What changed in this filing

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Item 1. Business

2023-03-30 compared with 2022-03-29 · 930 added, 1003 removed, 31 unchanged (98% of the section changed)

We are a biopharmaceutical company focused on

developing and commercializing therapeutic products for the prevention and treatment of infectious and inflammatory diseases.

Our primary focus is on the development of our lead product candidate,

DefenCath ™ , for potential commercialization in the United States, or U.S., and other key markets.

We have in-licensed

the worldwide rights to develop and commercialize DefenCath and Neutrolin ® .

are a biopharmaceutical company focused on developing and commercializing therapeutic products for the prevention and treatment of life-threatening

diseases and conditions.

primary focus is on the development of our lead product candidate, DefenCath ™ , for potential commercialization in the

United States, or U.S., and other key markets.

We have in-licensed the worldwide rights to develop and commercialize DefenCath and Neutrolin ® .

The name DefenCath is the U.S.

name conditionally approved by the U.S.

Food and Drug Administration, or FDA.

The name Neutrolin is currently used in the European Union,

or EU, and other territories where the Company has received CE-Mark approval for the commercial distribution of Neutrolin as a catheter

lock solution, or CLS, regulated as a medical device.

DefenCath/Neutrolin is a novel anti-infective solution

(a formulation of taurolidine 13.5 mg/mL, and heparin 1000 USP Units/mL) intended for the reduction of catheter-related infections and

thrombosis in patients requiring central venous catheters, or CVCs, in clinical settings such as hemodialysis and total parenteral nutrition.

Infections and thrombosis represent key complications among hemodialysis patients with CVCs.

These complications can lead to treatment

delays and increased costs to the healthcare system when they occur due to hospitalizations, need for intravenous, or IV, antibiotic treatment,

removal/replacement of the CVC, related treatment costs and increased mortality.

We believe DefenCath addresses a significant unmet medical

need and a potential large market opportunity.

DefenCath – United States

In late 2013, we met with the FDA, to determine the pathway for obtaining

proprietary name conditionally approved by the U.S.

Food and Drug Administration, or FDA, while the name

Neutrolin was used in the European Union, or EU, and other territories where we received CE-Mark approval for the commercial distribution

of Neutrolin as a catheter lock solution, or CLS, regulated as a medical device.

DefenCath is a novel anti-infective solution (a

formulation of taurolidine 13.5 mg/mL, and heparin 1000 USP Units/mL) intended for the reduction and prevention of catheter-related infections

and thrombosis in patients requiring central venous catheters, or CVCs, in clinical settings such as hemodialysis, total parenteral nutrition

and oncology.

Infections and thrombosis represent key complications among hemodialysis, total parenteral nutrition and cancer patients

These complications can lead to treatment delays and increased costs to the healthcare system when they occur due to hospitalizations,

need for IV antibiotic treatment, long-term anticoagulation therapy, removal/replacement of the CVC, related treatment costs, as well

as increased mortality.

We believe DefenCath, if approved, will address a significant unmet medical need and a potential large market

– United States

late 2013, we met with the FDA, to determine the pathway for obtaining U.S.

marketing approval of DefenCath as a new drug.

In January 2015, the FDA designated DefenCath as a Qualified Infectious Disease Product,

or QIDP, for prevention of catheter-related blood stream infections, or CRBSIs, in patients with end stage renal disease receiving hemodialysis

through a CVC.

CRBSIs can be life-threatening.

The QIDP designation provides five years of market exclusivity in addition to the five

years granted for a New Chemical Entity, or NCE, upon approval of a New Drug Application, or NDA.

In addition, in January 2015 the FDA

granted Fast Track designation to DefenCath Catheter Lock Solution, a designation intended to facilitate development and expedite review

of drugs that treat serious and life-threatening conditions so that the approved drug can reach the market expeditiously.

The Fast Track

designation of DefenCath provides the Company with the opportunity to meet with the FDA on a more frequent basis during the development

process, and also ensures eligibility to request priority review of the marketing application.

We launched the Phase 3 clinical trial in patients

with hemodialysis catheters in the U.S.

2015, the FDA designated DefenCath as a Qualified Infectious Disease Product, or QIDP, for prevention of catheter-related blood stream

infections, or CRBSIs, in patients with end stage renal disease receiving hemodialysis through a CVC.

CRBSIs and clotting can be life-threatening.

The QIDP designation provides five years of market exclusivity in addition to the five years granted for a New Chemical Entity, or NCE,

upon approval of a New Drug Application, or NDA.

In addition, in January 2015 the FDA granted Fast Track designation to DefenCath Catheter

Lock Solution, a designation intended to facilitate development and expedite review of drugs that treat serious and life-threatening

conditions so that the approved drug can reach the market expeditiously.

The Fast Track designation of DefenCath provides us with the

opportunity to meet with the FDA on a more frequent basis during the development process, and also ensures eligibility to request priority

review of the marketing application.

launched the Phase 3 clinical trial in patients with hemodialysis catheters in the U.S.

in December 2015.

The clinical trial, named Phase 3 Prospective, Multicenter, Double-blind, Randomized,

Active Control Study to Demonstrate Safety and Effectiveness of DefenCath in Preventing Catheter-related Bloodstream Infection in Subjects

on Hemodialysis for End Stage Renal Disease, or LOCK-IT-100, was a prospective, multicenter, randomized, double-blind, active control

trial which aimed to demonstrate the efficacy and safety of DefenCath in preventing CRBSIs, in subjects receiving hemodialysis therapy

as treatment for end stage renal disease.

The primary endpoint for the trial was time to CRBSI.

The trial evaluated DefenCath relative

to the active control heparin by documenting the incidence of CRBSI and the time until the occurrence of CRBSI for each study

Secondary endpoints were catheter patency, which was defined as required use of tissue plasminogen activating factor, or tPA,

or removal of catheter due to dysfunction, and removal of catheter for any reason.

During the course of the study, in consultation

with the FDA, we established the Clinical Adjudication Committee, or CAC, to critically and independently assess CRBSI while being blinded

to treatment assignment.

As announced in July 2018, the CAC reviewed potential cases of CRBSI in our LOCK-IT-100 study that occurred

through early December 2017 and identified 28 such cases.

As previously agreed with the FDA, an interim efficacy analysis was performed

when the first 28 CRBSIs were identified.

On July 25, 2018, we announced that the independent Data Safety Monitoring Board, or DSMB,

had completed its review of the interim analysis of the data from the LOCK-IT-100 study.

Based on the first 28 cases, there was a highly

statistically significant 72% reduction in CRBSI relative to the control (p=0.0034).

Because the pre-specified level of statistical significance

was reached for the primary endpoint and efficacy had been demonstrated with no safety concerns, the DSMB recommended the study be terminated

Following discussions with the FDA, we proceeded

with an orderly termination of LOCK-IT-100.

In late January 2019, we announced the topline results of the full data set of the LOCK-IT-100

The study continued enrolling and treating subjects until study termination, and the final efficacy analysis was based on a total

of 795 subjects.

The primary endpoint of the Phase 3 LOCK-IT-100

study was the reduction of the risk of occurrence of CRBSI by DefenCath relative to the active control of heparin.

In the analysis of

the full data set, a total of 41 CRBSI events were determined by the CAC.

There was a 71% reduction in the risk of occurrence of CRBSIs

compared with the active control of heparin, which was well in excess of the study’s assumed treatment effect size of a 55% reduction.

In the DefenCath arm, the CRBSI event rate was 0.13 per 1000 catheter days, which is significantly lower than the event rate of 0.46

per 1000 catheter days in the control arm.

The statistical significance of the primary endpoint in the full data set (p=0.0006) was even

more impressive than that of the interim analysis (p=0.0034).

The FDA granted our request for a rolling submission

and review of the New Drug Application, or NDA, that is designed to expedite the approval process for products being developed to address

an unmet medical need.

Although the FDA usually requires two pivotal clinical trials to provide substantial evidence of safety and effectiveness

for approval of the NDA, the FDA will in some cases accept one adequate and well-controlled trial, where it is a large multicenter trial

with a broad range of subjects and investigation sites with procedures to include trial quality that has demonstrated a clinically meaningful

and statistically very persuasive effect on prevention of a disease with potentially serious outcome.

In March 2020, we began the modular submission

process for the NDA for DefenCath for the prevention of CRBSI in hemodialysis patients, and in August 2020, the FDA accepted for filing

the DefenCath NDA.

The FDA also granted our request for priority review, which provides for a six-month review period instead of the

standard ten-month review period.

As we announced in March 2021, the FDA informed us in its Complete Response Letter (“CRL”)

that it cannot approve the NDA for DefenCath in its present form.

The FDA noted concerns at the third-party manufacturing facility after

a review of records requested by the FDA and provided by the contract manufacturing organization, or CMO.

Additionally, the FDA is requiring

a manual extraction study to demonstrate that the labeled volume can be consistently withdrawn from the vials despite an existing in-process

control to demonstrate fill volume within specifications.

In April 2021, we and the CMO met with the FDA

to discuss proposed resolutions for the deficiencies identified in the CRL to us and the Post-Application Action Letter, or PAAL, received

by the CMO from the FDA for the NDA for DefenCath.

There was an agreed upon protocol for the manual extraction study identified in the

CRL, which now has been successfully completed.

Addressing the FDA’s concerns regarding the qualification of the filling operation

necessitated adjustments in the process and generation of additional data on operating parameters for manufacture of DefenCath.

the CMO determined that additional process qualification is needed with subsequent validation to address these issues.

The FDA stated

that the review timeline would be determined when the NDA resubmission is received.

The FDA also stated that it expected all corrections

to facility deficiencies to be complete at the time of resubmission so that all corrective actions may be verified during an onsite evaluation

of the manufacturing facility in the next review cycle, if the FDA determines it will do an onsite evaluation.

CorMedix and the CMO worked closely to ensure

that the identified deficiencies were resolved and on February 28, 2022, we announced that we resubmitted the NDA for DefenCath to address

the CRL issued by the FDA.

In parallel, our third-party manufacturer submitted responses to the deficiencies identified at the manufacturing

facility in the PAAL issued by the FDA concurrently with the CRL.

Satisfactory resolution of these issues is required for approval of

the DefenCath NDA.

If an onsite inspection is required, we may encounter delays in obtaining FDA approval because the FDA is currently

facing a backlog due to the COVID-19 pandemic.

The FDA issued a guidance document on its plan to use voluntary remote interactive evaluations

at facilities, including for a pre-approval inspection to assess a marketing application.

The FDA will request the manufacturing facility

to participate in a voluntary remote interactive evaluation, if the FDA believes it is appropriate.

A manufacturing facility cannot request

the remote interaction.

The FDA expects the use of remote interactive evaluations should help the FDA operate within normal timeframes

in spite of the COVID-19 pandemic.

The FDA did not request additional clinical data

and did not identify any deficiencies related to the data submitted on the efficacy or safety of DefenCath from LOCK-IT-100.

draft labeling discussed with the FDA, the FDA added that the initial approval will be for the limited population of patients with kidney

failure receiving chronic hemodialysis through a central venous catheter.

This is consistent with our request for approval pursuant

to the Limited Population Pathway for Antibacterial and Antifungal Drugs, or LPAD.

LPAD, passed as part of the 21 st Century

Cures Act, is a new program intended to expedite the development and approval of certain antibacterial and antifungal drugs to treat

serious or life-threatening infections in limited populations of patients with unmet needs.

LPAD provides for a streamlined clinical

development program involving smaller, shorter, or fewer clinical trials and is intended to encourage the development of safe and effective

products that address unmet medical needs of patients with serious bacterial and fungal infections.

We believe that LPAD will provide

additional flexibility for the FDA to approve DefenCath to reduce CRBSIs in the limited population of patients with kidney failure receiving

hemodialysis through a central venous catheter.

In March 2020, we were granted a deferral by the

FDA under the Pediatric Research Equity Act, or PREA, that requires sponsors to conduct pediatric studies for NDAs for a new active ingredient,

such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the FDA.

A deferral acknowledges that a pediatric assessment

is required but permits the applicant to submit the pediatric assessment after the submission of an NDA.

We have made a commitment to

conduct the pediatric study after approval of the NDA for use in adult hemodialysis patients.

Pediatric studies for an approved product

conducted under PREA may qualify for pediatric exclusivity, which if granted would provide an additional six months of marketing exclusivity.

DefenCath would then have the potential to receive a total marketing exclusivity period of 10.5 years, including exclusivity pursuant

to NCE and QIDP.

Neutrolin – International

In the European Union, or EU, Neutrolin is regulated

as a Class 3 medical device.

The clinical trial, named Phase

3 Prospective, Multicenter, Double-blind, Randomized, Active Control Study to Demonstrate Safety and Effectiveness of DefenCath in Preventing

Catheter-related Bloodstream Infection in Subjects on Hemodialysis for End Stage Renal Disease, or LOCK-IT-100, was a prospective, multicenter,

randomized, double-blind, active control trial which was designed to demonstrate the safety and effectiveness of DefenCath compared to

the standard of care CLS, Heparin, in preventing CRBSIs, in subjects receiving hemodialysis therapy as treatment for end stage renal

The primary endpoint for the trial assessed the incidence of CRBSI and time to CRBSI for each study subject.

The trial evaluated

DefenCath relative to the active control heparin by documenting the incidence of CRBSI and the time until the occurrence of

CRBSI for each study subject.

Secondary endpoints were catheter patency, which was defined as required use of tissue plasminogen activating

factor, or tPA, or removal of catheter due to dysfunction, and removal of catheter for any reason.

the course of the study, in consultation with the FDA, we established the Clinical Adjudication Committee, or CAC, to critically and

independently assess CRBSI while being blinded to treatment assignment.

As announced in July 2018, the CAC reviewed potential cases of

CRBSI in our LOCK-IT-100 study that occurred through early December 2017 and identified 28 such cases.

As previously agreed with the

FDA, an interim efficacy analysis was performed when the first 28 CRBSIs were identified.

On July 25, 2018, we announced that the independent

Data Safety Monitoring Board, or DSMB, had completed its review of the interim analysis of the data from the LOCK-IT-100 study.

on the first 28 cases, there was a highly statistically significant 72% reduction in CRBSI relative to the control (p=0.0034).

the pre-specified level of statistical significance was reached for the primary endpoint and efficacy had been demonstrated with no safety

concerns, the DSMB recommended the study be terminated early.

discussions with the FDA, we proceeded with an orderly termination of LOCK-IT-100.

In late January 2019, we announced the topline results

of the full data set of the LOCK-IT-100 study.

The study continued enrolling and treating subjects until study termination, and the final

efficacy analysis was based on a total of 795 subjects.

primary endpoint of the Phase 3 LOCK-IT-100 study was the reduction of the risk of occurrence of CRBSI by DefenCath relative to the active

control of heparin.

In the analysis of the full data set, a total of 41 CRBSI events were determined by the CAC.

There was a 71% reduction

in the risk of occurrence of CRBSIs compared with the active control of heparin, which was well in excess of the study’s assumed

treatment effect size of a 55% reduction.

