine.

2 unchanged sentences

We also compete with academic institutions, government agencies, and private research organizations in the development of technologies and processes and in acquiring key personnel.

Although we have patents granted and patents applied for to protect our isotope separation processes and Cesium-131 seed manufacturing technology, we cannot be certain that one or more of our competitors will not attempt to obtain patent protection that blocks or adversely affects our product development efforts.

Cost-Containment Efforts Of Our Customers, Purchasing Groups, Third-Party Payers And Governmental Organizations Could Adversely Affect Our Sales And Profitability.

Although we have patents granted and patents applied for to protect our isotope separation processes, delivery system, and Cesium-131 seed manufacturing technology, we cannot be certain that one or more of our competitors will not attempt to obtain patent protection that blocks or adversely affects our product development efforts.

Cost-Containment Efforts Of Our Customers, Purchasing Groups, Third-Party Payers And Governmental Organizations Could Adversely Effect Our Sales And Profitability.

The continuing efforts of governments, insurance companies and other payors of healthcare costs to contain or reduce these costs, combined with closer scrutiny of such costs, could lead to patients being unable to obtain approval for payment from these third-party payors.

14 unchanged sentences

Failure to negotiate distribution arrangements having advantageous pricing and other terms of sale could cause us to lose market share and would adversely affect our business, results of operations, financial condition and cash flows.

If We Fail To Comply With Applicable Healthcare Regulations, We Could Face Substantial Penalties And Our Business, Operations And Financial Condition Could Be Adversely Affected.

Quality Problems With Our Product Could Harm Our Reputation For Producing A High-Quality Product And Erode Our Competitive Advantage, Sales, And Market Share.

Quality is extremely important to us and our customers due to the serious and costly consequences of product failure, which can include patient harm.

Our operating results depend in part on our ability to sustain an effective quality control system and effectively train and manage our employee base with respect to our quality system.

Our quality system plays an essential role in determining and meeting customer requirements, preventing defects and improving our product.

While we have a network of quality systems throughout our business lines and facilities, quality and safety issues may occur with respect to any of our product formats.

A quality or safety issue may result in a public warning letter from the FDA, product recalls or seizures, monetary sanctions, injunctions to halt manufacturing and distribution of products, civil or criminal sanctions, refusal of a government to grant clearances or approvals or delays in granting such clearances or approvals, import detentions of any future products made outside the United States, restrictions on operations or withdrawal or suspension of existing approvals.

Negative publicity regarding a quality issue could damage our reputation, cause us to lose customers, or decrease demand for our product and product formats.

Any of the foregoing events could disrupt our business and have an adverse effect on our results of operations and financial condition.

We Rely Upon Key Personnel.

Our success will depend, to a great extent, upon the experience, abilities and continued services of our executive officers, sales staff and key scientific personnel.

If we lose the services of several officers, sales personnel, or key scientific personnel, our business could be harmed.

Our success also will depend upon our ability to attract and retain other highly qualified scientific, managerial, sales, and manufacturing personnel and their ability to develop and maintain relationships with key individuals in the industry.

Competition for these personnel and relationships is intense and we compete with numerous pharmaceutical and biotechnology companies as well as with universities and non-profit research organizations.

We are highly dependent on our direct sales organization which promotes and supports our brachytherapy product.

There is intense competition for skilled sales and marketing employees, particularly for people who have experience in the radiation oncology market.

Accordingly, it is difficult to hire or retain skilled individuals to sell our product.

Failure to retain our direct sales force could adversely effect our growth and our ability to meet our revenue goals.

There can be no assurance that our direct sales and marketing efforts will be successful.

If we are not successful in our direct sales and marketing, our sales revenue and results of operations are likely to be materially adversely affected.

We may not be able to continue to attract and retain qualified personnel.

Our Ability To Operate In Foreign Markets Is Uncertain.

Our future growth will depend in part on our ability and the ability of our distributors to establish, grow and maintain sales in foreign markets.

However, we have limited experience in marketing and distributing our product in other countries.

