Item 1. Business
Item
1. Business
Overview
Citius
Pharmaceuticals, Inc. (the “Company,” “Citius” or “we”), headquartered in Cranford, New Jersey, is
a specialty pharmaceutical company dedicated to the development and commercialization of first in class critical care products with a
focus on anti-infective products in adjunct cancer care, unique prescription products and mesenchymal stem cell therapy. Our goal generally
is to achieve leading market positions by providing therapeutic products that address unmet medical needs yet have a lower development
risk than usually is associated with new chemical entities. New formulations of previously approved drugs with substantial existing safety
and efficacy data are a core focus. We seek to reduce development and clinical risks associated with drug development, yet still focus
on innovative applications. Our strategy centers on products that have intellectual property and regulatory exclusivity protection, while
providing competitive advantages over other existing therapeutic approaches.
The
Company was founded as Citius Pharmaceuticals, LLC, a Massachusetts limited liability company, on January 23, 2007. On September 12,
2014, Citius Pharmaceuticals, LLC entered into a Share Exchange and Reorganization Agreement, with Citius (formerly Trail One, Inc.),
a publicly traded company incorporated under the laws of the State of Nevada. Citius Pharmaceuticals, LLC became a wholly-owned subsidiary
of Citius. On March 30, 2016, Citius acquired Leonard-Meron Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary. LMB was
a pharmaceutical company focused on the development and commercialization of critical care products with a concentration on anti-infectives.
On September 11, 2020, we formed NoveCite, Inc. (“NoveCite”), a Delaware corporation, of which we own 75% of the issued and
outstanding capital stock. NoveCite is focused on the development and commercialization of its proprietary mesenchymal stem cells for
the treatment of acute respiratory disease syndrome (“ARDS”). On August 23, 2021, we formed Citius Acquisition Corp. as a
wholly-owned subsidiary in conjunction with the acquisition of I/ONTAK, but no activity has occurred to date.
Since
its inception, the Company has devoted substantially all of its efforts to business planning, acquiring our proprietary technology, research
and development, recruiting management and technical staff, and raising capital. We are developing five proprietary products: Mino-Lok,
an antibiotic lock solution used to treat patients with catheter-related bloodstream infections by salvaging the infected catheter; Mino-Wrap,
a liquifying gel-based wrap for reduction of tissue expander infections following breast reconstructive surgeries; Halo-Lido, a corticosteroid-lidocaine
topical formulation that is intended to provide anti-inflammatory and anesthetic relief to persons suffering from hemorrhoids; NoveCite,
a mesenchymal stem cell therapy for the treatment of ARDS; and I/ONTAK, in-licensed in September 2021, a engineered IL-2 diphtheria toxin
fusion protein, for the treatment of patients with persistent or recurrent cutaneous T-cell lymphoma (“CTCL”). We believe
these unique markets for our products are large, growing, and underserved by the current prescription products or procedures.
Citius
is subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risks related to the
development by Citius or its competitors of research and development stage products, market acceptance of its products that receive regulatory
approval, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company’s
ability to obtain additional financing and the Company’s compliance with governmental and other regulations.
I/ONTAK
Overview
In
September 2021, the Company announced that it had entered into a definitive agreement with Dr. Reddy's Laboratories SA, a subsidiary
of Dr. Reddy's Laboratories, Ltd. (collectively, "Dr. Reddy's"), to acquire its exclusive license of E7777 (denileukin diftitox),
a late-stage oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. E7777, an engineered IL-2-diphtheria
toxin fusion protein, is an improved formulation of oncology agent, ONTAK®, which was previously approved by the U.S. Food and Drug
Administration (“FDA”) for the treatment of patients with persistent or recurrent CTCL. We have renamed E7777 as I/ONTAK
although we refer to it as E7777 at times in this report.
1
Phase
3 Trial
A
global, multicenter, open label single arm pivotal clinical trial for the treatment of patients with persistent or recurrent CTCL was
initiated in 2013. Inclusion criteria for the study were to evaluate patients in advanced stage CTCL (Mycosis Fungoides or Sézary
Syndrome), who received at least one prior CTCL therapy.
The
pivotal trial was divided into two phases, a lead-in phase with 21 subjects that evaluated dose finding, pharmacokinetics and immunogenicity,
as well as assessing the Objective Response Rate (the “ORR”). An ORR is defined as a greater than 50% reduction in tumor
burden.