In the DefenCath arm, the CRBSI event rate was 0.13 per 1000 catheter days, which is significantly

lower than the event rate of 0.46 per 1000 catheter days in the control arm.

The statistical significance of the primary endpoint in

the full data set (p=0.0006) was even more impressive than that of the interim analysis (p=0.0034).

FDA granted our request for a rolling submission and review of the New Drug Application, or NDA, that is designed to expedite the approval

process for products being developed to address an unmet medical need.

Although the FDA usually requires two pivotal clinical trials

to provide substantial evidence of safety and effectiveness for approval of the NDA, the FDA will in some cases accept one adequate and

well-controlled trial, where it is a large multicenter trial with a broad range of subjects and investigation sites with procedures to

include trial quality that has demonstrated a clinically meaningful and statistically very persuasive effect on prevention of a disease

with potentially serious outcome.

March 2020, we began the modular submission process for the NDA for DefenCath for the prevention of CRBSI in hemodialysis patients, and

in August 2020, the FDA accepted for filing the DefenCath NDA.

The FDA also granted our request for priority review, which provides for

a six-month review period instead of the standard ten-month review period.

As we announced in March 2021, the FDA informed us in its

Complete Response Letter (“CRL”) that it could not approve the NDA for DefenCath in its present form.

The FDA noted concerns

at the third-party manufacturing facility after a review of records requested by the FDA and provided by the contract manufacturing organization,

Additionally, the FDA required a manual extraction study to demonstrate that the labeled volume can be consistently withdrawn

from the vials despite an existing in-process control to demonstrate fill volume within specifications.

April 2021, we and the CMO met with the FDA to discuss proposed resolutions for the deficiencies identified in the CRL to us and the

Post-Application Action Letter, or PAAL, received by the CMO from the FDA for the NDA for DefenCath.

There was an agreed upon protocol

for the manual extraction study identified in the CRL, which now has been successfully completed.

Addressing the FDA’s concerns

regarding the qualification of the filling operation necessitated adjustments in the process and generation of additional data on operating

parameters for manufacture of DefenCath.

We and the CMO determined that additional process qualification was needed with subsequent validation

to address these issues.

FDA did not request additional clinical data and did not identify any deficiencies related to the data submitted on the efficacy or safety

of DefenCath from LOCK-IT-100.

In draft labeling discussed with the FDA, the FDA added that the initial approval will be for the

limited population of patients with kidney failure receiving chronic hemodialysis through a central venous catheter.

This is consistent

with our request for approval pursuant to the Limited Population Pathway for Antibacterial and Antifungal Drugs, or LPAD.

as part of the 21 st Century Cures Act, is a new program intended to expedite the development and approval of certain antibacterial

and antifungal drugs to treat serious or life-threatening infections in limited populations of patients with unmet needs.

LPAD provides

for a streamlined clinical development program involving smaller, shorter, or fewer clinical trials and is intended to encourage the

development of safe and effective products that address unmet medical needs of patients with serious bacterial and fungal infections.

We believe that LPAD will provide additional flexibility for the FDA to approve DefenCath to reduce CRBSIs in the limited population

of patients with kidney failure receiving hemodialysis through a central venous catheter.

February 28, 2022, we resubmitted the NDA for DefenCath to address the CRL issued by the FDA.

In parallel, our third-party manufacturer

submitted responses to the deficiencies identified at the manufacturing facility in the PAAL issued by the FDA concurrently with the

The FDA had stated that it expected all corrections to facility deficiencies to be complete at the time of resubmission so that

all corrective actions may be verified during an onsite evaluation of the manufacturing facility in the next review cycle.

2022, we announced that the resubmission of the NDA for DefenCath had been accepted for filing by the FDA.

The FDA considered the resubmission

as a complete, Class 2 response with a six-month review cycle.

The CMO notified us that an onsite inspection by the FDA was conducted

that resulted in FORM FDA 483 observations that are being addressed.

The CMO submitted responses to the inspectional observations along

with a corrective action plan and requested a meeting with the FDA to discuss.

We were also notified by our supplier of heparin, an active

pharmaceutical ingredient, or API, for DefenCath, that an inspection by the FDA for an unrelated API, resulted in a Warning Letter due

to deviations from good manufacturing practices for the unrelated API.

August 8, 2022, we announced receipt of a second CRL from the FDA regarding the DefenCath NDA.

The FDA stated that the DefenCath NDA

cannot be approved until deficiencies conveyed to the CMO and the heparin API supplier are resolved to the satisfaction of the FDA.

were no other requirements identified by the FDA for us prior to resubmission of the NDA.

Validation of manufacturing with heparin from

an alternative supplier is underway to prepare for resubmission of the NDA in the event that the Warning Letter at our current API supplier

remains unresolved.

Corrective actions have been implemented to address the inspectional observations at the CMO and are under review

As part of the NDA review process, the FDA has also notified us that

although the tradename DefenCath was conditionally approved, the FDA now has identified potential confusion with another pending product

name that is also under review.

The ultimate acceptability of our proposed tradename is dependent upon which application is approved first.

As a precaution, we are preparing to submit an alternative proprietary name to the FDA which will undergo review.

intend to pursue additional indications for DefenCath use as a CLS in populations with unmet medical needs that may also represent potentially

significant market opportunities.

While we are continuing to assess these areas, potential future indications may include use as a CLS

to reduce CRBSIs in total parenteral nutrition patients using a central venous catheter and in oncology patients using a central venous

were granted a deferral by the FDA under the Pediatric Research Equity Act, or PREA, that requires sponsors to conduct pediatric studies

for NDAs for a new active ingredient, such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the FDA.

acknowledges that a pediatric assessment is required but permits the applicant to submit the pediatric assessment after the submission

We have made a commitment to conduct the pediatric study after approval of the NDA for use in adult hemodialysis patients.

Pediatric studies for an approved product conducted under PREA may qualify for pediatric exclusivity, which, if granted, would provide

an additional six months of marketing exclusivity.

DefenCath would then have the potential to receive a total marketing exclusivity period

of 10.5 years, including exclusivity pursuant to NCE and QIDP.

– International

the EU, Neutrolin was regulated as a Class 3 medical device.

In July 2013, we received CE Mark approval for Neutrolin.

In December 2013, we commercially launched

Neutrolin in Germany for the prevention of CRBSI, and maintenance of catheter patency in hemodialysis patients using a tunneled, cuffed

central venous catheter for vascular access.

To date, Neutrolin is registered and may be sold in certain European Union countries for

such treatment.

In September 2014, the TUV-SUD and The Medicines

Evaluation Board of the Netherlands, or MEB, granted a label expansion for Neutrolin for these same expanded indications for the EU.

In December 2014, we received approval from the Hessian District President in Germany to expand the label to include use in oncology

patients receiving chemotherapy, IV hydration and IV medications via central venous catheters.

The expansion also adds patients receiving

medication and IV fluids via central venous catheters in intensive or critical care units (cardiac care unit, surgical care unit, neonatal

critical care unit, and urgent care centers).

An indication for use in total parenteral nutrition was also approved.

Additional Development Possibilities

In addition to developing the use of taurolidine

as a catheter lock solution, we are sponsoring a pre-clinical research collaboration for the use of taurolidine as a possible treatment

for rare pediatric tumors.

In February 2018, the FDA granted orphan drug designation to taurolidine for the treatment of neuroblastoma

We may seek one or more strategic partners or other sources of capital to help us develop and commercialize taurolidine

for the treatment of neuroblastoma in children.

We are also evaluating opportunities for the possible expansion of taurolidine as a platform

compound for use in certain medical devices.

Patent applications have been filed in several indications, including wound closure, surgical

meshes, and wound management.

Based on initial feasibility work, we are advancing pre-clinical studies for taurolidine-infused surgical

meshes, suture materials and hydrogels.

We will seek to establish development/commercial partnerships as these programs advance.

The FDA regards taurolidine as a new chemical

entity and therefore it is currently regulated as an unapproved new drug.

We might in the future pursue product candidates that would

involve devices impregnated with taurolidine, and we believe that at the current time such products would be combination products subject

to both device premarket submission requirements and drug regulations.

Consequently, given that there is no appropriate predicate medical

device currently marketed in the U.S.

on which a 510(k) clearance process could be based and that taurolidine is not yet approved in

any application, we anticipate that we would be required to submit a premarket approval application, or PMA, for marketing authorization

for any medical device indications that we may pursue for devices containing taurolidine.

In the event that an NDA for DefenCath is approved

by the FDA, the regulatory pathway for these medical device product candidates may be revisited with the FDA.

Although there may be no

appropriate predicate, de novo Class II designation can be proposed, based on a risk assessment and a reasonable assurance of safety

and effectiveness.

Market Opportunity

Central venous catheters and

peripherally inserted central catheters (“Central Catheters”) are an important and frequently used method for accessing the

vasculature in hemodialysis (a form of dialysis where the patient’s blood is circulated through a dialysis filter), administering

chemotherapy and basic fluids in cancer patients and for cancer chemotherapy, long term antibiotic therapy, and total parenteral nutrition

(complete or partial dietary support via intravenous nutrients).

According to the 2015 United

States Renal Disease System, there were 660,000 patients on hemodialysis in the U.S.

Hemodialysis National Kidney Foundation has reported

that patients requiring Central Catheters represent over 63 million catheter/dialysis treatment days per year.

One of the major and common

complications for all patients requiring CVCs is CRBSI and the clinical complications associated with them.

The total annual cost for

treating CRBSI episodes and their related complications in the U.S.

is up to $2.7 billion, with approximately 250,000 CRBSI episodes

per year (Becker’s Hospital Review).

Biofilm build up is the pathogenesis

of both infections and thrombotic complications in central venous catheters.

Prevention of CRBSI and inflammatory complications requires

both removal of pathogens from the internal surface of the catheter to prevent the systemic dissemination of organisms contained within

the biofilm as well as an anticoagulant to retain blood flow during dialysis.

Biofilm forms when bacteria adhere to surfaces in aqueous

environments and begin to excrete a slimy, glue-like substance that can anchor them to various types of materials, including intravenous

The presence of biofilm has many adverse effects, including the ability to release bacteria into the blood stream.

standard of catheter care is to instill a heparin lock solution at a concentration of 1000 u/mL into each catheter lumen immediately

following treatment, in order to prevent clotting between dialysis treatments.

However, a heparin lock solution provides no protection

from the risk of infection.

Currently, there are no pharmacologic

agents approved in the U.S.

for the prevention of CRBSI in CVCs.

As noted above, we received the CE Mark approval for Neutrolin from

the MEB of the EU in July 2013.

We believe there is a significant need for prevention of CRBSI in the hemodialysis patient population

as well as for other patient populations utilizing central venous catheters and peripherally inserted central catheters, such as oncology/chemotherapy,

and total parenteral nutrition.

DefenCath is a broad-spectrum

antibacterial, antifungal and anticoagulant combination that is active against common microbes including antibiotic-resistant strains

and in addition may prevent biofilm formation.

We believe that using DefenCath as an anti-infective solution will significantly reduce

the incidence of life-threatening catheter-related blood stream infections, thus reducing the need for local and systemic antibiotics

while prolonging catheter function.

Initially, we expect to sell DefenCath in the

primarily to key operators of dialysis centers.

We anticipate that Medicare reimbursement could be available for DefenCath in hemodialysis

and other catheter indications, such as oncology patients and total parenteral nutrition patients through relevant hospital inpatient

diagnosis-related groups, or DRGs, or outpatient ambulatory payment classifications, or APCs, the End-Stage Renal Disease Prospective

Payment System, or ESRD PPS, base payment, or under the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies, or DMEPOS, Fee

Schedule, depending on the setting of care.

We also plan to seek separate reimbursement as a drug, where available under Medicare, through

mechanisms such as pass-through status under the Hospital Outpatient Prospective Payment System, the transitional drug add-on payment

adjustment, or TDAPA, under the ESRD PPS, or reimbursement as a drug used with a DMEPOS infusion pump.

We have engaged the U.S.

for Medicare & Medicaid Services, or CMS, in preliminary discussions concerning the reimbursement for DefenCath under TDAPA, however,

qualifications cannot be determined until after FDA approval and CMS evaluates the request for coverage in a quarterly review.

under TDAPA, reimbursement of DefenCath would be calculated based on its average selling price.

To be eligible for TDAPA, a new renal

drug or biologic must be:

● Approved by FDA pursuant

to Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act

● Commercially available

● Assigned a Healthcare

Common Procedure Coding System code

● Identified as having

an end action effect that treats or manages a condition or conditions associated with ESRD

● Identified as not

fitting into an established ESRD PPS functional category

● Designated by CMS

as a renal dialysis service.

Although we cannot fully anticipate changes in

reimbursement requirements and mechanisms in the coming years, we expect DefenCath would be eligible for and would obtain TDAPA.

meets the criterion of being a new renal dialysis product used to treat or manage a condition associated with ESRD, since infections

are the second leading cause of death in patients with ESRD and CVCs are a significant risk factor for infection-associated mortality.

Furthermore, we anticipate that the CMS, and private

payers will increasingly demand that manufacturers demonstrate the cost effectiveness of their product as part of the reimbursement review

and approval process.

With this in mind, we are performing health economic evaluations to support this review in the context of the prospective

use of DefenCath in dialysis, and other settings.

Our studies may not be sufficient to support coverage or reimbursement at levels

that allow providers to use DefenCath.

Competitive Landscape

The drug and medical device industries are highly

competitive and subject to rapid and significant technological change.

DefenCath’s current and future competitors include large

as well as specialty pharmaceutical and biotechnology companies and large and specialty medical device companies.

Many of our competitors

have substantially greater financial, technical and human resources than we do and significantly more experience in the development and

commercialization of drugs and medical devices.

Further, the development of new treatment methods could render DefenCath non-competitive

We believe that the key competitive factors that

will affect the development and commercial success of DefenCath are efficacy and safety, as well as pricing and reimbursement.

that there are no approved catheter lock solutions with antimicrobial properties in the U.S., and that the current standard of care is

heparin, we believe there is an opportunity for DefenCath to become the new standard of care as a CLS in the U.S.

market, if approved

We are not aware of any potentially competitive CLS which are approved or under development by other companies in the U.S.

development stage product from Citius is being studied for salvage of CVCs once a patient becomes diagnosed with a catheter related blood

stream infection.

In the EU, several catheter lock solutions have

received a CE Mark, in addition to Neutrolin.

For example, TauoLock contains a combination of citrate 4% with (cyclo)-taurolidine and

heparin or urokinase, but it is not approved for use in the U.S.

Some device companies have launched antibiotic or antimicrobial-coated

catheters as short-term prevention of catheter infection.

We believe these are not effective for hemodialysis catheters due to the long-term

use and high blood flow associated with hemodialysis.

Manufacturing/Supply Chain

We do not own or operate any

manufacturing facilities related to the production of our products.

All our manufacturing processes currently are, and we expect them

to continue, to be outsourced to third parties.

We rely on third-party manufacturers to produce sufficient quantities of drug product

for use both commercially and in clinical trials.