Foreign operations subject us to additional risks and uncertainties, including our customers’ ability to obtain reimbursement for procedures using our product in foreign markets;

the burden of complying with complex and changing foreign regulatory requirements;

time-sensitive delivery requirements due to the short half-life of our product;

language barriers and other difficulties in providing long-distance customer service;

potentially increased time to collect accounts receivable;

significant currency fluctuations, which could cause third-party distributors to reduce the amount of our product they purchase from us because the cost of our product to them could fluctuate relative to the price they can charge their customers;

reduced protection of intellectual property rights in some foreign countries;

and the possibility that contractual provisions governed by foreign laws would be interpreted differently than intended in the event of a contract dispute.

In addition, the significant appreciation of the U.S.

dollar during the past year has made our product much more expensive in overseas markets.

Any future foreign sales of our product could also be adversely affected by export license requirements, the imposition of governmental controls, political and economic instability, trade restrictions, changes in tariffs, and difficulties in staffing and managing foreign operations.

Many of these factors may also affect our ability to import Cesium-131 from Russia under our contract with JSC Isotope.

Sanctions placed on financial transactions with Russian banking institutions may interfere with the Company’s ability to transact business in Russia on a temporary or other basis resulting in an interruption of the Cesium-131 supply which could have a material adverse effect on the Company’s business, operating results and financial condition.

Our Ability To Expand Operations And Manage Growth Is Uncertain.

Our efforts to expand our operations will result in new and increased responsibilities for management personnel and will place a strain upon the entire Company.

To compete effectively and to accommodate growth, if any, we may be required to continue to implement and to improve our management, manufacturing, sales and marketing, operating and financial systems, procedures and controls on a timely basis and to expand, train, motivate and manage our employees.

There can be no assurance that our personnel, systems, procedures, and controls will be adequate to support our future operations.

If the Cesium-131 seed were to rapidly become the “seed of choice,” it is unlikely that we could immediately meet demand.

This could cause customer discontent and invite competition.

There can be no assurance that our personnel, systems, procedures, and controls will be adequate to immediately react to that growth.

We Rely On The Performance Of Our Information Technology Systems And Those of Third Parties, The Failure Of Which Could Have An Adverse Effect On Our Business And Performance.

Our business requires the continued operation of sophisticated information technology systems and network infrastructure.

These systems are vulnerable to interruption by fire, power loss, system malfunction, computer viruses, cyber-attacks and other events, which may be beyond our control.

Systems interruptions could reduce our ability to accept customer orders, manufacture our product, or provide service for our customers, and could have an adverse effect on our operations and financial performance.

The level of protection and disaster-recovery capability varies from site to site, and there can be no guarantee that any such plans, to the extent they are in place, will be totally effective.

In addition, security breaches of our information technology systems could result in the misappropriation or unauthorized disclosure of confidential information belonging to us, our employees, partners, customers, or our suppliers, which may result in significant costs and potential government sanctions.

In particular, if we are unable to adequately safeguard individually identifiable health information, we may be subject to additional liability under domestic and international laws respecting the privacy and security of health information.

We also rely on third party vendors to supply and/or support certain aspects of our information technology systems.

Third party systems may contain defects in design or manufacture or other problems that could result in system disruption or unexpectedly compromise the information security of our own systems, and we are dependent on these third parties to provide reliable systems and software and to deploy appropriate security programs to protect their systems.

If we are unable to maintain reliable information technology systems and prevent disruptions, outages, or data breaches, we may suffer regulatory consequences in addition to business consequences.

We have programs to ensure compliance with such laws and regulations.

However, there is no guarantee that we will avoid enforcement actions by governmental bodies.

Enforcement actions may be costly and interrupt regular operations of our business.

In addition, there has been a developing trend of civil lawsuits and class actions relating to breaches of consumer data held by large companies or incidents arising from other cyberattacks.

Our information technology systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving legal and regulatory standards, the increasing need to protect patient and customer information, and the information technology needs associated with our changing products and services.

There can be no assurance that our process of consolidating, protecting, upgrading and expanding our systems and capabilities, continuing to build security into the design of our products, and developing new systems to keep pace with continuing changes in information processing technology will be successful or that additional systems issues will not arise in the future.