The
results of the lead-in study were:
· 9
mcg/kg/dose for 5 consecutive days in 21-day cycles which was selected for the main phase
of the study based on safety, tolerability, and efficacy data.
· No
new safety signals were identified compared to Ontak.
· An
ORR of 38.1% in the intent to treat population and 44.4% in the efficacy evaluable populations.
The
second phase to the pivotal trial was a 70-patient study administered at the 9 mcg/kg/dose rate for 5 consecutive days in 21-day cycles,
The inclusion criteria was identical to the lead-in study and the primary objective was to evaluate the ORR.
Investigator
Initiated Trials
A
Phase 1 trial has been initiated at the University of Minnesota, Masonic Cancer Center. This study is a single-arm non-randomized trial
which has an estimated enrollment of 30 participants who will be administered E7777 prior to tisagenlecleucel Chimeric Antigen Receptor,
(“CAR-T”) therapy. The Phase 1 study consists of two components: dose finding to establish a maximum tolerated dose (“MTD”)
of E7777 in combination with CART-T Therapy, and a small extension component to provide an estimate of efficacy at that MTD.
A
second Phase 1 Study is planned to be initiated by March 2022 at the University of Pittsburg Medical Center, Hillman Cancer Center. This
study will be investigating the safety and efficacy of a combined regimen of pembrolizumab with T-regulatory cell depletion and E7777
in patients diagnosed with recurrent or metastatic solid tumors in the second line setting.
Regulatory
Development
In
the 1990’s, denileukin diftitox was developed at Boston University and the National Cancer Institute (“NCI”) in collaboration
with Seragen, Inc. In 1999, Ontak® (denileukin diftitox) was granted accelerated approval by the FDA for the treatment of persistent
or recurrent CTCL with Ligand Pharmaceuticals, Inc. (“Ligand”) acquiring the marketing rights in that same year. In 2006,
Eisai Co., Ltd. (“Eisai”) acquired the commercial rights to Ontak from Ligand.
In
2008, the FDA granted full approval to Ontak for CTCL.
In
2011, there was a commercial supply disruption due to manufacturing issues and a new formulation of denileukin diftitox was developed
under the code name E7777. The FDA considered this a new product with a new IND being filed. In ensuing discussions, the FDA agreed to
a development plan that included a single arm, open label study to conclude safety and efficacy of E7777 and a CMC development plan that
demonstrates the new process results in a comparable drug product.
In
2011, the FDA Office of Orphan Products Development granted E7777 orphan drug designation status for the treatment of Peripheral T-Cell
Lymphoma (“PTCL”). In 2013, the FDA Office of Orphan Products Development granted E7777 orphan drug designation status for
the treatment of CTCL.
2
In
2013, the first patient was enrolled into the lead-in phase of the pivotal study for the E7777 U.S. CTCL clinical trial.
In
2014, commercial sales of Ontak were discontinued when the product was voluntarily withdrawn from the market due to manufacturing issues
at the contract manufacturer.
In
2015, the last patient enrolled exited the lead-in phase of the E7777 U.S. CTCL clinical trial.
In
March 2016, Dr. Reddy’s Laboratories (“DRL”) acquired the global rights to E7777 from Eisai, other than far east countries,
with Eisai retaining the rights in those countries.
In
June 2016, the first patient was enrolled in the Phase 3 pivotal study for E7777 CTCL in the U.S.
In
March 2020, Eisai filed an NDA for E7777 in Japan for both CTCL and PTCL and in March 2021 received approvals in both CTCL and PTCL.
The
last patient in the Phase 3 Pivotal study of E7777 has been enrolled and a biologics license application (“BLA”) for E7777's
first indication in CTCL is expected to be filed with the FDA by the end of 2022.
Market
Opportunity
CTCL’s
are a heterogeneous subset of extranodal non-Hodgkin lymphomas (“NHL”) of mature, skin-homing T-cells that are mainly localized
to the skin. The most common types of CTCL are mycosis fungoides (“MF”) and primary cutaneous CD30+ anaplastic large cell
lymphoma (pcALCL), jointly representing an estimated 80–85% of all CTCL. Sézary Syndrome (“SS”), a very rare
subtype (~2–5% of CTCL) characterized by diffuse inflammatory, often exfoliative, erythroderma and by leukemic and nodal involvement,
displays a significant degree of clinical and biological overlap with MF and has long been considered a clinical variant of MF, although
recent evidence suggests that it may be a separate entity. The rest is represented by extremely rare, generally more aggressive subtypes.