In December 2013,

we commercially launched Neutrolin in Germany for the prevention of CRBSI, and maintenance of catheter patency in hemodialysis patients

using a tunneled, cuffed central venous catheter for vascular access.

September 2014, the TUV-SUD and The Medicines Evaluation Board of the Netherlands, or MEB, granted a label expansion for Neutrolin for

these same expanded indications for the EU.

In December 2014, we received approval from the Hessian District President in Germany to

expand the label to include use in oncology patients receiving chemotherapy, IV hydration and IV medications via central venous catheters.

The expansion also adds patients receiving medication and IV fluids via central venous catheters in intensive or critical care units

(cardiac care unit, surgical care unit, neonatal critical care unit, and urgent care centers).

An indication for use in total parenteral

nutrition was also approved.

September 2019, our registration with the Saudi Arabia Food and Drug Administration, or the SFDA, expired.

As a result, we cannot sell

Neutrolin in Saudi Arabia and do not intend to pursue renewal of our registration with the SFDA.

announced in May 2022, we began the process of winding down our operations in the EU and discontinued Neutrolin sales in both the EU

and the Middle East at the end of 2022.

Development Possibilities

addition to DefenCath, we have sponsored a pre-clinical research collaboration for the use of taurolidine as a possible treatment for

rare pediatric tumors.

In February 2018, the FDA granted orphan drug designation to taurolidine for the treatment of neuroblastoma in

We may seek one or more strategic partners or other sources of capital to help us develop and commercialize taurolidine for

the treatment of neuroblastoma in children.

have previously filed intellectual property for expanded uses of taurolidine as a platform compound for use in certain medical devices.

Patent applications have been filed in several indications, including wound closure, surgical meshes, and wound management.

need to seek to establish development/commercial partnerships for these programs to advance.

FDA regards taurolidine as a new chemical entity and therefore it is currently regulated as an unapproved new drug.

In the future, we

may pursue product candidates that would involve devices impregnated with taurolidine, and we believe that at the current time such products

would be combination products subject to device premarket submission requirements (while subject also, under review by the FDA, to the

standards for drug approvability).

Consequently, given that there is no appropriate predicate medical device currently marketed in the

on which a 510(k) approval process could be based and that taurolidine is not yet approved in any application, we anticipate that

we would be required to submit a premarket approval application, or PMA, for marketing authorization for any medical device indications

that we may pursue for devices containing taurolidine.

In the event that an NDA for DefenCath is approved by the FDA, the regulatory

pathway for these medical device product candidates may be revisited with the FDA.

Although there may be no appropriate predicate, de

novo Class II designation can be proposed, based on a risk assessment and a reasonable assurance of safety and effectiveness.

venous catheters, or CVCs, and peripherally inserted central catheters, or Central Catheters, are an important and frequently used method

for accessing the vasculature in hemodialysis (a form of dialysis where the patient’s blood is circulated through a dialysis filter),

administering chemotherapy and basic fluids in cancer patients and for cancer chemotherapy, long term antibiotic therapy, and total parenteral

nutrition (complete or partial dietary support via intravenous nutrients).

Bloodstream infections resulting from the use of

central catheters, known as CRBSIs or Central Line Associated Bloodstream Infections, or CLABSIs, can result in significant morbidity

and increased rates of hospital admissions, readmissions and mortality.

One of the major and common risk factors for all patients requiring

CVCs is CRBSIs and the clinical complications associated with them.

The total annual cost for treating CRBSI episodes and their related

complications in the U.S.

is up to $2.3 billion, with approximately 250,000 CRBSI episodes per year (Becker’s Hospital Review).

According to the 2022 United States Renal Disease System, reporting

data from 2020, there were nearly 808,000 End-Stage-Renal-Disease, or ESRD, patients on permanent hemodialysis in the U.S.

Of these, nearly

108,000 hemodialysis patients were new patients diagnosed with ESRD during the year they were receiving dialysis through a CVC.

are typically located in various care settings including inpatient hospitals and outpatient dialysis clinics.

Kidney failure patients

can include ESRD, Acute Kidney Injury, or AKI and Chronic Kidney Disease, or CKD, populations that crash land into dialysis.

that present in the hospital have an average length of stay of 13.3 days and additionally high 30-day readmission rates both for same

diagnosis and all-cause with the all-cause readmissions being higher.

build up is the pathogenesis of both infections and thrombotic complications in central venous catheters.

Prevention of CRBSI and inflammatory

complications requires both removal of pathogens from the internal surface of the catheter to prevent the systemic dissemination of organisms

contained within the biofilm as well as an anticoagulant to retain blood flow during dialysis.

Biofilm forms when bacteria adhere to

surfaces in aqueous environments and begin to excrete a slimy, glue-like substance that can anchor them to various types of materials,

including intravenous catheters.

The presence of biofilm has many adverse effects, including the ability to release bacteria into the

blood stream.

The current standard of catheter care is to instill a heparin lock solution at a concentration of 1000 u/mL into each catheter

lumen immediately following treatment, in order to prevent clotting between dialysis treatments.

However, a heparin lock solution provides

no protection from the risk of infection.

there are no pharmacologic agents approved in the U.S.

for the prevention or reduction of CRBSI in CVCs.

We believe there is a significant

need for prevention of CRBSI in the hemodialysis patient population as well as for other patient populations utilizing central venous

catheters and peripherally inserted central catheters, such as oncology/chemotherapy, and total parenteral nutrition.

is a non-antibiotic, broad-spectrum antibacterial, antifungal and anticoagulant combination that is active against common microbes including

antibiotic-resistant strains and in addition may prevent biofilm formation.

DefenCath had been reviewed as a New Molecular Entity, or

NME, with priority review.

In addition, DefenCath has been granted a QIDP designation by the FDA.

We believe that using DefenCath as

an anti-infective catheter-lock solution will significantly reduce the incidence of life-threatening catheter-related blood stream infections,

thus reducing the need for local and systemic antibiotics while prolonging catheter function.

There are currently no products approved

by the FDA with an indication for use as a catheter lock solution.

drug and medical device industries are highly competitive and subject to rapid and significant technological change.

current and future competitors include large as well as specialty pharmaceutical and biotechnology companies and large and specialty

medical device companies.

Many of our competitors have substantially greater financial, technical and human resources than we do and

significantly more experience in the development and commercialization of drugs and medical devices.

Further, the development of new

treatment methods could render DefenCath non-competitive or obsolete.

believe that the key competitive factors that will affect the development and commercial success of DefenCath are efficacy and safety,

as well as pricing and reimbursement.

Given that there are no approved catheter lock solutions with antimicrobial properties in the U.S.,

and that the current standard of care is heparin, we believe that with adequate reimbursement there is an opportunity for DefenCath to

become the new standard of care as a CLS in the U.S.

market, if approved by FDA.

We are not aware of any potentially competitive CLS

which are approved or under development by other companies in the U.S.

A development stage product from Citius Pharmaceuticals Inc.

being studied for use to salvage an infected CVC, causing a catheter related blood stream infection.

Manufacturing/Supply

do not own or operate any manufacturing facilities related to the production of our products.

All our manufacturing processes currently

are, and we expect them to continue, to be outsourced to third parties.

We rely on third-party manufacturers to produce sufficient quantities

of drug product for use both commercially and in clinical trials.

We intend to continue this practice in the future.

With regards to taurolidine,

an active drug ingredient, or API, of DefenCath, we have a Drug Master File filed with the FDA.

There is a master commercial supply agreement

between the third-party manufacturer, and us in place from August 2018.

With regards to taurolidine, an active pharmaceutical

ingredient, or API, of DefenCath, we have a Drug Master File filed with the FDA.

There is a master commercial supply agreement between

the third-party manufacturer, and us in place from August 2018.

We have two sources for the other key API, Heparin sodium.

We have utilized two drug

product CMOs.

One CMO manufactures for the EU and Middle East markets and the other is for U.S.

In order to assure supply,

we are in the process of identifying an additional CMO.

We are confident that these

CMO’s have adequate capacity to produce the volumes needed, and that there exists a sufficient number of potential alternate sources

for the drug substances required to produce our products, as well as third-party manufacturers, that we will be able to find alternate

suppliers and third-party manufacturers in the event that our relationship with any supplier or third-party manufacturer deteriorates.

The process for selecting and qualifying an alternative contract manufacturer and for completing the technology transfer to such a manufacturer

to the point of enabling commercialization of the product would take several years.

United States Government Regulation

The research, development, testing,

manufacture, labeling, promotion, advertising, distribution, and marketing, among other things, of our products are extensively regulated

by governmental authorities in the U.S.

We have historically utilized a European based

CMO for the production of DefenCath for the U.S.

We have validated the manufacturing process for DefenCath at this CMO utilizing

one source of heparin API, and are in the process of validating a second source of heparin API.

are confident that this CMO has adequate capacity to produce the volumes needed, and that there exists a sufficient number of potential

alternate sources for the drug substances required to produce our products, as well as third-party manufacturers, that we will be able

to find alternate suppliers and third-party manufacturers in the event that our relationship with any supplier or third-party manufacturer

deteriorates.

The process for selecting and qualifying an alternative contract manufacturer and for completing the technology transfer

to such a manufacturer to the point of enabling commercialization of the product may take several years.

previously announced an agreement with Alcami Corporation, or Alcami, a U.S.

based contract manufacturer with proven capabilities for

manufacturing commercial sterile parenteral drug products.

Alcami may function as an alternate manufacturing site for DefenCath for the

As part of the technology transfer and validation of the manufacturing process at Alcami, we would also expect to qualify

an alternate source of heparin API sourced from a major U.S.

States Government Regulation

research, development, testing, manufacture, labeling, promotion, advertising, distribution, and marketing, among other things, of our

products are extensively regulated by governmental authorities in the U.S.

and other countries.

Our products may be classified by the FDA as a drug or a medical device

depending upon the indications for use or claims.

Because certain of our product candidates are considered as medical devices and others

are considered as drugs for regulatory purposes, we intend to submit applications to regulatory agencies for approval or clearance of

both medical devices and pharmaceutical product candidates.

In the U.S., the FDA regulates

drugs and medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA) and the Agency’s implementing regulations.

fail to comply with the applicable U.S.

requirements at any time during the product development process, clinical testing, and during

the approval process or after approval, we may become subject to administrative or judicial sanctions.

These sanctions could include

the FDA’s refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, warning letters,

adverse publicity, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines,

civil penalties or criminal prosecution, among other actions.

Any agency enforcement action and/or any related impact could have a material

adverse effect on us.

Drug Approval Process

The research, development, and

approval process in the United States and elsewhere is intensive and rigorous and generally takes many years to complete.

process required by the FDA before a therapeutic drug may be marketed in the United States includes:

● Pre-clinical laboratory

and animal tests performed under the FDA’s Good Laboratory Practices, or GLP, regulations;

● submission to the

FDA of an investigational new drug application, or IND, which must become effective before

human clinical trials may commence;

● human clinical studies

to evaluate the drug’s safety and effectiveness for its intended uses;

● FDA review of whether

the facility in which the drug is manufactured, processed, packaged, or held meets standards

designed to assure the product’s continued quality and FDA review of clinical trial

sites to determine whether the clinical trials were conducted in accordance with Good Clinical

Practices, or GCPs;

● submission of a new

drug application, or NDA, to the FDA, and approval of the application by the FDA to allow

sales of the drug.

During pre-clinical testing,

studies are performed with respect to the chemical and physical properties of candidate formulations.

These studies are subject to GLP

Our products may be classified by the

FDA as a drug or a medical device depending upon the indications for use or claims.

Because certain of our product candidates are considered

as medical devices and others are considered as drugs for regulatory purposes, we intend to submit applications to regulatory agencies

for approval or clearance of both medical devices and pharmaceutical product candidates.

In the U.S., the FDA regulates drugs and medical

devices under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and the FDA’s implementing regulations.

If we fail to

comply with the applicable U.S.

requirements at any time during the product development process, clinical testing, and during the approval

process or after approval, we may become subject to administrative or judicial sanctions.

These sanctions could include the FDA’s

refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, warning letters, adverse publicity,

product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal

prosecution, among other actions.

Any agency enforcement action and/or any related impact could have a material adverse effect on us.

Approval Process

research, development, and approval process in the United States and elsewhere is intensive and rigorous and generally takes many years

The typical process required by the FDA before a therapeutic drug may be marketed in the United States includes:

● pre-clinical

laboratory and animal tests performed under the FDA’s Good Laboratory Practices, or GLP, regulations;

to the FDA of an investigational new drug application, or IND, which must become effective before human clinical trials may commence;

clinical studies to evaluate the drug’s safety and effectiveness for its intended uses;

review of whether the facility in which the drug is manufactured, processed, packaged, or held meets standards designed to assure the

product’s continued quality and FDA review of clinical trial sites to determine whether the clinical trials were conducted in accordance

with Good Clinical Practices, or GCPs;

of a new drug application, or NDA, to the FDA, and approval of the application by the FDA to allow sales of the drug.

pre-clinical testing, studies are performed with respect to the chemical and physical properties of candidate formulations.

These studies

are subject to GLP requirements.

Biological testing is typically done in animal models to demonstrate the activity of the compound against

the targeted disease or condition and to assess the apparent effects of the new product candidate on various organ systems, as well as

its relative therapeutic effectiveness and safety.

An IND application must be submitted to the FDA and become effective before studies

in humans may commence.

trial programs in humans generally follow a three-phase process.

Typically, Phase 1 studies are conducted in small numbers of healthy

volunteers or, on occasion, in patients afflicted with the target disease.

Phase 1 studies are conducted to determine the metabolic and

pharmacological action of the product candidate in humans and the side effects associated with increasing doses, and, if possible, to

gain early evidence of effectiveness.

In Phase 2, studies are generally conducted in larger groups of patients having the target disease

or condition in order to validate clinical endpoints, and to obtain preliminary data on the effectiveness of the product candidate and

optimal dosing.

This phase also helps determine further the safety profile of the product candidate.

In Phase 3, large-scale clinical

trials are generally conducted in patients having the target disease or condition to provide sufficient data for the statistical proof

of effectiveness and safety of the product candidate as required by United States and foreign regulatory agencies.

Typically, two Phase

3 trials are required for marketing approval.

the case of products for certain serious or life-threatening diseases, the initial human testing may be done in patients with the disease

rather than in healthy volunteers.

Because these patients are already afflicted with the target disease or condition, it is possible

that such studies will also provide results traditionally obtained in Phase 2 studies.

These studies are often referred to as “Phase

1/2” studies.

However, even if patients participate in initial human testing and a Phase 1/2 study is carried out, the sponsor

is still responsible for obtaining all the data usually obtained in both Phase 1 and Phase 2 studies.

proceeding with a study, sponsors may seek a written agreement known as a Special Protocol Assessment, or SPA, from the FDA regarding

the design, size, and conduct of a clinical trial.

Among other things, SPAs can cover clinical studies for pivotal trials whose data

will form the primary basis to establish a product’s efficacy.

