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Item 1. Business

2024-03-12 compared with 2023-03-30 · 617 added, 725 removed, 236 unchanged (85% of the section changed)

1 unchanged sentence

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 ® .

primary focus is on the commercialization of our lead product, DefenCath ® in the United States.

We have in-licensed the

worldwide rights to develop and commercialize DefenCath.

The name DefenCath is the U.S.

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

proprietary name approved by the U.S.

Drug Administration, or FDA.

DefenCath is an antimicrobial

catheter lock solution (“CLS”) (a formulation of taurolidine 13.5 mg/mL, and heparin 1000 USP Units/mL) indicated to reduce

the incidence of catheter-related bloodstream infections (“CRBSI”) in adult patients with kidney failure receiving chronic

hemodialysis through a central venous catheter (“CVC”).

It is indicated for use in a limited and specific population of patients.

CRBSIs 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

We believe DefenCath can address a significant unmet medical need.

– 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.

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 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.

On November 15, 2023, we announced

that the FDA approved the new drug application (“NDA”) for DefenCath to reduce the incidence of CRBSI in adult patients with

kidney failure receiving chronic hemodialysis through a CVC.

DefenCath is indicated for use in a limited and specific population of patients.

DefenCath is the first and only FDA-approved antimicrobial CLS in the U.S.

and was shown to reduce the risk of CRBSI by up to 71% in a

Phase 3 clinical study.

As a result of the November 2023 FDA approval, we are currently preparing for the commercial launch of DefenCath.

DefenCath is listed in the

Orange Book as having New Chemical Entity or NCE exclusivity (5 years) expiring on November 15, 2028, and the Generating Antibiotic Incentives

Now or GAIN exclusivity extension of the NCE exclusivity (an additional 5 years) expiring on November 15, 2033.

The GAIN exclusivity extension

of 5 years is the result of the January 2015 designation of DefenCath as a Qualified Infectious Disease Product (“QIDP”).

As part of the DefenCath approval

letter, the FDA communicated the existence of a required pediatric assessment under the Pediatric Research Equity Act (“PREA”).

PREA requires sponsors to conduct pediatric studies for, among other things, 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.

FDA deferred submission of the pediatric study for DefenCath

because the product is ready for approval for use in adults and the pediatric study has not been completed.

We are obligated to conduct

the study communicated in the approval letter:

an open-label, two-arm (DefenCath vs.

standard of care) study to assess safety and time

to CRBSI in subjects from birth to less than 18 years of age with kidney failure receiving hemodialysis via a central venous catheter.

Because this is a required post-marketing study, we must make annual reports to the FDA.

Pediatric studies for an approved product conducted

under PREA may qualify for pediatric exclusivity, which, if granted, provides an additional six months of exclusivity that attaches to

the end of existing marketing exclusivity and patent periods for DefenCath.

Depending on the timing of final report submission, DefenCath

could potentially receive a total marketing exclusivity period of 10.5 years.

However, there are factors that could affect whether this

exclusivity is received or the duration of exclusivity, and DefenCath may or may not ultimately be eligible for the additional 0.5 years

of exclusivity associated with this pediatric study.

We announced on April 26,

2023 that following the submission of a duplicate New Technology Add-On Payment (“NTAP”) application in the fourth quarter

of 2022 to the Centers for Medicare & Medicaid Services (“CMS”), CMS has subsequently issued the Inpatient Prospective

Payment System (“IPPS”) 2024 proposed rule that includes a NTAP of up to $17,111 per hospital stay for DefenCath.

represents reimbursement to inpatient facilities of 75% of the anticipated wholesaler acquisition cost (“WAC”) price of $1,170

per 3 mL vial, and an average utilization of 19.5 vials per hospital stay.

The final IPPS rule was published in early August 2023 and

confirmed this payment amount in that final rule.

This NTAP was conditioned upon the DefenCath NDA obtaining final FDA approval prior

to July 1, 2024.