In light of the overlap between MF and SS, and considering that many of the systemic therapy options for the two neoplasms are the same,
some consider the treatment approach to MF and SS as if they were a single disease entity (MF/SS). However, some of the drugs currently
in use, or in development, for MF/SS appear to be more effective in clearing different anatomical compartments (skin versus blood, for
example) and therefore have differential efficacy in MF and SS.
Based
on Surveillance Epidemiology and End Results (SEER) data from 2001–2007, the estimated incidence rate of MF/SS in the U.S. is 0.5/100,000
or about 2,500–3,000 new cases per year representing about 25% of all T-cell lymphomas.
The
Company estimates that there are 30,000 – 40,000 patients living with CTCL in the U.S. with approximately 16,000 – 20,000
having mycosis fungoides. Of those, the Company further estimates that there are 10,000 patients with relapsed or refractory CTCL that
require systemic therapy.
The
Company also estimates that the addressable U.S. market is approximately $300,000,000 for patients with advanced stage relapsed or refractory
CTCL.
Mino-Lok ®
Overview
Mino-Lok
is a patented solution containing minocycline, disodium ethylenediaminetetraacetic acid (edetate), and ethyl alcohol, all of which act
synergistically to treat and salvage infected central venous catheters (“CVCs”) in patients with catheter related bloodstream
infections (“CRBSIs”). Mino-Lok breaks down biofilm barriers formed by bacterial colonies, eradicates the bacteria, and provides
anti-clotting properties to maintain patency in CVCs.
3
The
administration of Mino-Lok consists of filling the lumen of the catheter with 0.8 ml to 2.0 ml of Mino-Lok solution. The catheter is
then “locked”, meaning that the solution remains in the catheter without flowing into the vein. The lock is maintained for
a dwell-time of two hours while the catheter is not in use. If the catheter has multiple lumens, all lumens may be locked with the Mino-Lok
solution either simultaneously or sequentially. If patients are receiving continuous infusion therapy, the catheters alternate between
being locked with the Mino-Lok solution and delivering therapy. The Mino-Lok therapy is two hours per day for at least five days, usually
with two additional locks in the subsequent two weeks. After locking the catheter for two hours, the Mino-Lok solution is aspirated,
and the catheter is flushed with normal saline. At that time, either the infusion will be continued, or will be locked with the standard-of-care
lock solution until further use of the catheter is required. In a clinical study conducted by MD Anderson Cancer Center (“MDACC”),
there were no serum levels of either minocycline or edetate detected in the sera of several patients who underwent daily catheter lock
solution with minocycline and edetate (“M-EDTA”) at the concentration level proposed in Mino-Lok treatment. Thus, it has
been demonstrated that the amount of either minocycline or edetate that leaks into the serum is very low or none at all.
Phase
2b Results
From
April 2013 to July 2014, 30 patients with CVC-related bloodstream infection were enrolled at MDACC in a prospective Phase 2b study. Patients
received Mino-Lok therapy for two hours once daily for a minimum of five days within the first week, followed by two additional locks
within the next two weeks. Patients were followed for one month post-lock therapy. Demographic information, clinical characteristics,
laboratory data, therapy, as well as adverse events and outcome were collected for each patient. Median age at diagnosis was 56 years
(range: 21-73 years). In all patients, prior to the use of lock therapy, systemic treatment with a culture-directed, first-line intravenous
antibiotic was started. Microbiological eradication was achieved at the end of therapy in all cases. None of the patients experienced
any serious adverse event related to the lock therapy.
The
active arm, which is the Mino-Lok treated group of patients, was then compared to 60 patients in a matched cohort that experienced removal
and replacement of their CVCs within the same contemporaneous timeframe. The patients were matched for cancer type, infecting organism,
and level of neutropenia. All patients were cancer patients and treated at MDACC. The efficacy of Mino-Lok therapy was 100% in salvaging
CVCs, demonstrating equal effectiveness to removing the infected CVC and replacing it with a new catheter.