SPAs help establish up-front agreement with the FDA about the adequacy

of a clinical trial design to support a regulatory approval, but the agreement is not binding on the FDA if new circumstances arise.

An SPA may only be modified with the agreement of the FDA and the trial sponsor or if the director of the FDA reviewing division determines

that a substantial scientific issue essential to determining the safety or efficacy of the drug was identified after the testing began.

There is no guarantee that a study will ultimately be adequate to support an approval even if the study is subject to an SPA.

Additionally,

some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data

safety monitoring board or committee.

This group regularly reviews accumulated data and advises the study sponsor regarding the continuing

safety of trial subjects, and the continuing validity and scientific merit of the clinical trial.

The data safety monitoring board receives

special access to unblinded data during the clinical trial and may advise the sponsor to halt the clinical trial if it determined there

is an unacceptable safety risk for subjects or on other grounds, such as no demonstration of efficacy.

The committee can also stop a

clinical trial for an overwhelming demonstration of efficacy, based on pre-defined, stringent statistical parameters and ethical considerations.

manufacture of investigational drugs for the conduct of human clinical trials is subject to current Good Manufacturing Practice, or cGMP,

requirements.

Biological testing is typically done in animal models to demonstrate the activity of the compound against the targeted

disease or condition and to assess the apparent effects of the new product candidate on various organ systems, as well as its relative

therapeutic effectiveness and safety.

An IND application must be submitted to the FDA and become effective before studies in humans may

Clinical trial programs in humans

generally follow a three-phase process.

Typically, Phase 1 studies are conducted in small numbers of healthy volunteers or, on occasion,

in patients afflicted with the target disease.

Phase 1 studies are conducted to determine the metabolic and pharmacological action of

the product candidate in humans and the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.

In Phase 2, studies are generally conducted in larger groups of patients having the target disease or condition in order to validate

clinical endpoints, and to obtain preliminary data on the effectiveness of the product candidate and optimal dosing.

This phase also

helps determine further the safety profile of the product candidate.

In Phase 3, large-scale clinical trials are generally conducted

in patients having the target disease or condition to provide sufficient data for the statistical proof of effectiveness and safety of

the product candidate as required by United States and foreign regulatory agencies.

Typically, two Phase 3 trials are required for marketing

In the case of products for

certain serious or life-threatening diseases, the initial human testing may be done in patients with the disease rather than in healthy

Because these patients are already afflicted with the target disease or condition, it is possible that such studies will

also provide results traditionally obtained in Phase 2 studies.

These studies are often referred to as “Phase 1/2” studies.

However, even if patients participate in initial human testing and a Phase 1/2 study is carried out, the sponsor is still responsible

for obtaining all the data usually obtained in both Phase 1 and Phase 2 studies.

Before proceeding with a study,

sponsors may seek a written agreement known as a Special Protocol Assessment, or SPA, from the FDA regarding the design, size, and conduct

of a clinical trial.

Among other things, SPAs can cover clinical studies for pivotal trials whose data will form the primary basis to

establish a product’s efficacy.

SPAs help establish up-front agreement with the FDA about the adequacy of a clinical trial design

to support a regulatory approval, but the agreement is not binding on the FDA if new circumstances arise.

An SPA may only be modified

with the agreement of the FDA and the trial sponsor or if the director of the FDA reviewing division determines that a substantial scientific

issue essential to determining the safety or efficacy of the drug was identified after the testing began.

There is no guarantee that

a study will ultimately be adequate to support an approval even if the study is subject to an SPA.

Additionally, some clinical trials are overseen

by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee.

This group regularly reviews accumulated data and advises the study sponsor regarding the continuing safety of trial subjects, and the

continuing validity and scientific merit of the clinical trial.

The data safety monitoring board receives special access to unblinded

data during the clinical trial and may advise the sponsor to halt the clinical trial if it determined there is an unacceptable safety

risk for subjects or on other grounds, such as no demonstration of efficacy.

The committee can also stop a clinical trial for an overwhelming

demonstration of efficacy, based on pre-defined, stringent statistical parameters and ethical considerations.

The manufacture of investigational drugs for the

conduct of human clinical trials is subject to current Good Manufacturing Practice, or cGMP, requirements.

Investigational drugs and

active pharmaceutical ingredients imported into the United States are also subject to regulation by the FDA relating to their labeling

and distribution.

Further, the export of investigational drug products outside of the United States is subject to regulatory requirements

of the receiving country as well as U.S.

Investigational drugs and active pharmaceutical ingredients imported into the United States are also subject to regulation

by the FDA relating to their labeling and distribution.

Further, the export of investigational drug products outside of the United States

is subject to regulatory requirements of the receiving country as well as U.S.

export requirements under the FDCA.

IND sponsors are required to submit a number of

reports to the FDA during the course of a development program.

For instance, sponsors are required to make annual reports to the FDA

concerning the progress of their clinical trial programs as well as more frequent reports for certain serious adverse events.

must submit a protocol for each clinical trial, and any subsequent protocol amendments to the FDA.

Investigators must also provide certain

information to the clinical trial sponsors to allow the sponsors to make certain financial disclosures to the FDA.

Information about

certain clinical trials, including a description of the study and study results, must be submitted within specific timeframes to the

National Institutes of Health, or NIH, for public dissemination on their clinicaltrials.gov website.

Moreover, under the 21st Century

Cures Act, manufacturers or distributors of investigational drugs for the diagnosis, monitoring, or treatment of one or more serious

diseases or conditions must have a publicly available policy concerning expanded access to investigational drugs.

United States law requires that

studies conducted to support approval for product marketing be “adequate and well controlled.” In general, this means that

either a placebo or a product already approved for the treatment of the disease or condition under study must be used as a reference

The recently passed 21st Century Cures Act, however, provides for FDA acceptance of new kinds of data such as patient experience

data, real world evidence, and, for appropriate indications sought through supplemental marketing applications, data summaries.

must also be conducted in compliance with good clinical practice requirements, and informed consent must be obtained from all study subjects.

In addition, under the Pediatric Research Equity

Act, or PREA, an NDA or supplement to an NDA for a new active ingredient, indication, dosage form, dosage regimen, or route of administration

must contain data that are adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric

subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until

after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.

The FDA also may require submission of a risk

evaluation and mitigation strategy, or REMS, to ensure that the benefits of the drug outweigh the risks of the drug.

The REMS plan could

include medication guides, physician communication plans, and elements to assure safe use, such as restricted distribution methods, patient

registries, or other risk minimization tools.

An assessment of the REMS must also be conducted at set intervals.

Following product approval,

a REMS may also be required by the FDA if new safety information is discovered and the FDA determines that a REMS is necessary to ensure

that the benefits of the drug outweigh the risks of the drug.

The clinical trial process for

a new compound can take ten years or more to complete.

The FDA may prevent clinical trials from beginning or may place clinical trials

on hold at any point in this process if, among other reasons, it concludes that study subjects are being exposed to an unacceptable health

Trials may also be prevented from beginning or may be terminated by institutional review boards, or IRBs, who must review and approve

all research involving human subjects and amendments thereto.

The IRB must continue to oversee the clinical trial while it is being conducted.

This includes the IRB receiving information concerning unanticipated problems involving risk to subjects.

Side effects or adverse events

that are reported during clinical trials can delay, impede, or prevent marketing authorization.

Similarly, adverse events that are reported

after marketing authorization can result in additional limitations being placed on a product’s use and, potentially, withdrawal

of the product from the market.

Following the completion of

a clinical trial, the data are analyzed by the sponsoring company to determine whether the trial successfully demonstrated safety and

effectiveness and whether a product approval application may be submitted.

In the United States, if the product is regulated as a new

drug, an NDA must be submitted and approved by the FDA before commercial marketing may begin.

The NDA must include a substantial amount

of data and other information concerning the safety and effectiveness of the compound from laboratory, animal, and human clinical testing,

as well as data and information on manufacturing, product quality and stability, and proposed product labeling.

Each domestic and foreign manufacturing

establishment, including any contract manufacturers that we may decide to use, must be listed in the NDA and must be registered with

The application generally will not be approved until the FDA conducts a manufacturing inspection, approves the applicable manufacturing

process for the drug product, and determines that the facility is in compliance with current cGMP requirements.

Moreover, FDA will also

typically inspect one or more clinical trial sites to confirm that the applicable clinical trials were conducted in accordance with GCPs.

Under the Prescription Drug

User Fee Act (PDUFA), as amended, the FDA assesses and receives application user fees for reviewing an NDA, as well as annual program

fees for commercial manufacturing establishments and for approved products.

sponsors are required to submit a number of reports to the FDA during the course of a development program.

For instance, sponsors are

required to make annual reports to the FDA concerning the progress of their clinical trial programs as well as more frequent reports

for certain serious adverse events.

Sponsors must submit a protocol for each clinical trial, and any subsequent protocol amendments to

Investigators must also provide certain information to the clinical trial sponsors to allow the sponsors to make certain financial

disclosures to the FDA.

Information about certain clinical trials, including a description of the study and study results, must be submitted

within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their clinicaltrials.gov website.

Moreover, under the 21st Century Cures Act, manufacturers or distributors of investigational drugs for the diagnosis, monitoring, or

treatment of one or more serious diseases or conditions must have a publicly available policy concerning expanded access to investigational

States law requires that studies conducted to support approval for product marketing be “adequate and well controlled.” In

general, this means that either a placebo or a product already approved for the treatment of the disease or condition under study must

be used as a reference control.

The recently passed 21st Century Cures Act, however, provides for FDA acceptance of new kinds of data

such as patient experience data, real world evidence, and, for appropriate indications sought through supplemental marketing applications,

data summaries.

Studies must also be conducted in compliance with good clinical practice requirements, and informed consent must be obtained

from all study subjects.

addition, under the Pediatric Research Equity Act, or PREA, an NDA or supplement to an NDA for a new active ingredient, indication, dosage

form, dosage regimen, or route of administration must contain data that are adequate to assess the safety and effectiveness of the drug

for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation

for which the product is safe and effective.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for

submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric

data requirements.

FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, to ensure that the benefits of the drug outweigh

the risks of the drug.

The REMS plan could include medication guides, physician communication plans, and elements to assure safe use,

such as restricted distribution methods, patient registries, or other risk minimization tools.

An assessment of the REMS must also be

conducted at set intervals.

Following product approval, a REMS may also be required by the FDA if new safety information is discovered

and the FDA determines that a REMS is necessary to ensure that the benefits of the drug outweigh the risks of the drug.

clinical trial process for a new compound can take ten years or more to complete.

The FDA may prevent clinical trials from beginning

or may place clinical trials on hold at any point in this process if, among other reasons, it concludes that study subjects are being

exposed to an unacceptable health risk.

Trials may also be prevented from beginning or may be terminated by institutional review boards,

or IRBs, who must review and approve all research involving human subjects and amendments thereto.

The IRB must continue to oversee the

clinical trial while it is being conducted.

This includes the IRB receiving information concerning unanticipated problems involving risk

Side effects or adverse events that are reported during clinical trials can delay, impede, or prevent marketing authorization.

Similarly, adverse events that are reported after marketing authorization can result in additional limitations being placed on a product’s

use and, potentially, withdrawal of the product from the market.

the completion of a clinical trial, the data are analyzed by the sponsoring company to determine whether the trial successfully demonstrated

safety and effectiveness and whether a product approval application may be submitted.

In the United States, if the product is regulated

as a new drug, an NDA must be submitted and approved by the FDA before commercial marketing may begin.

The NDA must include a substantial

amount of data and other information concerning the safety and effectiveness of the compound from laboratory, animal, and human clinical

testing, as well as data and information on manufacturing, product quality and stability, and proposed product labeling.

domestic and foreign manufacturing establishment, including any contract manufacturers that we may decide to use, must be listed in the

NDA and must be registered with the FDA.

The application generally will not be approved until the FDA conducts a manufacturing inspection,

approves the applicable manufacturing process for the drug product, and determines that the facility is in compliance with current cGMP

requirements.

Moreover, FDA will also typically inspect one or more clinical trial sites to confirm that the applicable clinical trials

were conducted in accordance with GCPs.

the Prescription Drug User Fee Act (PDUFA), as amended, the FDA assesses and receives application user fees for reviewing an NDA, as

well as annual program fees for commercial manufacturing establishments and for approved products.

These fees can be significant.

Fee waivers, reductions or

refunds are available in certain circumstances.

One basis for a waiver or refund of the application user fee is if the applicant is a

“small business” generally defined as employing fewer than 500 employees, including employees of affiliates, no approved

marketing application for a product that has been introduced or delivered for introduction into interstate commerce, and the applicant,

including its affiliates, is submitting its first marketing application.

Product candidates that are designated as orphan drugs, which

are further described below, are also not subject to application user fees unless the application includes an indication other than the

orphan indication.

waivers, reductions or refunds are available in certain circumstances.

One basis for a waiver or refund of the application user fee is

if the applicant is a “small business” generally defined as employing fewer than 500 employees, including employees of affiliates,

no approved marketing application for a product that has been introduced or delivered for introduction into interstate commerce, and

the applicant, including its affiliates, is submitting its first marketing application.

Product candidates that are designated as orphan

drugs, which are further described below, are also not subject to application user fees unless the application includes an indication

other than the orphan indication.

Under certain circumstances, orphan products may also be exempt from product and establishment fees.

Each NDA submitted for FDA approval

is usually reviewed for administrative completeness and reviewability.

Following this review, the FDA may request additional information

rather than accept an NDA for filing.

In this event, the application must be resubmitted with the additional information.

The resubmitted

application is also subject to review before the FDA accepts it for filing.

Once accepted for filing, the

FDA’s review of an application may involve review and recommendations by an independent FDA advisory committee.

The FDA must refer

applications for drugs that contain active ingredients, including any ester or salt of the active ingredients that have not previously

been approved by the FDA to an advisory committee or provide in an action letter a summary for not referring it to an advisory committee.

The FDA may also refer drugs to advisory committees when it is determined that an advisory committee’s expertise would be beneficial

to the regulatory decision-making process, including the evaluation of novel products and the use of new technology.

NDA submitted for FDA approval is usually reviewed for administrative completeness and reviewability.

Following this review, the FDA

may request additional information rather than accept an NDA for filing.

In this event, the application must be resubmitted with the

additional information.

The resubmitted application is also subject to review before the FDA accepts it for filing.

accepted for filing, the FDA’s review of an application may involve review and recommendations by an independent FDA advisory committee.

The FDA must refer applications for drugs that contain active ingredients, including any ester or salt of the active ingredients that

have not previously been approved by the FDA to an advisory committee or provide in an action letter a summary for not referring it to

an advisory committee.

is typically a panel that includes clinicians and other experts, which review, evaluate, and make a recommendation as to whether the

application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but it

considers such recommendations carefully when making decisions.

After evaluating the NDA and

all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing

facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a Complete Response Letter, or CRL.

a CRL is issued, the applicant may either resubmit the NDA, addressing all the deficiencies identified in the letter;

withdraw the application;

The FDA may also refer drugs to advisory committees when it is determined that an advisory committee’s expertise

would be beneficial to the regulatory decision-making process, including the evaluation of novel products and the use of new technology.

