Item 1A. Risk Factors
Item 1A. Risk Factors.
There have been no material changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2024. For a discussion of risks that affect the Company’s business, please refer to Part I, Item IA, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In addition to the other information set forth in this Quarterly Report on Form 10-Q, please carefully consider the factors described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The risks described are not the only risks facing us. Additional risks and uncertainties are not currently known to us, or that our management currently deems to be immaterial, also may adversely affect our business, financial condition, and/or operating results.
The following represent modification to risk factors that could materially harm our business, financial position, or operating results or could cause our actual results to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statement made in this report.
We may not be successful in obtaining the FDA’s or Health Canada’s authorization and successful commercialization for DrugSorb-ATR in the U.S. or Canada, respectively
On April 25, 2025, the FDA issued a denial letter regarding the Company’s De Novo Request for DrugSorb-ATR, identifying remaining deficiencies that must be addressed before the De Novo Request can be granted, and the device can be authorized for commercialization in the U.S. The Company filed an appeal of the decision through the formal appeal process with the FDA. In July, the Company participated in an appeal hearing with the FDA for supervisory review (administrative appeal) under 21 CFR 10.75. The appeal hearing included FDA senior leadership, Company management and our external surgical experts.
On August 14, 2025, the Company received an FDA appeal decision following its July 2025 in-person supervisory administrative review (appeal) meeting with the FDA under 21 CFR 10.75. In the appeal decision, the FDA found no issues with device safety but upheld its prior De Novo denial decision citing the need for additional information to support the Company’s desired label indication. Additionally, the FDA proactively proposed a potential expedited path forward for market authorization but noted the Company could also appeal to a final higher level within the FDA with the Director of the FDA’s Center for Devices and Radiologic Health (CDRH). On September 16, 2025, the Company announced that it decided to not file a final appeal with the CDRH because of positive FDA upper management feedback for a reasonable path forward that would allow for a suitable and potentially expedited De Novo grant for the Company’s original desired label indication. The Company expects to file a new De Novo application with additional information that includes analyses of new real-world data to support its desired label indication in early 2026. As part of the resubmission process, the Company filed a pre-submission meeting request with supporting documentation to the FDA on November 7, 2025. A formal meeting with the FDA is anticipated in either late fourth quarter of 2025, or early 2026 to confirm the requirements for the new De Novo submission. A regulatory decision is expected in mid-2026 following a typical 150-day review process.
On June 26, 2025, Health Canada issued a Notice of Refusal of the Company’s Medical Device License application, identifying remaining deficiencies that must be addressed before the application may be granted and the device authorized for commercialization. On September 16, 2025 the Company announced that it had timely filed a Level 1 “Request For Reconsideration” with Health Canada. However, following interactive discussions with the Medical Devices Directorate Bureau Director and the Company’s Canadian regulatory counsel, it was recommended that any subsequent review of DrugSorb-ATR in Canada be delayed until better clarity was received from the FDA. As such, the Company withdrew the Request for Reconsideration and will provide a new Medical Device License application to Health Canada with improved visibility from the FDA.
We may be unsuccessful in our appeal which may significantly impact our ability to generate any significant revenues or ever achieve and maintain a substantial level of sales of our product candidates in the U.S. and Canada.
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Acceptance of our medical devices in the marketplace is uncertain, and failure to achieve market acceptance will prevent or delay our ability to generate revenues.
Our future financial performance will depend, at least in part, upon the introduction, and customer and healthcare community acceptance of our products. Even with current or future regulatory or marketing approvals for our CytoSorb, ECOS-300CY, and PuriFi pump devices, other products like VetResQ, and product candidates such as DrugSorb-ATR, these products may not achieve market acceptance in the countries where they are sold. There is no guarantee that we will be able to achieve additional regulatory approvals, and even if we do, our products may not achieve market acceptance in the countries covered by such approvals. The degree of market acceptance will depend upon a number of factors, including:
● the receipt of regulatory clearance of marketing claims for the uses that we are developing
● the establishment, demonstration, and acceptance of the advantages, safety and efficacy of our polymer technology and products as evidenced by product adoption, sales, reimbursement, inclusion in treatment guidelines, etc.;
● pricing and reimbursement policies of government and third-party payers such as insurance companies, health maintenance organizations and other health plan administrators;
● the development by our competitors of products or product candidates that are similar or identical to ours;
● our ability to attract corporate partners, including medical device companies, to assist in commercializing our products; and
● our ability to effectively market our products
Physicians, patients, payers or the medical community in general may be unwilling to accept, utilize or recommend any of our products. For example, the approval of our CytoSorb device as a cytokine adsorber as well as the data we have gathered in our clinical studies to support device usage in this indication may not be sufficient for market acceptance in the medical community. We may also need to conduct additional clinical studies to gather additional data for marketing purposes. If we are unable to obtain regulatory approval or commercialize and market our products when planned, we may not achieve any market acceptance or generate revenue.
If we are not in compliance with the continued listing standards of the Nasdaq Stock Market LLC (“Nasdaq”), our common stock may be delisted, which could have a material adverse effect on the liquidity of our common stock.
Our common stock is listed on the Nasdaq Stock Market LLC (“Nasdaq”). On October 2, 2025, we were notified that we were not in compliance with the Nasdaq’s continued listing requirements relating to the minimum average closing price per share of our common stock, because the average closing price of our common stock over a consecutive 30 trading-day period was below $1.00 per share (the “Minimum Bid Price Requirement”).
We have timely notified the Nasdaq of our intent to regain compliance with the minimum price condition within a 180-day cure period provided by Nasdaq rules, or until March 31, 2026 (the “Compliance Date”). We can regain compliance at any time within the cure period if, the closing bid price of the Company’s common stock meets or exceeds $1.00 per common share for a minimum of 10 consecutive business days prior to the Compliance Date, unless the Nasdaq staff exercises its discretion to require the Company to meet the Minimum Bid Price Requirement for a longer period pursuant to applicable Nasdaq rules. If we fail to regain compliance with the Nasdaq’s minimum price condition by the end of the cure period, the Company would be eligible for an additional compliance period of 180 days provided it presents an acceptable plan to Nasdaq to regain compliance.
The Company intends to actively monitor the closing bid price of its common stock and will consider its options to regain compliance with the Minimum Bid Price Requirement. There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq listing standards. If the Company is unable to regain compliance with the Minimum Bid Price Requirement, our common stock will be subject to the Nasdaq’s suspension and delisting procedures.
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During this time, our common stock will continue to be listed on the Nasdaq, subject to our compliance with other Nasdaq continued listing requirements. However, there can be no assurance about our ability to regain compliance with the Nasdaq’s minimum price condition within the applicable cure periods.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.