The
main purpose of the study was to show that Mino-Lok therapy was at least as effective as the removal and replacement of CVCs when CRBSIs
are present, and that the safety was better, that is, the complications of removing an infected catheter and replacing with a new one
could be avoided. In addition to having a 100% efficacy rate with all CVCs being salvaged, Mino-Lok therapy had no significant adverse
events (“SAEs”), compared to an 18% SAE rate in the matched cohort where patients had the infected CVCs removed and replaced
with a fresh catheter. There were no overall complication rates in the Mino-Lok arm group compared to 11 patients with events (18%) in
the control group. These events included bacterial relapse (5%) at four weeks post-intervention, and a number of complications associated
with mechanical manipulation in the removal or replacement procedure for the catheter (10%) or development of deep-seated infections
such as septic thrombophlebitis and osteomyelitis (8%). As footnoted, six patients had more than one complication in the control arm
group.
Mino-Lok® Arm
Control Arm
Parameter
N
(%)
N
(%)%
Patients
30
(100 )%
60
(100 )%
Cancer type
- Hematologic
20
(67 )
48
(80 )
- Solid tumor
10
(33 )
12
(20 )
ICU Admission
4
(13 )
4
(7 )
Mech.Ventilator
3
(10 )
0
(0 )
Bacteremia
- Gram+
17
(57 )*
32
(53 )
- Gram-
14
(47 )*
28
(47 )
Neutropenia (<500)
19
(63 )
36
(60 )
Microbiologic Eradication
30
(100 )
60
(100 )
- Relapse
0
(0 )
3
(5 )
Complications
0
(0 )
8
(13 )
SAEs related R&R
0
(0 )
6
(10 )
Overall Complication Rate
0
(0 )%
11 **
(18 )%
*
1 Polymicrobial patient
had a Gram+ and a Gram- organism cultured
**
6 Patients had > 1 complication
Source:
Dr. Issam Raad, Antimicrobial Agents and Chemotherapy, June 2016, Vol. 60 No. 6, Page 3429
4
Phase
3 Trial
In
November 2016, the Company initiated site recruitment for Phase 3 clinical trials. From initiation through the first quarter of 2017,
the Company received input from several sites related to the control arm as being less than standard-of-care for some of the respective
institutions. The Company worked closely with the FDA with respect to the design of the Phase 3 trial and received feedback on August
17, 2017. The FDA stated that they recognized that there is an unmet medical need in salvaging infected catheters and agreed that an
open label, superiority design would address the Company’s concerns and would be acceptable to meet the requirements of a new drug
application. The Company amended the Phase 3 study design to remove the saline and heparin placebo control arm and to use an active control
arm that conforms with today’s current standard-of-care. Patient enrollment commenced in February 2018.
The
Mino-Lok Phase 3 Trial was originally planned to enroll 700 patients in 50 participating institutions, all located in the U.S. There
were interim analyses at both the 50% and 75% points of the trial as measured by the number of patients treated. As of November 30, 2021,
there are 21 active sites currently enrolling patients including such academic centers as MDACC, Henry Ford Health Center, Georgetown
University Medical Center, and others. There are two additional medical centers in startup mode. There are no other remaining sites in
feasibility.
In
September 2019, the Company announced that the FDA agreed to a new primary efficacy endpoint of “time to catheter failure”
in comparing Mino-Lok to the antibiotic lock control arm. This change in the trial design reduced the required patient sample size of
the trial from 700 subjects to approximately 144 available subjects to achieve the pre-specified 92 catheter failure events needed to
conclude the trial. Additionally, the Company submitted a response to the FDA that it would implement this change in the primary endpoint
and expected it to result in less than 150 subjects needed in its Phase 3 trial. The new primary endpoints require that the time to catheter
failure be at least 38 days for Mino-Lok versus 21 days for the standard of care antibiotic locks.
In
October 2019, the FDA agreed that the patient sample size of approximately 144 patients was acceptable.
In
October 2019, the Company announced that the Phase 3 trial had reached the 40% completion triggering an interim futility analysis by
the data monitoring committee (the “DMC”). The DMC is an independent panel of experts that review progress regarding the
safety and efficacy of drugs in clinical trials, and to determine if the trial may be futile in achieving its endpoints or if the trial
should be modified in any way.
In
December 2019, the DMC convened and recommended that the trial continue with no changes because the analysis showed a positive outcome,
as it met the prespecified interim futility analysis criteria.