Any significant breakdown, intrusion, interruption, corruption, or destruction of these systems, as well as any data breaches, could have a material adverse effect on our business.

If our information technology systems, products or services or sensitive data are compromised, patients or employees could be exposed to financial or medical identity theft, and we could lose existing customers, have difficulty attracting new customers, have difficulty preventing, detecting, and controlling fraud, be exposed to the loss or misuse of confidential information, have disputes with customers, physicians, and other health care professionals, suffer regulatory sanctions or penalties under federal laws, state laws, or the laws of other jurisdictions, experience increases in operating expenses or an impairment in our ability to conduct our operations, incur expenses or lose revenues as a result of a data privacy breach, product failure, information technology outages or disruptions, or suffer other adverse consequences including lawsuits or other legal action and damage to our reputation.

Legal and Regulatory Risks

If We Fail To Comply With Applicable Healthcare Regulations, We Could Face Substantial Penalties And Our Business, Operations And Financial Condition Could Be Adversely Effected.

Certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights may be applicable to our business.

24 unchanged sentences

have become increasingly stringent and more common, and we may become subject to more rigorous regulation by governmental authorities in the future.

In the European Union, for example, a new Medical Device Regulation was approved in 2017 which, when it went into effect in the spring of 2020, will impose significant additional premarket and post-market requirements.

In the European Union, for example, a new Medical Device Regulation was approved in 2017 which, when it went into effect in the spring of 2020, imposed significant additional premarket and post-market requirements.

This new EU Medical Device Regulation caused the Company to not renew its CE Mark due to the requirement of additional clinical trials that would have required a significant investment.

50 unchanged sentences

The Value Of Our Granted Patents, and Our Patents Pending, Is Uncertain.

Although our management strongly believes that our patent on the process for producing Cesium-131, our patents on additional methods for producing Cesium-131 and other isotopes, our patent on the manufacture of the brachytherapy seed, and anticipated future patent applications, which have not yet been filed, have significant value, we cannot be certain that other like-kind processes may not exist or be discovered, that any of these patents is enforceable, or that any of our pending or future patent applications will result in issued patents.

Although our management strongly believes that our patent on the process for producing Cesium-131, our patents on additional methods for producing Cesium-131 and other isotopes, our patent on the manufacture of the brachytherapy seed, our delivery device patent, and anticipated future patent applications, which have not yet been filed, have significant value, we cannot be certain that other like-kind processes may not exist or be discovered, that any of these patents is enforceable, or that any of our pending or future patent applications will result in issued patents.

Failure To Comply With Government Regulations Could Harm Our Business .

44 unchanged sentences

This could limit our sales and growth.

Quality Problems With Our Product Could Harm Our Reputation For Producing A High-Quality Product And Erode Our Competitive Advantage, Sales, And Market Share.

Quality is extremely important to us and our customers due to the serious and costly consequences of product failure, which can include patient harm.

Our operating results depend in part on our ability to sustain an effective quality control system and effectively train and manage our employee base with respect to our quality system.

Our quality system plays an essential role in determining and meeting customer requirements, preventing defects and improving our product.

While we have a network of quality systems throughout our business lines and facilities, quality and safety issues may occur with respect to any of our product formats.

Negative publicity regarding a quality issue could damage our reputation, cause us to lose customers, or decrease demand for our product and product formats.

Any of the foregoing events could disrupt our business and have an adverse effect on our results of operations and financial condition.

Our Business Exposes Us To Product Liability Claims.

29 unchanged sentences

The ultimate cost of site cleanup and timing of future cash outflows is difficult to predict, given the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods.

We Rely Upon Key Personnel.

Our success will depend, to a great extent, upon the experience, abilities and continued services of our executive officers, sales staff and key scientific personnel.

If we lose the services of several officers, sales personnel, or key scientific personnel, our business could be harmed.

We are highly dependent on our direct sales organization who promote and support our brachytherapy product.

There is intense competition for skilled sales and marketing employees, particularly for people who have experience in the radiation oncology market.

Accordingly, we could find it difficult to hire or retain skilled individuals to sell our product.

Failure to retain our direct sales force could adversely affect our growth and our ability to meet our revenue goals.