An advisory committee is typically a panel that includes clinicians and other experts, which review, evaluate, and make a recommendation

as to whether the application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory

committee, but it considers such recommendations carefully when making decisions.

evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding

the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a Complete Response Letter,

If a CRL is issued, the applicant may either resubmit the NDA, addressing all the deficiencies identified in the letter;

the application;

or request an opportunity for a hearing.

A CRL indicates that the review cycle of the application is complete, and the application is

not ready for approval and describes all the specific deficiencies that the FDA identified in the NDA.

A CRL generally contains a statement

of specific conditions that must be met in order to secure final approval of the NDA and may require additional clinical or pre-clinical

testing in order for the FDA to reconsider the application.

The deficiencies identified may be minor, for example, requiring labeling

A CRL indicates that the review cycle of the application is complete, and the

application is not ready for approval and describes all the specific deficiencies that the FDA identified in the NDA.

A CRL generally

contains a statement of specific conditions that must be met in order to secure final approval of the NDA and may require additional

clinical or pre-clinical testing in order for the FDA to reconsider the application.

The deficiencies identified may be minor, for example,

requiring labeling changes;

or major, for example, requiring additional clinical trials.

Even with submission of this additional information, the FDA ultimately

may decide that the application does not satisfy the regulatory criteria for approval.

If and when those conditions have been met to

the FDA’s satisfaction, the FDA may issue an approval letter.

An approval letter authorizes commercial marketing of the drug with

specific prescribing information for specific indications.

Even if the FDA approves a product,

it may limit the approved therapeutic uses for the product as described in the product labeling, require that warning statements be included

in the product labeling, require that additional studies be conducted following approval as a condition of the approval, impose restrictions

and conditions on product distribution, prescribing, or dispensing in the form of a REMS or otherwise limit the scope of any approval.

Special FDA Expedited Review and Approval Programs

The FDA has various programs, including Fast Track

designation, priority review and breakthrough designation, that are intended to expedite or simplify the process for the development

and FDA review of certain drug products that are intended for the treatment of serious or life-threatening diseases or conditions, and

demonstrate the potential to address unmet medical needs or present a significant improvement over existing therapy.

The purpose of these

programs is to provide important new drugs to patients earlier than under standard FDA review procedures.

To be eligible for a Fast Track designation, the

FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition

and demonstrates the potential to address an unmet medical need.

The FDA will determine that a product will fill an unmet medical need

if the product will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based

on efficacy, safety, or public health factors.

If Fast Track designation is obtained, drug sponsors may be eligible for more frequent

development meetings and correspondence with the FDA.

In addition, the FDA may initiate review of sections of an NDA before the application

This “rolling review” is available if the applicant provides and the FDA approves a schedule for the remaining

A Fast Track product is also eligible to apply for accelerated approval and priority review.

The FDA may give a priority review designation

to drugs that are intended to treat serious conditions and, if approved, would provide significant improvements in the safety or effectiveness

of the treatment, diagnosis, or prevention of serious conditions.

A priority review means that the goal for the FDA is to review an application

within six months, rather than the standard review of ten months under current PDUFA guidelines, of the 60-day filing date for new molecular

Moreover, under the provisions of the Food and

Drug Administration Safety and Innovation Act, or FDASIA, enacted in 2012, a sponsor can request designation of a product candidate as

a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combination with one

or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the

drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial

treatment effects observed early in clinical development.

Drugs designated as breakthrough therapies are eligible for the Fast Track

designation features as described above, intensive guidance on an efficient drug development program beginning as early as Phase 1

trials, and a commitment from the FDA to involve senior managers and experienced review staff in a proactive collaborative, cross-disciplinary

Even if a product qualifies for one or more of

these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period

for FDA review or approval will not be shortened.

A final new program to expedite the development

of drug products is the LPAD, which was passed as part of the 21 st Century Cures Act.

LPAD allows for the FDA’s determination

of safety and effectiveness to reflect the risk-benefit profile of the drug in the intended limited population, taking into account the

severity, rarity, or prevalence of the infection and the availability of alternative treatments in the limited population.

a sponsor may request drug approval for an antibacterial or antifungal drug if the drug is intended to treat a serious life-threatening

infection in a limited population of patients with unmet needs.

The drug may be approved for the limited population notwithstanding a

lack of evidence to fully establish a favorable benefit-risk profile in a broader population.

The FDA must provide prompt advice to sponsors

seeking approval under LPAD to enable them to plan a development program.

If approved under LPAD, certain post-marketing requirements

would apply, such as required labeling and advertising statements and pre-distribution submission of promotional materials to FDA.

after approval for a limited population, a product receives a broader approval, the FDA may remove such post-marketing restrictions.

While a drug may only be approved for a limited population under this program, the 21 st Century Cures Act states that it is

not intended to restrict the prescribing of antimicrobial drugs or other products by healthcare professionals.

For approved drug products, market exclusivity

provisions under the FDCA provide periods of regulatory exclusivity, which gives the holder of an approved NDA limited protection from

new competition in the marketplace for the innovation represented by its approved drug.

Section 505 of the FDCA describes three types

of marketing applications that may be submitted to the FDA to request marketing authorization for a new drug.

Even with submission of this additional information,

the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

If and when those conditions

have been met to the FDA’s satisfaction, the FDA may issue an approval letter.

An approval letter authorizes commercial marketing

of the drug with specific prescribing information for specific indications.

if the FDA approves a product, it may limit the approved therapeutic uses for the product as described in the product labeling, require

that warning statements be included in the product labeling, require that additional studies be conducted following approval as a condition

of the approval, impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a REMS or otherwise

limit the scope of any approval.

FDA Expedited Review and Approval Programs

FDA has various programs, including Fast Track designation, priority review and breakthrough designation, that are intended to expedite

or simplify the process for the development and FDA review of certain drug products that are intended for the treatment of serious or

life-threatening diseases or conditions, and demonstrate the potential to address unmet medical needs or present a significant improvement

over existing therapy.

The purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review

be eligible for a Fast Track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat

a serious or life-threatening disease or condition and demonstrates the potential to address an unmet medical need.

The FDA will determine

that a product will fill an unmet medical need if the product will provide a therapy where none exists or provide a therapy that may

be potentially superior to existing therapy based on efficacy, safety, or public health factors.

If Fast Track designation is obtained,

drug sponsors may be eligible for more frequent development meetings and correspondence with the FDA.

In addition, the FDA may initiate

review of sections of an NDA before the application is complete.

This “rolling review” is available if the applicant provides

and the FDA approves a schedule for the remaining information.

A Fast Track product is also eligible to apply for accelerated approval

and priority review.

FDA may give a priority review designation to drugs that are intended to treat serious conditions and, if approved, would provide significant

improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions.

A priority review means

that the goal for the FDA is to review an application within six months, rather than the standard review of ten months under current

PDUFA guidelines, of the 60-day filing date for new molecular entities.

under the provisions of the Food and Drug Administration Safety and Innovation Act, or FDASIA, enacted in 2012, a sponsor can request

designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended,

alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical

evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant

endpoints, such as substantial treatment effects observed early in clinical development.

Drugs designated as breakthrough therapies are

eligible for the Fast Track designation features as described above, intensive guidance on an efficient drug development program beginning

as early as Phase 1 trials, and a commitment from the FDA to involve senior managers and experienced review staff in a proactive

collaborative, cross-disciplinary review.

if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for

qualification or decide that the time period for FDA review or approval will not be shortened.

final new program to expedite the development of drug products is the LPAD, which was passed as part of the 21 st Century Cures

LPAD allows for the FDA’s determination of safety and effectiveness to reflect the risk-benefit profile of the drug in the

intended limited population, taking into account the severity, rarity, or prevalence of the infection and the availability of alternative

treatments in the limited population.

Under LPAD, a sponsor may request drug approval for an antibacterial or antifungal drug if the

drug is intended to treat a serious life-threatening infection in a limited population of patients with unmet needs.

The drug may be

approved for the limited population notwithstanding a lack of evidence to fully establish a favorable benefit-risk profile in a broader

The FDA must provide prompt advice to sponsors seeking approval under LPAD to enable them to plan a development program.

If approved under LPAD, certain post-marketing requirements would apply, such as required labeling and advertising statements and pre-distribution

submission of promotional materials to FDA.

If after approval for a limited population, a product receives a broader approval, the FDA

may remove such post-marketing restrictions.

While a drug may only be approved for a limited population under this program, the 21 st

Century Cures Act states that it is not intended to restrict the prescribing of antimicrobial drugs or other products by healthcare

professionals.

approved drug products, market exclusivity provisions under the FDCA provide periods of regulatory exclusivity, which gives the holder

of an approved NDA limited protection from new competition in the marketplace for the innovation represented by its approved drug.

of the FDCA describes three types of marketing applications that may be submitted to the FDA to request marketing authorization for a

A Section 505(b)(1) NDA is an application that contains full reports of investigations of safety and efficacy.

A Section 505(b)(2)

NDA is an application that contains full reports of investigations of safety and efficacy.

A Section 505(b)(2) NDA is an application

in which the applicant, in part, relies on investigations that were not conducted by or for the applicant and for which the applicant

has not obtained a right of reference or use from the person by or for whom the investigations were conducted.

Section 505(j) establishes

an abbreviated approval process for a generic version of approved drug products through the submission of an Abbreviated New Drug Application,

An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route

of administration, labeling, performance characteristics, and intended use, among other things, to a previously approved product.

changes must be pre-approved by the FDA via a suitability petition.

Five years of exclusivity are available to New

Chemical Entities, or NCEs.

A NCE is a drug that contains no active moiety that has been approved by the FDA in any other NDA.

moiety is the molecule or ion, excluding those appended portions of the molecule, that cause the drug to be an ester, salt, including

a salt with hydrogen or coordination bonds, or other noncovalent derivatives, such as a complex, chelate, or clathrate, of the molecule,

responsible for the therapeutic activity of the drug substance.

During the exclusivity period, the FDA may not accept for review and

make an ANDA or a 505(b)(2) NDA approval effective for an application submitted by another company that contains the previously approved

active moiety.

An ANDA or 505(b)(2) application, however, may be submitted one year before NCE exclusivity expires if the applicant submits

a certification stating that the patents listed by the NCE sponsor in FDA’s list of Approved Drug Products with Therapeutic Equivalence

Evaluations, or Orange Book, are invalid or will not be infringed by the manufacture, use, or sale of the drug product for which approval

Five-year exclusivity will also not delay the submission or approval of a full NDA;

however, an applicant submitting a full

NDA would be required to conduct or obtain a right of reference to all the pre-clinical studies and adequate and well-controlled clinical

trials necessary to demonstrate safety and efficacy.

Pediatric exclusivity is another type of non-patent

marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of marketing

protection to the term of any existing regulatory exclusivity, including the non-patent exclusivity period described above.

This six-month

exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data.

NDA is an application in which the applicant, in part, relies on investigations that were not conducted by or for the applicant and for

which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted.

Section 505(j)

establishes an abbreviated approval process for a generic version of approved drug products through the submission of an Abbreviated

New Drug Application, or ANDA.

An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage

form, strength, route of administration, labeling, performance characteristics, and intended use, among other things, to a previously

approved product.

Limited changes must be pre-approved by the FDA via a suitability petition.

years of exclusivity are available to New Chemical Entities, or NCEs.

A NCE is a drug that contains no active moiety that has been approved

by the FDA in any other NDA.

An active moiety is the molecule or ion, excluding those appended portions of the molecule, that cause the

drug to be an ester, salt, including a salt with hydrogen or coordination bonds, or other noncovalent derivatives, such as a complex,

chelate, or clathrate, of the molecule, responsible for the therapeutic activity of the drug substance.

During the exclusivity period,

the FDA may not accept for review and make an ANDA or a 505(b)(2) NDA approval effective for an application submitted by another company

that contains the previously approved active moiety.

An ANDA or 505(b)(2) application, however, may be submitted one year before NCE

exclusivity expires if the applicant submits a certification stating that the patents listed by the NCE sponsor in FDA’s list of

Approved Drug Products with Therapeutic Equivalence Evaluations, or Orange Book, are invalid or will not be infringed by the manufacture,

use, or sale of the drug product for which approval is sought.

Five-year exclusivity will also not delay the submission or approval of

however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all the pre-clinical

studies and adequate and well-controlled clinical trials necessary to demonstrate safety and efficacy.

exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment

of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent exclusivity

period described above.

This six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written

request from the FDA for such data.

The data do not need to show the product to be effective in the pediatric population studied;

rather, if the clinical trial is deemed

to fairly respond to the FDA’s request, the additional protection is granted.

If reports of requested pediatric studies are submitted

to and accepted by the FDA within the required time frames, whatever statutory or regulatory periods of exclusivity or Orange Book listed

patent protection cover the drug are extended by six months.

Moreover, pediatric exclusivity attaches to all formulations, dosage forms,

and indications for products with existing marketing exclusivity or patent life that contain the same active moiety as that which was

The Orphan Drug Act also provides incentives for

the development of drugs intended to treat rare diseases or conditions, which generally are diseases or conditions affecting fewer than

200,000 individuals annually in the United States, or affecting more than 200,000 in the United States and for which there is no reasonable

expectation that the cost of developing and making the drug available in the United States will be recovered from sales in the United

Additionally, sponsors must present a plausible hypothesis for clinical superiority to obtain orphan designation if there is

a drug already approved by the FDA that is intended for the same indication and that is considered by the FDA to be the same drug as

the already approved drug.

if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted.

If reports of requested

pediatric studies are submitted to and accepted by the FDA within the required time frames, whatever statutory or regulatory periods

of exclusivity or Orange Book listed patent protection cover the drug are extended by six months.

Moreover, pediatric exclusivity attaches

to all formulations, dosage forms, and indications for products with existing marketing exclusivity or patent life that contain the same

active moiety as that which was studied.

Orphan Drug Act also provides incentives for the development of drugs intended to treat rare diseases or conditions, which generally

are diseases or conditions affecting fewer than 200,000 individuals annually in the United States, or affecting more than 200,000 in

the United States and for which there is no reasonable expectation that the cost of developing and making the drug available in the United

States will be recovered from sales in the United States.

Additionally, sponsors must present a plausible hypothesis for clinical superiority

to obtain orphan designation if there is a drug already approved by the FDA that is intended for the same indication and that is considered

by the FDA to be the same drug as the already approved drug.

This hypothesis must be demonstrated to obtain orphan drug exclusivity.

If granted, prior to product approval,

Orphan Drug Designation entitles a party to financial incentives such as opportunities for grant funding towards clinical study costs,

tax advantages, and user-fee waivers.

In addition, if a product receives FDA approval for the indication for which it has orphan designation,

the product is generally entitled to orphan drug exclusivity, which means the FDA may not approve any other application to market the

same drug for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority

over the product with orphan exclusivity.