As the NTAP was calculated by CMS based upon an anticipated WAC price of $1,170, and following FDA approval of the DefenCath

NDA, an actual WAC of $249.99 per 3ml vial was established, we anticipate that CMS will revise the amount of the NTAP payment to reflect

the actual WAC price in the next IPPS rulemaking, effective October 1, 2024.

Upon the listing in the compendia of the actual WAC price

of $249.99 per 3ml vial, we notified CMS of the new lower WAC pricing and recommended that CMS make an off-cycle adjustment to the NTAP

to reflect the current lower WAC pricing amount.

CMS subsequently communicated to us that they do not intend to update the NTAP reimbursement

amount until the next review cycle in October 2024.

On January 25, 2024, CMS determined

that DefenCath should be classified as a renal dialysis service that is subject to the Medicare end-stage renal disease prospective payment

system (“ESRD PPS”).

The ESRD PPS provides bundled payment for renal dialysis services, but also affords a transitional drug

add-on payment adjustment, or TDAPA, which provides temporary, additional payments for certain new drugs and biologicals.

an application for TDAPA on January 26, 2024, and CMS has confirmed receipt.

We also submitted a HCPCS application for a J-code to CMS

on December 8, 2023, for DefenCath, which is relevant to billing and the TDAPA application.

CMS has confirmed the coding application is

under review.

TDAPA reimbursement is calculated based on 100 percent of the average selling price (“ASP”) (or 100 percent

of WAC or else manufacturers’ list price, respectively, if such data is unavailable).

If CMS grants TDAPA and post-TDAPA add-on

payment adjustments for DefenCath, collective payments would be for five years (with such post-TDAPA add-on payments applying to all ESRD

PPS payments for years three through five).

CMS confirmed to us that, assuming a favorable review, CMS is working towards a July 1, 2024

implementation date for TDAPA.

We may 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 certain oncology patients using a central venous catheter.

In 2024, we anticipate

discussing with the FDA potential pathways for expanded indications.

announced on May 1, 2023 that the United States Patent and Trademark Office (“USPTO”) allowed our patent application directed

to a locking solution composition for treating and reducing infection and flow reduction in central venous catheters.

This application

was granted on August 29, 2023 as U.S.

Our newly granted U.S.

Patent reflects the unique and proprietary

formulation of our product, DefenCath, for which we received FDA approval on November 15, 2023.

This patent supplements the coverage

of our existing licensed U.S.

7,696,182, and has the potential to provide an additional layer of patent protection for DefenCath

through 2042.

– 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.

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.

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

of Neutrolin as a CLS.

We have elected to discontinue sales of Neutrolin for lack of commercial viability.

The winding down of our operations

in the EU is nearly complete and Neutrolin sales in both the EU and the Middle East have been discontinued since 2022.

Development Possibilities

4 unchanged sentences

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.

Agreement with NDP Partners

On January 30, 2008, we entered

into a License and Assignment Agreement, or the ND License Agreement, with ND Partners LLC, or NDP.

Pursuant to the ND 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”).

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

In addition, we are required to make cash payments to NDP upon the achievement of certain milestones.

The maximum aggregate

amount of cash payments upon achievement of milestones is $3,000,000, with $2,000,000 remaining at December 31, 2023.

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.

On April 11, 2013, we

entered into an amendment to the ND 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

and were unexercised 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 terms of the escrow agreement

provide that if, as of December 31, 2022, any shares remain in escrow, such shares will be returned to the Company and cancelled.

were no milestones achieved in 2023 or 2022.

The ND License Agreement will

expire on a country-by-country basis upon the earlier of (i) the expiration of the last patent claim under the ND License Agreement in

a given country, or (ii) the payment of all milestone payments.

Upon the expiration of the ND 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 ND License Agreement

also may be terminated by NDP if we materially breach or default under the ND 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.

ND License Agreement is terminated by either party, our rights to the NDP Technology will revert back to NDP.

We announced on May 1, 2023

that the USPTO allowed our patent claims directed to a locking solution composition for treating and reducing infection and flow reduction

in central venous catheters.

Our newly issued U.S.

Patent 11,738,120 reflects the unique and proprietary formulation of our product, DefenCath,

for which we received FDA approval on November 15, 2023.

The newly issued patent provides patent coverage that supplements our existing

licensed U.S.

7,696,182, and has the potential to provide an additional layer of patent protection for DefenCath through 2042.

We believe that the patents

and patent applications we have licensed pursuant to the ND License Agreement cover effective solutions to the various medical problems

discussed previously when using taurolidine in clinical applications, and specifically in hemodialysis applications.

The foregoing summary

of the ND License Agreement does not purport to be complete and is qualified in its entirety by reference to the ND License Agreement,

attached as an exhibit hereto and which is incorporated by reference herein.

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.

for accessing the vasculature for 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, administering long term antibiotic therapy,

and administering total parenteral nutrition (complete or partial dietary support via intravenous nutrients).

infections resulting from the use of central catheters known as CRBSIs 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 CRBSI and the clinical

complications associated with them.

The total annual cost for treating CRBSI episodes and their related complications in the U.S.

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

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.

Patients are typically treated 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 progress into dialysis.

Patients 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.

11 unchanged sentences

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.

Other than DefenCath, there

are no pharmacologic drug products approved in the U.S.

for the prevention or reduction of CRBSIs 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.

need for reduction or prevention of CRBSIs 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, our FDA-approved

product, 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.

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.

We are unaware of any drug products other than DefenCath

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

The drug and medical device industries are highly

competitive and subject to rapid and significant technological change.

DefenCath’s potential competitors could include large as

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

Many of our potential 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 commercial success of DefenCath are efficacy and safety, as well as pricing and reimbursement.

DefenCath is the only approved catheter lock solution with antimicrobial properties in the U.S., 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.

We are not aware of any potentially

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

As a means to reduce infections, some dialysis

providers may be using anti-infective infused catheter caps and/or compounded unapproved antibiotic catheter lock solutions.

Manufacturing/Supply

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We intend to continue this practice in the future.

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 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.

We currently have one FDA

approved source for each of our two key active drug ingredients (“APIs”) for DefenCath, taurolidine and heparin sodium, respectively.

With regards to taurolidine, we have a Drug Master File (“DMF”) filed with the FDA.

There is a master commercial supply agreement

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

We are currently in the process of identifying and qualifying an

alternate third-party manufacturer for taurolidine under our existing DMF.

With respect to heparin sodium API, we have identified an alternate

third party supplier and intend to qualify such supplier under the DefenCath NDA over the next twelve months.

We received FDA approval of

DefenCath with finished dosage production from our European based CMO Rovi Pharma Industrial Services.

We believe this CMO has adequate

capacity to produce the volumes needed to meet near term projected demand for the commercial launch of DefenCath.

We previously announced commercial

arrangements with additional finished dosage CMOs, Alcami Corporation and Siegfried Hameln, that provide for the manufacture of commercial

sterile parenteral drug products.

The Company anticipates the submission to the FDA of a supplement adding Siegfreid Hameln as an alternate

manufacturing site in the second fiscal quarter of 2024.

The Company will also discontinue its relationship with Alcami as a potential

alternate manufacturing site for DefenCath.

note that CMOs and our API suppliers are subject to FDA oversight and inspection regarding compliance with cGMP, and if deemed non-compliant

with cGMP by FDA, we could face shortages or risk with respect to producing sufficient quantities of drug product or drug substance.

States Government Regulation

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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 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.

DefenCath is an FDA-approved drug, and

our other product candidates may be classified by the FDA as a drug or a medical device (or combination product) depending upon the indications

for use or claims, and/or how the product affects the structure or function of the body.

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 medical device and pharmaceutical product candidates, or combination products, as appropriate.

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.

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.

sanctions could include the FDA’s refusal to approve pending applications, 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

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:

research, development, and approval process in the U.S.

and elsewhere is intensive and rigorous and generally takes many years to complete.

The typical process required by the FDA before a therapeutic drug may be marketed in the U.S.

● 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;

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.

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 compliance

with cGMPs, 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.

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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.

3 trials are required for marketing approval, though one such trial, plus confirmatory evidence, may be acceptable.