For certain infectious

disease products, the above discussed exclusivity periods may be further extended under the FDA’s qualified infectious disease

product program.

A qualified infectious disease product, or QIDP, is an antibacterial or antifungal drug for human use intended to treat

serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen, including novel

or emerging infectious pathogens;

or qualifying pathogens designated by the FDA that have the potential to pose a serious threat to public

Subject to the specified statutory limitations, a drug that is designated as a QIDP and is approved for the use for which the

QIDP designation was granted will receive a 5-year extension to any exclusivity for which the application qualifies upon approval.

example, if the FDA approves an NDA for a drug designated as a QIDP, the NCE exclusivity period is extended to ten years and the FDA

may not accept applications for nine years.

Moreover, if a product is designated as a QIDP and an orphan product, the orphan product

exclusivity period is extended to twelve years.

These extensions are in addition to any extension that an application may be entitled

to under the pediatric exclusivity provisions.

To receive a QIDP designation, the sponsor must request that the FDA designate the product

as such prior to the submission of an NDA.

This designation may not be withdrawn except if the FDA finds that the request for designation

contained an untrue statement of material fact.

If granted, prior to product approval, Orphan Drug Designation entitles a party to financial incentives such as opportunities for grant

funding towards clinical study costs, tax advantages, and user-fee waivers.

In addition, if a product receives FDA approval for the indication

for which it has orphan designation, the product is generally entitled to orphan drug exclusivity, which means the FDA may not approve

any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such

as a showing of clinical superiority over the product with orphan exclusivity.

certain infectious disease products, the above discussed exclusivity periods may be further extended under the FDA’s qualified

infectious disease product program.

A qualified infectious disease product, or QIDP, is an antibacterial or antifungal drug for human

use intended to treat serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen,

including novel or emerging infectious pathogens;

or qualifying pathogens designated by the FDA that have the potential to pose a serious

threat to public health.

Subject to the specified statutory limitations, a drug that is designated as a QIDP and is approved for the

use for which the QIDP designation was granted will receive a 5-year extension to any exclusivity for which the application qualifies

upon approval.

For example, if the FDA approves an NDA for a drug designated as a QIDP, the NCE exclusivity period is extended to ten

years and the FDA may not accept applications for nine years.

Moreover, if a product is designated as a QIDP and an orphan product, the

orphan product exclusivity period is extended to twelve years.

These extensions are in addition to any extension that an application

may be entitled to under the pediatric exclusivity provisions.

To receive a QIDP designation, the sponsor must request that the FDA designate

the product as such prior to the submission of an NDA.

This designation may not be withdrawn except if the FDA finds that the request

for designation contained an untrue statement of material fact.

QIDPs are also eligible for Fast Track status and priority review.

In March 2020, we were

granted a deferral by the FDA under the PREA, that requires sponsors to conduct pediatric studies for NDAs for a new active ingredient,

such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the FDA.

A deferral acknowledges that a pediatric assessment

is required but permits the applicant to submit the pediatric assessment after the submission of an NDA.

We have made a commitment to

conduct the pediatric study after approval of the NDA for use in adult hemodialysis patients.

Pediatric studies for an approved product

conducted under PREA may qualify for pediatric exclusivity, which if granted would provide an additional six months of marketing exclusivity.

DefenCath would then have the potential to receive a total marketing exclusivity period of 10.5 years, including exclusivity pursuant

to NCE and QIDP.

Post Approval Requirements

Significant legal and regulatory

requirements also apply after FDA approval to market under an NDA.

These include, among other things, requirements related to adverse

event and other reporting, product tracking and tracing, suspect and illegitimate product investigations and notifications, product advertising

and promotion and ongoing adherence to cGMPs, as well as the need to submit appropriate new or supplemental applications and obtain FDA

approval for certain changes to the approved product, product labeling, or manufacturing process.

The FDA also enforces the requirements

of the Prescription Drug Marketing Act which, among other things, imposes various requirements in connection with the distribution of

product samples to physicians.

The FDA enforces these requirements through, among other ways, periodic announced and unannounced facility

The FDA also strictly regulates marketing, labeling,

advertising, and promotion of products that are placed on the market.

A company can make only those claims relating to safety and efficacy

that are approved by the FDA.

Physicians, in their independent professional medical judgment, may prescribe legally available products

for unapproved indications that are not described in the product’s labeling and that differ from those tested and approved by the

Pharmaceutical companies, however, are allowed to promote their drug products only for the approved indications and in accordance

with the provisions of the approved label.

The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion

of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including,

but not limited to, criminal and civil penalties under the FDCA and the civil False Claims Act, or FCA, exclusion from participation

in federal healthcare programs, mandatory compliance programs under corporate integrity agreements, debarment, and refusal of government

The regulatory framework applicable

to the production, distribution, marketing, and/or sale, of our product candidates may change significantly from the current descriptions

provided herein in the time that it may take for any of our product candidates to reach a point at which an NDA is approved.

individual states may have laws and regulations that we must comply with, such as laws and regulations concerning licensing, promotion,

sampling, distribution, and reporting.

Overall research, development,

and approval times depend on a number of factors, including the period of review at the FDA, the number of questions posed by the FDA

during review, how long it takes to respond to the FDA’s questions, the severity or life-threatening nature of the disease in question,

the availability of alternative treatments, the availability of clinical investigators and eligible patients, the rate of enrollment

of patients in clinical trials, and the risks and benefits demonstrated in the clinical trials.

Medical Device Approval Process

In addition to our lead product candidate DefenCath,

which is subject to regulation by the FDA as a drug, we may be developing other products that may be regulated as medical devices in

the United States.

The FDA considers a product to be a device, and subject to the FDA regulation, if it meets the definition of a medical

device in the FDCA, which states that a device is an instrument, apparatus, implement, machine, contrivance, implant, in vitro

reagent, or other similar or related article, including a component part, or accessory which is:

● recognized in the official

National Formulary, or the United States Pharmacopoeia, or any supplement to them,

● intended for use in

the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention

of disease, in man or other animals, or

● intended to affect

the structure or any function of the body of man or other animals, and which does not achieve

its primary intended purposes through chemical action within or on the body of man or other

animals and which does not achieve its primary intended purposes through chemical action

within or on the body of man or other animals and which is not dependent upon being metabolized

for the achievement of its primary intended purposes.

The FDA regulates the design, development, clinical

testing, manufacture, labeling, distribution, import and export, sale and promotion of medical devices.

Unless an exemption applies or

a product is a Class I device, all medical devices must receive either 510(k) clearance or an approved pre-market application, or PMA,

from the FDA before they may be commercially distributed in the U.S.

In addition, certain modifications made to marketed devices also

may require 510(k) clearance or approval of a PMA supplement.

Unlike approved drug products, there are no market exclusivity provisions

under the FDCA for products regulated as medical devices.

To obtain a 510(k) clearance for a device, a pre-market

notification to the FDA must be submitted demonstrating that the device is substantially equivalent to a legally marketed predicate device.

For a new device to be found “substantially equivalent” to one or other legally marketed predicate devices, the new device

March 2020, we were granted a deferral by the FDA under the PREA, that requires sponsors to conduct pediatric studies for NDAs for a

new active ingredient, such as taurolidine in DefenCath, unless a waiver or deferral is obtained from the FDA.

A deferral acknowledges

that a pediatric assessment is required but permits the applicant to submit the pediatric assessment after the submission of an NDA.

We have made a commitment to conduct the pediatric study after approval of the NDA for use in adult hemodialysis patients.

studies for an approved product conducted under PREA may qualify for pediatric exclusivity, which if granted would provide an additional

six months of marketing exclusivity.

DefenCath would then have the potential to receive a total marketing exclusivity period of 10.5

years, including exclusivity pursuant to NCE and QIDP.

Approval Requirements

legal and regulatory requirements also apply after FDA approval to market under an NDA.

These include, among other things, requirements

related to adverse event and other reporting, product tracking and tracing, suspect and illegitimate product investigations and notifications,

product advertising and promotion and ongoing adherence to cGMPs, as well as the need to submit appropriate new or supplemental applications

and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process.

The FDA also enforces

the requirements of the Prescription Drug Marketing Act which, among other things, imposes various requirements in connection with the

distribution of product samples to physicians.

The FDA enforces these requirements through, among other ways, periodic announced and

unannounced facility inspections.

FDA also strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market.

A company can

make only those claims relating to safety and efficacy that are approved by the FDA.

Physicians, in their independent professional medical

judgment, may prescribe legally available products for unapproved indications that are not described in the product’s labeling

and that differ from those tested and approved by the FDA.

Pharmaceutical companies, however, are allowed to promote their drug products

only for the approved indications and in accordance with the provisions of the approved label.

The FDA and other agencies actively enforce

the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label

uses may be subject to significant liability, including, but not limited to, criminal and civil penalties under the FDCA and the civil

False Claims Act, or FCA, exclusion from participation in federal healthcare programs, mandatory compliance programs under corporate

integrity agreements, debarment, and refusal of government contracts.

regulatory framework applicable to the production, distribution, marketing, and/or sale, of our product candidates may change significantly

from the current descriptions provided herein in the time that it may take for any of our product candidates to reach a point at which

an NDA is approved.

Moreover, individual states may have laws and regulations that we must comply with, such as laws and regulations

concerning licensing, promotion, sampling, distribution, and reporting.

research, development, and approval times depend on a number of factors, including the period of review at the FDA, the number of questions

posed by the FDA during review, how long it takes to respond to the FDA’s questions, the severity or life-threatening nature of

the disease in question, the availability of alternative treatments, the availability of clinical investigators and eligible patients,

the rate of enrollment of patients in clinical trials, and the risks and benefits demonstrated in the clinical trials.

Device Approval Process

addition to our lead product candidate DefenCath, which is subject to regulation by the FDA as a drug, we may develop other products

that could be regulated as medical devices in the United States.

The FDA considers a product to be a device, and subject to the FDA regulation,

if it meets the definition of a medical device in the FDCA, which states that a device is an instrument, apparatus, implement, machine,

contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:

in the official National Formulary, or the United States Pharmacopoeia, or any supplement

for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment,

or prevention of disease, in man or other animals, or

to affect the structure or any function of the body of man or other animals, and which does

not achieve its primary intended purposes through chemical action within or on the body of

man or other animals and which does not achieve its primary intended purposes through chemical

action within or on the body of man or other animals and which is not dependent upon being

metabolized for the achievement of its primary intended purposes.

FDA regulates the design, development, clinical testing, manufacture, labeling, distribution, import and export, sale and promotion of

medical devices.

Unless an exemption applies or a product is a Class I device, all medical devices must receive either 510(k) clearance

or an approved pre-market application, or PMA, from the FDA before they may be commercially distributed in the U.S.

In addition, certain

modifications made to marketed devices also may require 510(k) clearance or approval of a PMA supplement.

Unlike approved drug products,

there are no market exclusivity provisions under the FDCA for products regulated as medical devices.

obtain a 510(k) clearance for a device, a pre-market notification to the FDA must be submitted demonstrating that the device is substantially

equivalent to a legally marketed predicate device.

For a new device to be found “substantially equivalent” to one or other

legally marketed predicate devices, the new device must have:

1) the same intended use as a predicate;

and 2) either a) the same technological characteristics as the predicate device or

b) different technological characteristics, but the information submitted must not raise new questions of safety and effectiveness and

must demonstrate substantial equivalence.

The FDA attempts to respond to a 510(k) pre-market notification within 90 days of submission,

but as a practical matter, pre-market clearance can take significantly longer, potentially up to one year or more.

The PMA process is much more demanding and uncertain

than the 510(k) pre-market notification process and must be supported by extensive clinical, laboratory, technical and other information,

including at least one adequate and well-controlled clinical investigation conducted under an investigational device exemption (IDE).

The FDA has 180 days to review an accepted PMA, although the review generally occurs over a significantly longer period of time

and can take up to several years.

The FDA has informed us that it regards taurolidine

as a new chemical entity and therefore an unapproved new drug.

Consequently, for any other products that we intend to develop as a medical

device, there is currently no appropriate predicate device currently marketed in the U.S.

on which a 510(k) approval process could be

As a result, we will be required to submit a premarket approval application for marketing authorization for these indications.

In the event that the NDA for DefenCath is approved by the FDA, the regulatory pathway for these taurolidine product candidates can be

revisited with the FDA.

Although there will presumably still be no appropriate predicate, de novo Class II designation

can be proposed, a process that provides a pathway to classify novel medical device for which there is no legally marketed predicate

device, based on a risk assessment and a reasonable assurance of safety and effectiveness.

After a device is placed on the market, numerous

regulatory requirements apply, including:

● Quality System Regulations,

or QSRs, which require manufacturers to have a quality system for the design, manufacture,

packaging, labeling, storage, installation, and servicing of finished medical devices;

● labeling regulations,

which govern product labels and labeling, prohibit the promotion of products for unapproved,

or off-label, uses and impose other restrictions on labeling and promotional activities;

● medical device listing

and establishment registration;

● post-approval restrictions

or conditions, including post-approval study commitments;

● post-market surveillance

requirements;

● medical device reporting,

or MDR, regulations, which require that manufacturers evaluate and investigate potential

adverse events and malfunctions, and report to the FDA if their device may have caused or

contributed to a death or serious injury or malfunctioned in a way that would likely cause

or contribute to a death or serious injury if it were to recur;

● regulations requiring

the reporting of any device corrections or removals if the correction or removal was initiated

to reduce a risk to health posed by the device or remedy a violation of the FDCA which may

present a risk to health;

● the FDA’s recall

authority, whereby it can ask, or under certain conditions order, device manufacturers to

recall from the market a product that is a risk to health.

Our manufacturing facilities, as well as those

of certain of our suppliers, are subject to periodic and for-cause inspections by the FDA and other governmental authorities to verify

compliance with the QSR and other regulatory requirements.

Reimbursement and Pricing Controls

In many of the markets where

we or the parties we collaborate with have targeted or will target DefenCath for sale, laws control the prices charged to certain purchasers

of pharmaceutical products and the prices paid by drug reimbursement programs through varying price control mechanisms.

Public and private

health care payors control costs and influence drug pricing through a variety of mechanisms, including through negotiating rebates with

the manufacturers, limiting the reimbursement rate paid to providers, and using tiered formularies, co-payment structures that incentivize

beneficiaries to request lower cost alternatives, and other mechanisms that provide preferential access to certain drugs over others

within a therapeutic class.

Federal and commercial payors use competition for health plan coverage and market share as leverage to obtain

rebates on products they reimburse, which impacts the manufacturer’s net realization on the sale of the products.

These rebates

may be paid on drugs sold at a mandatory discount.

Additionally, federal and commercial health plans may choose to reimburse dialysis

providers for dialysis services and drugs used in the provision of those services through a single bundled payment rate, which tends

to make cost a more important factor for providers when making drug purchase decisions than it would otherwise be if the providers were

reimbursed for drugs on a stand-alone basis.

Payors also set other criteria to govern the uses of a drug that will be deemed medically

appropriate and therefore reimbursed or otherwise covered.