Post-approval

trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval.

These trials are used to

gain additional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate

additional safety data regarding use of the product in a clinical setting.

In certain instances, the FDA may mandate the performance

of Phase 4 clinical trials as a condition of approval of an NDA or post-approval.

Additionally,

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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.

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.

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

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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.

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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.

domestic and foreign manufacturing establishment, including any contract manufacturers, 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.

FDA will also typically inspect one or more clinical trial sites to confirm that the applicable clinical trials were conducted in accordance

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.

These fees can be significant.

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.

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.

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

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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.

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

and Mitigation Strategy, or a REMS, or otherwise limit the scope of any approval.

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.

Such deferred studies become required post-marketing studies upon approval of the product.

FDA Expedited Review and Approval Programs

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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.

sponsor can also 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.

new program to expedite the development of drug products is the Limited Population Pathway for Antibacterial and Antifungal Drugs, or

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.

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 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.

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 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

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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

by the FDA in any other NDA submitted under Section 505 of the FDCA.

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 physiological or pharmacological action of

the drug substance.

During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA application submitted

by another company that contains the previously approved active moiety, except that an ANDA or 505(b)(2) that contains a certification

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,

may be submitted one year before NCE exclusivity expires.

Five-year exclusivity will also not delay the submission or approval of a 505(b)(1)

however, an applicant submitting a 505(b)(1) 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.

FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations,

other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval

of the application, for example, new indications, dosages or strengths of an existing drug.

This three-year exclusivity covers only the

conditions of use associated with the new clinical investigations and does not prohibit the FDA from approving NDAs or ANDAs for drugs

containing the original active agent.

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.

of an additional six months of exclusivity to the term of any existing exclusivity for the product, such as NCE exclusivity.

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;

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.

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 that cover the drug

are extended by six months.

For patent protection, pediatric exclusivity does not extend the term of the patent or the term a patent

extension, but rather the period during which FDA cannot approve an ANDA or 505(b)(2) NDA that certifies to a patent listed in the Orange

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

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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

certain infectious disease products, the above discussed exclusivity periods may be further extended if the product is designated as

a QIDP and receives GAIN Act exclusivity.

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.

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

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

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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 can also require

the completion of studies post-approval, such as required studies under PREA.

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

The FDA enforces these requirements through, among other ways, review of promotional material submissions, review of adverse

events, review of annual reports, 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.

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.

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;

promotion is prohibited, as is false and misleading promotion.

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.

regulations require that products be manufactured in specific approved facilities and in accordance with cGMP regulations.

expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with

cGMP regulations.

These manufacturers must comply with cGMP regulations that require, among other things, quality control and quality

assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP.

Manufacturers

and other entities involved in the manufacture and distribution of approved drugs or biologics are required to register their establishments

with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for

compliance with cGMP requirements and other laws.

Accordingly, manufacturers must continue to expend time, money and effort in the area

of production and quality control to maintain cGMP compliance.

The discovery of violative conditions, including failure to conform to

cGMP regulations, could result in enforcement actions, and the discovery of problems with a product after approval may result in restrictions

on a product, manufacturer or holder of an approved NDA or BLA, including recall.

approval of a drug is granted, FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained

or if problems occur after the product reaches the market.

Later discovery of previously unknown problems with a product, including adverse

events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may

result in mandatory revisions to the approved labeling to add new safety information, or imposition of additional post-market surveillance

or clinical trials to assess new safety risks.

Other potential consequences include, among other things:

restrictions on the marketing

or manufacturing of the product, complete withdrawal of the product from the market or product recalls; fines, warning letters or

other enforcement-related letters or clinical holds on investigational or post-approval clinical trials; refusal by FDA to approve

pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; product seizure or detention, or

refusal to permit the import or export of products; injunctions or the imposition of civil or criminal penalties; and consent

decrees, corporate integrity agreements, debarment, or exclusion from federal health care programs; or mandated modification of

promotional materials and labeling and the issuance of corrective information.

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

sampling, distribution, and reporting.

and Reimbursement

expect to sell DefenCath primarily to inpatient acute-care hospitals and outpatient dialysis clinics.

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:

For Medicare, inpatient acute-care

hospitals are paid under the inpatient prospective payment system (referred to herein as the “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, which is weighted and multiplied by a standardized

amount (updated each year for inflation and other factors), to yield a fixed payment for that DRG and adjusted for hospital-specific factors

(e.g., wages, teaching hospitals) to cover care furnished during the inpatient stay.

Additional, temporary payment is available for new

medical services and technologies called New Technology Add-on Payment, or NTAP, if certain criteria are met.

There are three criteria

required for new technologies to be eligible to receive NTAP:

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.

Product must meet “substantial clinical improvement” over existing technologies;

Product must meet certain cost thresholds.

CMS created several alternative

NTAP approval pathways for certain devices that obtain breakthrough designation and drugs that obtain Qualified Infectious Disease

Product, or QIDP, designation from the FDA.

Under these alternative pathways, the new technology need only meet the cost criterion because

CMS assumes that those products meet the newness and substantial clinical improvement criteria.

We submitted an NTAP application

under the alternative pathway for fiscal year (“FY”) 2024 IPPS and received conditional approval from CMS pending FDA marketing

authorization for DefenCath before July 1, 2024.

Based on the information available at the time of the FY 2024 IPPS final rule, CMS determined

the cost per case of DefenCath was $22,815.

Under CMS’ regulations, NTAPs are limited to the lesser of 75% of the average cost of

the technology, or 75% of the costs in excess of the MS-DRG payment for the case.

Accordingly, CMS finalized for FY 2024 $17,111.25 as

the maximum NTAP for a case involving the use of DefenCath.

This NTAP represents reimbursement to inpatient facilities of 75% of the anticipated

wholesaler acquisition cost price of $1,170 per 3 mL vial, and an average utilization of 19.5 vials per hospital stay.

Given that FDA

approval of the NDA was obtained on November 15, 2023 and prior to the July 1, 2024 deadline, the NTAP for cases involving the technology

will be effective beginning January 1, 2024.

As the NTAP was calculated by CMS based upon an anticipated WAC price of $1,170, and following

FDA approval of the DefenCath NDA an actual WAC of $249.99 per 3ml vial was established, we anticipate that CMS will revise the amount

of the NTAP payment to reflect the actual WAC price in the next IPPS rulemaking, effective October 1, 2024.

Upon the listing in the compendia

of the actual WAC price of $249.99 per 3ml vial, we notified CMS of the new lower WAC pricing and recommended that CMS make an off-cycle

adjustment to the NTAP to reflect the current lower WAC pricing amount.

CMS subsequently communicated to us that CMS does not intend to

update the NTAP reimbursement amount until the next review cycle in October 2024.

NTAP is granted for a period

of 2-3 years after the date of FDA approval.

Although NTAP is intended to identify and ensure adequate payment for qualifying new technologies,

it may have a limited effect depending on the DRG assignment after the NTAP period ends.

With established reimbursement in the inpatient

setting, we plan to launch DefenCath in hospitals first while outpatient reimbursement is expected to be effective July 1, 2024 (assuming

TDAPA approval as discussed below).

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;

On January 25, 2024, CMS determined

that DefenCath should be classified as a renal dialysis service within an existing functional category, and is therefore subject to the

Medicare end-stage renal disease prospective payment system (referred to herein as the “ESRD PPS”).

The ESRD PPS does afford,

however, a transitional drug add-on payment adjustment, or TDAPA, followed by post-TDAPA add-on payment adjustments.

If CMS grants TDAPA

and post-TDAPA add-on payment adjustments for DefenCath, collective payments would be for five years (with such add-on payments applying

to all ESRD PPS payments for years three through five).

New renal dialysis drugs or biological products that fall within an ESRD PPS functional

category are paid TDAPA unless certain exclusion criteria apply (related to the FDA approval or the NDA classification type).