In particular, many public and private health care payors limit reimbursement

and coverage to the uses of a drug that are either approved by the FDA or that are supported by other appropriate evidence (for example,

published medical literature) and appear in a recognized drug compendium.

Drug compendia are publications that summarize the available

medical evidence for particular drug products and identify which uses of a drug are supported or not supported by the available evidence,

whether or not such uses have been approved by the FDA.

and 2) either a) the same technological

characteristics as the predicate device or b) different technological characteristics, but the information submitted must not raise new

questions of safety and effectiveness and must demonstrate substantial equivalence.

The FDA attempts to respond to a 510(k) pre-market

notification within 90 days of submission, but as a practical matter, pre-market clearance can take significantly longer, potentially

up to one year or more.

PMA process is much more demanding and uncertain than the 510(k) pre-market notification process and must be supported by extensive clinical,

laboratory, technical and other information, including at least one adequate and well-controlled clinical investigation conducted under

an investigational device exemption (IDE).

The FDA has 180 days to review an accepted PMA, although the review generally occurs

over a significantly longer period of time and can take up to several years.

FDA has informed us that it regards taurolidine as a new chemical entity and therefore an unapproved new drug.

Consequently, for any

other products that we intend to develop as a medical device, there is currently no appropriate predicate device currently marketed in

on which a 510(k) approval process could be based.

As a result, we will be required to submit a premarket approval application

for marketing authorization for these indications.

In the event that the NDA for DefenCath is approved by the FDA, the regulatory pathway

for these taurolidine product candidates can be revisited with the FDA.

Although there will presumably still be no appropriate

predicate, de novo Class II designation can be proposed, a process that provides a pathway to classify novel medical

device for which there is no legally marketed predicate device, based on a risk assessment and a reasonable assurance of safety and effectiveness.

a device is placed on the market, numerous regulatory requirements apply, including:

System Regulations, or QSRs, which require manufacturers to have a quality system for the

design, manufacture, packaging, labeling, storage, installation, and servicing of finished

medical devices;

regulations, which govern product labels and labeling, prohibit the promotion of products

for unapproved, or off-label, uses and impose other restrictions on labeling and promotional

device listing and establishment registration;

● post-approval

restrictions or conditions, including post-approval study commitments;

● post-market

surveillance requirements;

device reporting, or MDR, regulations, which require that manufacturers evaluate and investigate

potential adverse events and malfunctions, and report to the FDA if their device may have

caused or contributed to a death or serious injury or malfunctioned in a way that would likely

cause or contribute to a death or serious injury if it were to recur;

● regulations

requiring the reporting of any device corrections or removals if the correction or removal

was initiated to reduce a risk to health posed by the device or remedy a violation of the

FDCA which may present a risk to health;

FDA’s recall authority, whereby it can ask, or under certain conditions order, device

manufacturers to recall from the market a product that is a risk to health.

manufacturing facilities, as well as those of certain of our suppliers, are subject to periodic and for-cause inspections by the FDA

and other governmental authorities to verify compliance with the QSR and other regulatory requirements.

and Reimbursement

Reimbursement

Initially, and contingent upon FDA approval of

DefenCath, we plan to sell DefenCath primarily to inpatient acute-care hospitals and outpatient dialysis clinics.

Most of the nation’s

inpatient acute-care hospitals are paid under the inpatient prospective payment system, or IPPS.

The IPPS pays a flat rate based

on the average charges across all hospitals for a specific diagnosis, regardless of whether that particular patient costs more or less.

Under the IPPS, each case is categorized into a diagnosis-related group, or DRG to determine the base rate and for specific products that

meet various levels of criteria there is an established New Technology Add-on Payment, or NTAP.

There are three levels of criteria required

to be eligible to receive an NTAP and they are:

Product must meet “newness” criteria;

Product must meet “substantial clinical evidence”;

Product must meet certain pricing thresholds.

Centers for Medicare & Medicaid Services, or CMS, recently created the alternative NTAP approval pathways for certain

technologies.

Under the alternative NTAP pathway, devices that obtain breakthrough designation and drugs that obtain QIDP designation

from the FDA need only meet the cost criterion because the CMS assumes that those products meet the newness and substantial clinical

improvement criteria.

After submission and review of our NTAP application

by CMS, we have been granted a conditional alternative NTAP for the inpatient setting.

This reimbursement provides for a maximum per hospital

stay equivalent to $14,259, per patient.

With this level of reimbursement in the inpatient setting, we plan to launch DefenCath post-approval

in hospitals first, while outpatient reimbursement remains under determination by CMS.

The NTAP is conditioned upon the DefenCath NDA

receiving final FDA approval prior to July 1, 2023.

We have submitted a duplicate NTAP application to CMS, should final approval of the

DefenCath NDA not occur prior to July 1, 2023.

We will seek further CMS reimbursement for DefenCath,

contingent upon approval by the FDA, in other catheter indications and settings of care, such as (i) oncology patients and total parenteral

nutrition patients through relevant hospital inpatient DRGs, (ii) additional NTAP payments, (iii) outpatient ambulatory payment classifications,

or APCs, (iv) the End-Stage Renal Disease Prospective Payment System, or ESRD PPS, base payment, or (v) under the Durable Medical Equipment,

Prosthetics, Orthotics, and Supplies, or DMEPOS, Fee Schedule, depending on the setting of care.

Reimbursement

For outpatient reimbursement, we plan to seek separate

reimbursement as a drug.

We have engaged CMS in preliminary discussions concerning the reimbursement for DefenCath as a separately billable

product based on statutory definition of a renal dialysis service, or RDS, as codified in 42 C.F.R §413.171.

We do not believe DefenCath

is a RDS and should be separately billable due to the following reasons:

DefenCath is not an item or service included in the composite rate for RDS as of December 31, 2010;

is not an erythropoiesis stimulating agent;

is not a drug or biological that was furnished to individuals for the treatment of ESRD and

for which payment was (prior to January 1, 2011) made separately;

● DefenCath’s

first expected indication for use, which is pending FDA review, is not as a treatment for

ESRD, rather as a broad-spectrum antimicrobial for the reduction of CRBSIs;

is not essential for the delivery of maintenance dialysis;

is subject to CMS’s established mechanism used by ESRD facilities to identify and be

paid separately for non-ESRD-related drugs and biologicals;

are planning to use DefenCath for additional indications such as total parental nutrition

and oncology settings;

is not systemically delivered into a patients’ body;

it dwells in the lumen of the

CVC until the lumen is accessed, at which time it is aspirated;

DefenCath may potentially

be beneficial in preventing CRBSIs in any population requiring the use of central venous

approved as a separate billable product, reimbursement of DefenCath’s cost would be the average selling price, or ASP, plus 4.3%

for CMS, plus 6% for commercially insured patients.

CMS determines DefenCath is a renal dialysis service, we believe DefenCath would be eligible for, and would obtain under the ESRD PPS,

the transitional drug add-on payment adjustment, or TDAPA;

however, these qualifications cannot be determined until the FDA approves

DefenCath and CMS evaluates our request for coverage in a quarterly review.

If determined to be TDAPA, reimbursement of DefenCath would

be calculated based on its ASP.

To be eligible for TDAPA, a new renal drug or biologic must be:

by the FDA pursuant to Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act;

● Commercially

a Healthcare Common Procedure Coding System code;

as having an end action effect that treats or manages a condition or conditions associated

as not fitting into an established ESRD PPS functional category;

by CMS as a renal dialysis service.

Although we cannot anticipate changes in reimbursement

requirements and mechanisms in the coming years, CMS has acknowledged TDAPA payment mechanisms maybe adjusted to encourage innovation

for this patient population.

These new payment calculations are yet to be determined.

We believe that DefenCath would meet the criterion

of being a new renal dialysis product used to treat or manage a condition associated with ESRD, because taurolidine, the active antimicrobial

agent in DefenCath, is a new chemical entity that has not been approved for use in the U.S.

anticipation that the CMS and private payers will require that we demonstrate the cost effectiveness of DefenCath as part of the reimbursement

review and approval process, we have submitted posters and abstracts to support our health economic analysis and continue to commission

and develop health economic evaluations to support this review in the context of the prospective use of DefenCath in dialysis.

Of additional

importance, we are pursuing opportunities to partner with healthcare systems prior to the approval of DefenCath to demonstrate the product’s

clinical and economic effectiveness.

Regulatory Requirements

We and our collaborative partners

may be subject to widely varying foreign regulations, which may be quite different from those of the FDA, governing clinical trials,

manufacture, product registration and approval, and pharmaceutical sales.

Whether or not FDA approval has been obtained, we or our collaboration

partners must obtain a separate approval for a product by the comparable regulatory authorities of foreign countries prior to the commencement

of product marketing in those countries.

In certain countries, regulatory authorities also establish pricing and reimbursement criteria.

The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval.

under current United States law, there are restrictions on the export of products not approved by the FDA, depending on the country involved

and the status of the product in that country.

International sales of medical

devices manufactured in the U.S.

that are not approved by the FDA for use in the U.S., or are banned or deviate from lawful performance

standards, are subject to FDA export requirements.

Exported devices are subject to the regulatory requirements of each country to which

the device is exported.

Some countries do not have medical device regulations, but in most foreign countries, medical devices are regulated.

and our collaborative partners may be subject to widely varying foreign regulations, which may be quite different from those of the FDA,

governing clinical trials, manufacture, product registration and approval, and pharmaceutical sales.

Whether or not FDA approval has

been obtained, we or our collaboration partners must obtain a separate approval for a product by the comparable regulatory authorities

of foreign countries prior to the commencement of product marketing in those countries.

In certain countries, regulatory authorities

also establish pricing and reimbursement criteria.

The approval process varies from country to country, and the time may be longer or

shorter than that required for FDA approval.

In addition, under current United States law, there are restrictions on the export of products

not approved by the FDA, depending on the country involved and the status of the product in that country.

International

sales of medical devices manufactured in the U.S.

that are not approved by the FDA for use in the U.S., or are banned or deviate from

lawful performance standards, are subject to FDA export requirements.

Exported devices are subject to the regulatory requirements of

each country to which the device is exported.

Some countries do not have medical device regulations, but in most foreign countries, medical

devices are regulated.

Frequently, regulatory approval may first be obtained in a foreign country prior to application in the U.S.

to take advantage of differing

regulatory requirements.

take advantage of differing regulatory requirements.

Most countries outside of the U.S.

require that product approvals be recertified on a regular basis, generally

every five years.

The recertification process requires that we evaluate any device changes and any new regulations or standards relevant

to the device and conduct appropriate testing to document continued compliance.

Where recertification applications are required, they

must be approved in order to continue selling our products in those countries.

In the European Union, in order

for our product candidates to be marketed and sold, we are required to comply with the Medical Devices Directive and obtain CE Mark certification.

The CE Mark certification encompasses an extensive review of our quality management system which is inspected by a notified body’s

auditor as part of a Stage 1 and 2 International Organization for Standardization, or ISO, 13485:2003 audit, in accordance with worldwide

recognized ISO standards and applicable European Medical Devices Directives for quality management systems for medical device manufacturers.

Once the quality management system and design dossier has been successfully audited by a notified body and reviewed and approved by a

competent authority, a CE certificate for the medical device will be issued.

We are also required to comply with other foreign regulations

such as the requirement that we obtain Ministry of Health, Labor and Welfare approval before we can launch new products in Japan.

time required to obtain these foreign approvals to market our products may vary from U.S.

approvals, and requirements for these approvals

may differ from those required by the FDA.

Medical device laws and regulations

are in effect in many of the countries in which we may do business outside the United States.

These laws and regulations range from comprehensive

device approval requirements for our medical device product to requests for product data or certifications.

The number and scope of these

requirements can be complex and could increase.

We may not be able to obtain or maintain regulatory approvals in such countries and we

may be required to incur significant costs in obtaining or maintaining our foreign regulatory approvals.

In addition, the export of certain

of our products which have not yet been cleared for domestic commercial distribution may be subject to FDA export restrictions.

to obtain product approvals in a timely fashion or to comply with state or foreign medical device laws and regulations may have a serious

adverse effect on our business, financial condition or results of operations.

Intellectual Property

On January 30, 2008, we entered

into a License and Assignment Agreement, or the NDP License Agreement, with ND Partners, LLC, or NDP.

Pursuant to the NDP License Agreement,

NDP granted us exclusive, worldwide licenses for certain antimicrobial catheter lock solutions, processes for treating and inhibiting

infections, a biocidal lock system and a taurolidine delivery apparatus, and the corresponding United States and foreign patents and

applications (the “NDP Technology”).

We acquired such licenses and patents through our assignment and assumption of NDP’s

rights under certain separate license agreements by and between NDP and Dr.

require that product approvals be recertified

on a regular basis, generally every five years.

The recertification process requires that we evaluate any device changes and any new

regulations or standards relevant to the device and conduct appropriate testing to document continued compliance.

Where recertification

applications are required, they must be approved in order to continue selling our products in those countries.

device laws and regulations are in effect in many of the countries in which we may do business outside the United States.

and regulations range from comprehensive device approval requirements for our medical device product to requests for product data or

certifications.

The number and scope of these requirements can be complex and could increase.

We may not be able to obtain or maintain

regulatory approvals in such countries and we may be required to incur significant costs in obtaining or maintaining our foreign regulatory

In addition, the export of certain of our products which have not yet been cleared for domestic commercial distribution may

be subject to FDA export restrictions.

Any failure to obtain product approvals in a timely fashion or to comply with state or foreign

medical device laws and regulations may have a serious adverse effect on our business, financial condition or results of operations.

January 30, 2008, we entered into a License and Assignment Agreement, or the NDP License Agreement, with ND Partners, LLC, or NDP.

to the NDP License Agreement, NDP granted us exclusive, worldwide licenses for certain antimicrobial catheter lock solutions, processes

for treating and inhibiting infections, a biocidal lock system and a taurolidine delivery apparatus, and the corresponding United States

and foreign patents and applications (the “NDP Technology”).

We acquired such licenses and patents through our assignment

and assumption of NDP’s rights under certain separate license agreements by and between NDP and Dr.

Hans-Dietrich Polaschegg, Dr.

Klaus Sodemann, and Dr.

NDP also granted us exclusive licenses, with the right to grant sublicenses, to use and display certain trademarks in connection

with the NDP Technology.

As consideration in part for the rights to the NDP Technology, we paid NDP an initial licensing fee of $325,000

and granted NDP an equity interest in our Company consisting of 73,107 shares of common stock as of December 31, 2010.

In addition, we

are required to make payments to NDP upon the achievement of certain regulatory and sales-based milestones.

Certain of the milestone

payments are to be made in the form of shares of common stock currently held in escrow for NDP, and other milestone payments are to be

paid in cash.

The maximum aggregate number of shares issuable upon achievement of milestones and the number of shares held in escrow

is 29,109 shares of common stock.

The maximum aggregate amount of cash payments upon achievement of milestones is $3,000,000 with $2,500,000

remaining at December 31, 2020.

Events that trigger milestone payments include but are not limited to the reaching of various stages

of regulatory approval processes and certain worldwide net sales amounts.

During the year ended December

31, 2013, a milestone payment of $500,000 was earned by NDP upon the first issuance of the CE Mark for Neutrolin.

Under Article 6 of

the NDP License Agreement, we were obligated to make a milestone payment of $500,000 to NDP upon the first issuance of a CE Mark for

a licensed product, which payment was payable to NDP within 30 days after such issuance.

On April 11, 2013, we entered into an amendment

to the NDP License Agreement which extended the milestone payment from within 30 days after such issuance to within twelve months after

the achievement of such issuance.

As consideration for the amendment, we issued NDP a five-year warrant to purchase 25,000 shares of

our common stock at an exercise price of $7.50 per share.

The warrant was exercisable immediately upon issuance and expired in April

In January 2014, the $500,000 milestone payment due to NDP was converted into 10,000 Series C-3 non-voting preferred stock and

a warrant to purchase 50,000 shares of our common stock at an exercise price of $4.50 per share.

The warrants expired during the year

ended December 31, 2020.

During the year ended December

31, 2014, a certain milestone was achieved resulting in the release of 7,277 shares held in escrow.

The number of shares held in escrow

as of December 31, 2021 is 21,832 shares of common stock.

Johannes Reinmueller.

NDP also granted us exclusive licenses, with the right to grant sublicenses, to use and

display certain trademarks in connection with the NDP Technology.

As consideration in part for the rights to the NDP Technology, we paid

NDP an initial licensing fee of $325,000 and granted NDP an equity interest in our Company consisting of 73,107 shares of common stock

as of December 31, 2010.

In addition, we are required to make payments to NDP upon the achievement of certain regulatory and sales-based

Certain of the milestone payments are to be made in the form of shares of common stock currently held in escrow for NDP,

and other milestone payments are to be paid in cash.

The maximum aggregate number of shares issuable upon achievement of milestones and

the number of shares initially held in escrow is 29,109 shares of common stock.

The maximum aggregate amount of cash payments upon achievement

of milestones is $3,000,000 with $2,500,000 remaining at December 31, 2022.

Events that trigger milestone payments include but are not

limited to the reaching of various stages of regulatory approval processes and certain worldwide net sales amounts.

the year ended December 31, 2013, a milestone payment of $500,000 was earned by NDP upon the first issuance of the CE Mark for Neutrolin.

Under Article 6 of the NDP License Agreement, we were obligated to make a milestone payment of $500,000 to NDP upon the first issuance

of a CE Mark for a licensed product, which payment was payable to NDP within 30 days after such issuance.

On April 11, 2013, we entered

into an amendment to the NDP License Agreement which extended the milestone payment from within 30 days after such issuance to within

twelve months after the achievement of such issuance.

As consideration for the amendment, we issued NDP a five-year warrant to purchase

25,000 shares of our common stock at an exercise price of $7.50 per share.

The warrant, which was exercisable immediately upon issuance,

expired in April 2018.

In January 2014, the $500,000 milestone payment due to NDP was converted into 10,000 Series C-3 non-voting preferred

stock and a warrant to purchase 50,000 shares of our common stock at an exercise price of $4.50 per share.

These warrants expired during

the year ended December 31, 2020.

the year ended December 31, 2014, a certain milestone was achieved resulting in the release of 7,277 shares held in escrow.

of shares held in escrow as of December 31, 2022 is 21,832 shares of common stock.

There were no milestones achieved in 2022 or 2021.

The NDP License Agreement will

expire on a country-by-country basis upon the earlier of (i) the expiration of the last patent claim under the NDP License Agreement

in a given country, or (ii) the payment of all milestone payments and release of all shares of our common stock held in escrow under

the NDP License Agreement.

Upon the expiration of the NDP License Agreement in each country, we will have an irrevocable, perpetual,

fully paid-up, royalty-free exclusive license to the NDP Technology in such country.

The NDP License Agreement also may be terminated

by NDP if we materially breach or default under the NDP License Agreement and that breach is not cured within 60 days following the delivery

of written notice to us, or by us on a country-by-country basis upon 60 days prior written notice.

If the NDP License Agreement is terminated

by either party, our rights to the NDP Technology will revert back to NDP.

We believe that the patents

and patent applications we have licensed pursuant to the NDP License Agreement cover effective solutions to the various medical problems

discussed previously when using taurolidine in clinical applications, and specifically in hemodialysis applications.

Our patent portfolio

consists of 5 issued U.S.

NDP License Agreement will expire on a country-by-country basis upon the earlier of (i) the expiration of the last patent claim under

the NDP License Agreement in a given country, or (ii) the payment of all milestone payments and release of all shares of our common stock

held in escrow under the NDP License Agreement.

Upon the expiration of the NDP License Agreement in each country, we will have an irrevocable,

perpetual, fully paid-up, royalty-free exclusive license to the NDP Technology in such country.

The NDP License Agreement also may be

terminated by NDP if we materially breach or default under the NDP License Agreement and that breach is not cured within 60 days following

the delivery of written notice to us, or by us on a country-by-country basis upon 60 days prior written notice.

If the NDP License Agreement

is terminated by either party, our rights to the NDP Technology will revert back to NDP.

believe that the patents and patent applications we have licensed pursuant to the NDP License Agreement cover effective solutions to

the various medical problems discussed previously when using taurolidine in clinical applications, and specifically in hemodialysis applications.

Our patent portfolio consists of 6 issued U.S.

patents and 11 pending U.S.

patent applications;

17 issued foreign patents and 51 pending foreign patent applications.

19 issued foreign patents and 45 pending

foreign patent applications.

Additional patent applications will be filed to cover any additional related subject matter developed.

The patents cover additional applications

using taurolidine in, among others, sutures, hydrogels, meshes, transdermal and biofilm products.

Employees and Human Capital Resources

As of March 15, 2022, we employed 29 full-time

employees and one part-time employee, who work out of our corporate offices in Berkeley Heights NJ or work remotely in various locations

throughout the United States and Europe.

We are committed to diversity, equity and inclusion, regardless of gender or race/ethnicity,

or any protected status, and conduct training to reflect our commitment as an organization and build awareness.

We invest in our workforce

by offering competitive salaries and benefits.

We endeavor to foster a strong sense of ownership by offering stock options under our

stock incentive program.

patents cover additional applications using taurolidine in, among others, sutures, hydrogels, meshes, transdermal and biofilm products.

and Human Capital Resources

of March 24, 2023, we employed 40 full-time employees and one part-time employee, who work out of our corporate offices in Berkeley Heights

NJ or work remotely in various locations throughout the United States and Europe.

We are committed to diversity, equity and inclusion,

regardless of gender or race/ethnicity, or any protected status, and conduct training to reflect our commitment as an organization and

build awareness.

invest in our workforce by offering competitive salaries and benefits.

We endeavor to foster a strong sense of ownership by offering

stock options under our stock incentive program.

We also offer comprehensive and locally relevant benefits for all eligible employees.

We recognize and support

the growth and development of our employees and we provide performance feedback and conduct employee goal and development discussions.

We have implemented COVID-19

policies designed to ensure the safety and well-being of all employees and the people associated with them.

As a result of the COVID-19

pandemic, to reduce risk, our employees have been asked to work remotely, and all employees have been asked to avoid all non-essential

travel, adhere to recommended health and safety practices.

None of our employees are

subject to a collective bargaining agreement.

We emphasize organizational communication and consider our relationship with our employees

to be strong.

Corporate Information

We were organized as a Delaware

corporation on July 28, 2006 under the name “Picton Holding Company, Inc.” and we changed our corporate name to “CorMedix

Inc.” on January 18, 2007.

Our principal executive offices are located at 300 Connell Drive, Suite 4200, Berkeley Heights, New

Jersey 07922.

We recognize and support the growth and development of our employees and we provide performance feedback and conduct employee goal and

development discussions.

of our employees are subject to a collective bargaining agreement.

We emphasize organizational communication and consider our relationship

with our employees to be strong.

were organized as a Delaware corporation on July 28, 2006 under the name “Picton Holding Company, Inc.” and we changed our

corporate name to “CorMedix Inc.” on January 18, 2007.

Our principal executive offices are located at 300 Connell Drive,

Suite 4200, Berkeley Heights, New Jersey 07922.

Our telephone number is (908) 517-9500.

On March 26, 2019, we effected a 1-for-5 reverse

stock split of our issued and outstanding shares of common stock, par value $0.001, per share (“Common Stock”), by combining,

reclassifying and changing each authorized and outstanding five shares of “old” common stock into one share of “new”

common stock.

No fractional shares were issued, and, in lieu thereof, where applicable, one whole share was issued.

To reflect the reverse

stock split, reclassification, combination and change, proportional adjustments were also made to the number of shares of our common stock

issuable upon conversion of outstanding preferred shares and the convertible note payable, warrants and options and other equity awards.

The reverse stock split did not affect the par value per share of our common stock (which remains at $0.001 per share) or the total

number of shares of common stock that are authorized to be issued pursuant to our Amended and Restated Certificate of Incorporation, as

amended, which remains at 160 million shares.

All issued and outstanding share and per share amounts included in the accompanying consolidated

financial statements and in this report have been adjusted to reflect the reverse stock split, reclassification, combination and change

for all periods presented.

In April 2021, we received approximately $1.3

million, net of expenses, from the sale of most of our remaining unused New Jersey net operating losses (“NOL”) eligible

for sale under the State of New Jersey’s Economic Development Authority’s New Jersey Technology Business Tax Certificate

Transfer program (“NJEDA Program”).

The NJEDA Program allowed us to sell approximately $1.3 million of our total $1.3 million

in available NOL tax benefits for the state fiscal year 2019.

The NJEDA has approved our

application to participate in the NJEDA Program for the state fiscal year 2021.

The approval will allow us to sell approximately $0.6

million of the total $0.6 million in available tax benefits to an unrelated, profitable New Jersey corporation in return for approximately

$0.6 million in cash.

Closing is subject to NJEDA’s typical closing conditions, which are in process of completion.

In November 2020, we filed a registration statement,

under which we could issue and sell up to an aggregate of $100.0 million of shares of our common stock, $0.001 par value per share.

November 27, 2020, we entered into an Amended and Restated At Market Issuance Sales Agreement (“Amended Sales Agreement”)

Riley and Needham & Company, LLC (“Needham”), together with B.

Riley, acting as sales agents (“Sales Agent”).

The Amended Sales Agreement relates to the sale of shares of up to $25.0 million of our common stock under our ATM program, of which we

may issue and sell common stock from time to time through the Sales Agent, subject to limitations imposed by us and subject to Sales Agent’s

acceptance, such as the number or dollar amount of shares registered under the registration statement to which the offering relates.

Agent is entitled to a commission of up to 3% of the gross proceeds from the sale of common stock sold under the ATM program.

year ended December 31, 2020, we sold 832,676 shares of common stock under the Amended Sales Agreement at the weighted average price of

$8.69 per share and realized net proceeds of approximately $7.0 million.

At December 31, 2020, we had approximately $17.8 million available

under the Amended Sales Agreement and $75.0 million available under our current shelf registration for the issuance of equity, debt or

equity-linked securities unrelated to the Amended Sales Agreement.

On February 5, 2021, we allocated to our ATM program an additional

$25.0 million of the remaining $75.0 million available under our shelf registration statement.

Giving effect to the additional $25.0 million,

plus the $17.8 million available at December 31, 2020, we had a total of $42.8 million available under our ATM program, which were sold

during January and February 2021, for an aggregate of 3,737,862 shares of our common stock and approximately $41.5 million in net proceeds.

On August 12, 2021, we entered into an At Market

Issuance Sales Agreement with Truist Securities, Inc.

and JMP Securities LLC, as sales agents, pursuant to which we may sell, from time

to time, an aggregate of up to $50.0 million of our common stock through the sales agents under our ATM program, subject to limitations

imposed by us and subject to the sales agent’s acceptance, such as the number or dollar amount of shares registered under the registration

statement to which the offering relates.

The sales agents are entitled to a commission of up to 3% of the gross proceeds from the sale

of common stock sold under the ATM program.

As of December 31, 2021, we have $50.0 million available under our ATM program relating to

our shelf registration statement filed in November 2020 and we have $150.0 million available under our shelf registration statement filed

on August 12, 2021 for the issuance of equity, debt or equity-linked securities.

We maintain a website at www.cormedix.com;

November 2020, we filed a shelf registration statement, (the “2020 Shelf Registration”), under which we could issue and sell

up to an aggregate of $100.0 million of shares of our common stock, $0.001 par value per share.

On November 27, 2020, we entered into

an Amended and Restated At Market Issuance Sales Agreement (the “Amended Sales Agreement”) with FBR Securities, Inc.

Riley Securities, Inc.) and Needham & Company, LLC as sales agents.

The Amended Sales Agreement relates to the sale of

shares of up to $50.0 million of our common stock under our at-the-market program (the “ATM program”), of which we may issue

and sell common stock from time to time through the sales agents, subject to limitations imposed by us and subject to the sales agents’

acceptance, such as the number or dollar amount of shares registered under the 2020 Shelf Registration to which the offering relates.

Sales agents are entitled to a commission of up to 3% of the gross proceeds from the sale of common stock sold under the ATM program.

During the year ended December 31, 2021, the ATM program under the Amended Sales Agreement had been fully sold.

August 12, 2021, we entered into a new At Market Issuance Sales Agreement with Truist Securities, Inc.

and JMP Securities LLC, as sales

agents, pursuant to which we may sell, from time to time, an aggregate of up to $50.0 million of our common stock through the sales agents

under our ATM program, subject to limitations imposed by us and subject to the sales agents’ acceptance, such as the number or

dollar amount of shares registered under the 2020 Shelf Registration to which the offering relates.

The sales agents are entitled to

a commission of up to 3% of the gross proceeds from the sale of common stock sold under the ATM program.

As of December 31, 2022, we

have $31.6 million available under our ATM program relating to our 2020 Shelf Registration.

on August 12, 2021, we filed a new shelf registration statement (the “2021 Shelf Registration”) for the issuance of up to

$150.0 million of shares of our common stock which is currently available for the issuance of equity, debt or equity-linked securities.

We maintain the websites at www.cormedix.com and www.crbis.com;

the information on, or that can be accessed through, our website or certain information in our website is not part of this report.

report and all of our filings under the Exchange Act, including copies of annual reports on Form 10-K, quarterly reports on Form 10-Q,

current reports on Form 8-K, and any amendments to those reports, are available free of charge through our website on the date we file

those materials with, or furnish them to, the Securities and Exchange Commission (the “SEC”).

Such filings are also available

to the public on the internet at the SEC’s website at www.sec.gov.

Annual Report on Form 10-K and all of our filings under the Exchange Act, including copies of annual reports on Form 10-K, quarterly reports

on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, are available free of charge through our website on the

date we file those materials with, or furnish them to, the Securities and Exchange Commission (the “SEC”).

are also available to the public on the internet at the SEC’s website at www.sec.gov.

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