To be considered

a new renal drug or biologic, the product must be:

to treat or manage a condition(s) associated with ESRD

by the FDA pursuant to Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act or section

351 of the Public Health service 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;

● Assigned a Healthcare Common Procedure Coding System ("HCPCS") code (or have an application submitted);

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.

believe that DefenCath would meet the criterion of being a new renal dialysis product based upon communications received from CMS.

submitted a HCPCS application for a J-code to CMS on December 8, 2023 for DefenCath and CMS has confirmed the application is under review.

We submitted an application for TDAPA on January 26, 2024.

CMS confirmed receipt and advised us in writing that CMS is working toward

a July 1, 2024 effective date for TDAPA, assuming a favorable review.

CMS reserves the right to request more information, and does not

guarantee that the TDAPA application will be approved or will be effective by July 1, 2024.

reimbursement is calculated based on 100 percent ASP (or 100 percent of wholesale acquisition price or else manufacturers’ list

price, respectively, if such data is unavailable).

CMS has recently adopted policies related to the submission of ASP data making TDAPA

conditional in certain circumstances on the continued submission of such data.

Accordingly, it is possible that the duration of TDAPA

could be shortened if the submission requirements of the ASP policy are not met.

When TDAPA ends for new products for which there is

a functional category, CMS does not make any adjustments to the ESRD PPS rate.

we cannot anticipate changes in reimbursement requirements and mechanisms in the coming years, CMS has acknowledged TDAPA payment mechanisms

may be adjusted to encourage innovation for this patient population.

Beginning with calendar year 2024, CMS adopted a new payment adjustment

that follows the TDAPA period which is applied to all ESRD PPS payments for three years.

Following such additional ESRD PPS payment adjustments,

DefenCath would be paid as part of the bundled ESRD PPS rate.

In anticipation that 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.

We may seek CMS reimbursement

for DefenCath in other catheter indications, such as oncology patients and total parenteral nutrition patients, including through (i)

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.

Coverage and payment under these Medicare benefit

categories is not guaranteed for these additional potential indications.

Federal and state healthcare

laws, including fraud and abuse and health information privacy and security laws, also govern our business.

If we fail to comply with

those laws, we could face substantial penalties and our business, results of operations, financial condition and prospects could be adversely

Such laws include, but are not limited to:

the federal Anti-Kickback Statute (“AKS”);

federal pricing transparency

and reporting laws and regulations;

federal Physician Payments Sunshine Act and Open Payments requirements to track and report certain

payments and other transfers of value;

federal and state civil and criminal false claims laws, including the civil False Claims Act.

Additionally,

we are subject to state and local law equivalents of the above federal laws, which may be broader in scope and apply regardless of whether

the payer is a governmental healthcare program.

We may also be subject to certain state healthcare laws that may not have a federal parallel,

such as pharmaceutical detailing and disclosure laws and requirements.

We are subject to federal

government price reporting, such as those applicable to the Medicare Part B program, those under the Medicaid Drug Rebate Program (“MDRP”),

the 340 Drug Pricing Program and individual state laws relating to pricing and sales and marketing practices.

Manufacturers report Average

Sales Price (ASP) data for Part B-covered drugs and biologicals and related items, services, supplies, and products that are paid as drugs

or biologicals.

We also participate in the MDRP and report ASP, Best Price and other metrics related to our participation in such program.

We pay rebates to state Medicaid agencies based on those metrics on Medicaid beneficiary utilization of products.

In addition, we are

required to sell our covered outpatient drugs at or below the 340B Ceiling Price to 340B Covered Entities.

We are also required to discount

our products to authorized users of the Federal Supply Schedule, under which additional laws and requirements apply.

Each of these programs

require submission of pricing data and calculation of discounts and/or rebates pursuant to complex statutory formulas and regulatory guidance,

as well as the entry into government procurement contracts governed by the Federal Acquisition Regulations, and the guidance governing

such calculations is not always clear.

Compliance with such requirements can require significant investment in personnel, systems and

Failure to properly calculate prices, or to offer required discounts or rebates could subject us to substantial penalties including,

but not limited to, potential False Claims Act liability.

CMS continues to issue guidance and rulemaking governing our participation in

the MDRP, and we cannot predict how future guidance or rules would affect our profitability (including the potential for increases in

our overall Medicaid rebate liability and the obligation to charge greatly reduced prices to 340B Covered Entities).

the U.S., the federal and state governments are considering proposals or have enacted legislative and regulatory changes to the healthcare

system that could affect our ability to sell our products profitably.

Among policy makers and payers in the U.S., there is significant

interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding

has been increasing legislative and enforcement interest in the U.S.

with respect to drug pricing practices.

In particular, there have

been several recent U.S.

Congressional inquiries, hearings and proposed and enacted federal legislation and rules, as well as executive

orders and sub-regulatory guidance that may impact pricing for pharmaceutical products.

These initiatives include, among others:

to reevaluate, reduce or limit the prices of drugs and make them more affordable for patients;

● implementation

of additional data collection and transparency reporting regarding drug pricing, rebates,

fees and other remuneration provided by drug manufacturers;

to rules associated with ESRD PPS Transitional Drug Add-on Payment Adjustment;

revisions to rules associated with the calculation of average sales price;

to rules associated with the calculation of average manufacturer price and best price under

to the MDRP, including through a May 2023 CMS-proposed rulemaking for this program, that

could significantly increase manufacturer rebate liability;

● implementation

of the inflation Reduction Act of 2022 (Inflation Reduction Act), including provisions that

generally require manufacturers of Medicare Part B and Part D drugs to pay inflation rebates

to the Medicare program if pricing metrics associated with their products increase faster

than the rate of inflation;

elimination of the AKS discount safe harbor protection for manufacturer rebate arrangements

with Medicare Part D plan sponsors;

● reevaluation

of safe harbors under the AKS.

addition, at the state level, legislatures have increasingly passed legislation and implemented regulations similar to those under consideration

at the federal level, as well as laws designed to control pharmaceutical and biotherapeutic product pricing, including restrictions on

pricing or reimbursement at the state government level, limitations on discounts to patients, marketing cost disclosure and transparency

measures, restrictions or other limitations on patient assistance, and, in some cases, policies to encourage importation from other countries

(subject to federal approval) and bulk purchasing.

addition, the U.S.

Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries

from making improper payments for the purpose of obtaining or retaining business.

laws and regulations may affect our sales, marketing, and other promotional activities by imposing administrative and compliance burdens

In addition, given the lack of clarity with respect to these laws and their implementation, our reporting actions could be subject

to the penalty provisions of the pertinent state and federal authorities.

Regulatory Requirements

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.

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.

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.

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.

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;

19 issued foreign patents and 45 pending

foreign patent applications.

Additional patent applications will be filed to cover any additional related subject matter developed.

patents cover additional applications using taurolidine in, among others, sutures, hydrogels, meshes, transdermal and biofilm products.

have not made any filings seeking approval for DefenCath outside of the United States.

In order to market any product outside of the

United States, we would need to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy

and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our products.

though we have obtained FDA approval for DefenCath, and more generally, whether or not with FDA approval for a product, we would need

to obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials

or marketing of the product in those countries.

The approval process varies from country to country and can involve additional product

testing and additional administrative review periods.

The time required to obtain approval in other countries might differ from and be

longer than that required to obtain FDA approval.

Regulatory approval in one country does not ensure regulatory approval in another,

but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.

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.

As of March 7, 2024, we employed

82 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.

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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 also offer comprehensive and 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.

of our employees are subject to a collective bargaining agreement.

6 unchanged sentences

Our telephone number is (908) 517-9500.

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.

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.

maintain our websites at www.cormedix.com, www.defencath.com.

and www.crbis.com.

This 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”).

Such filings are also available to the public on the internet

at the SEC’s website at www.sec.gov.

The information contained on, or that can be accessed through, the websites referenced

in this Annual Report on Form 10-K is not a part of, nor shall it be deemed to be, incorporated by reference into this filing or any

of our other filings with the SEC.

Further, the Company’s references to website URLs are intended to be inactive textual references

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