In
May 2020, we announced that we are providing free access to Mino-Lok for healthcare providers under an Expanded Access protocol to ease
the burden associated with the COVID-19 pandemic. Through the Expanded Access protocol, an infected central venous catheter can now be
treated with Mino-Lok, potentially avoiding the need for the removal and replacement procedure.
In
June 2020, we announced that we had received positive feedback from the FDA on our proposed catheter compatibility studies for Mino-Lok.
The studies, if and when successfully completed, should allow Mino-Lok to be labeled for use with all commercially available CVCs and
peripherally inserted central catheters (PICCs) on the U.S. market. We further assume that these studies will meet European and world
standards. The ability to be labeled without restrictions with respect to catheter type would allow Mino-Lok unrestricted access to the
full U.S. and world markets for an effective antibiotic lock therapy for central line associated blood stream infections (“CLABSIs”).
5
In
September 2020, we announced that another DMC meeting was held to review the data being generated and analyzed in the Mino-Lok Phase
3 trial based on progress to date, and to make recommendations to us as to any action that may be necessary regarding the study. After
reviewing these data, the DMC members stated that they did not find any safety signals; and they also recommended continuing the trial
without any modifications. The DMC further conducted an ad hoc meeting and agreed with the Company that a 75% interim analysis
be conducted as planned in which superior efficacy is evaluated.
In
September 2020, the Company announced that the three registration batches for all components of Mino Lok were manufactured and that clinical
sites were resupplied with registration product.
In
November 2020, the Company announced that the three components of Mino-Lok, minocycline, disodium edetate (“EDTA”), and ethanol,
were superior to EDTA and ethanol in their ability to eradicate resistant staphylococcal biofilms.
The
75% interim analysis was completed in June 2021. In July 2021, the Company announced that following an unblinded data review of safety
and efficacy, the independent DMC for the trial recommended proceeding with the trial as planned. The DMC did not identify any safety
concerns and no modifications were recommended to the protocol-defined sample size or power to achieve the primary endpoint.
Fast
Track Designation
In
October 2017, the Company received official notice from FDA that the investigational program for Mino-Lok was granted “Fast Track”
status. Fast Track is a designation that expedites FDA review to facilitate development of drugs which treat a serious or life-threatening
condition and fill an unmet medical need. A drug that receives Fast Track designation is eligible for the following:
●
More frequent meetings
with FDA to discuss the drug’s development plan and ensure collection of appropriate data needed to support drug approval;
●
More frequent written correspondence
from FDA about the design of the clinical trials;
●
Priority review to shorten
the FDA review process for a new drug from ten months to six months; and
●
Rolling review, which means
Citius can submit completed sections of its New Drug Application (“NDA”) for review by FDA, rather than waiting until
every section of the application is completed before the entire application can be submitted for review.
Mino-Lok
International Study
In
October 2017, data from an international study on Mino-Lok was presented at the Infectious Disease Conference, (“ID Week”),
in San Diego, California. The 44-patient study was conducted in Brazil, Lebanon, and Japan and showed Mino-Lok therapy was an effective
intervention to salvage long-term, infected CVCs in CRBSIs in patients who had cancer with limited vascular access. This study showed
95% effectiveness for Mino-Lok therapy in achieving microbiological eradication of the CVCs as compared to 83% for the control. The single
failure in the Mino-Lok arm was due to a patient with Burkholderia cepacia that was resistant to all antibiotics tested.
Stability
Patent Application for Mino-Lok
In
October 2018, the U.S. Patent and Trademark Office (“USPTO”) issued U.S. Patent No. 10,086,114, entitled “Antimicrobial
Solutions with Enhanced Stability.” On October 9, 2019, the European Patent Office (“EPO”) granted European Patent
No. 3370794, entitled “Antimicrobial Solutions with Enhanced Stability.” The grant of this European patent strengthens the
intellectual property protection for Mino-Lok through November of 2036. This invention overcomes limitations in mixing antimicrobial
solutions in which components have precipitated because of physical and/or chemical factors, thus limiting the stability of the post-mix
solutions. The scientists and technologists at MDACC have been able to improve the stability of the post-mixed solutions through adjustments
of the post-mixed pH of the solution. This may allow for longer storage time of the ready-to-use solution. Citius holds the exclusive
worldwide license which provides access to this patented technology for development and commercialization of Mino-Lok.
6
Market
Opportunity
In
spite of best clinical practice, catheters contribute to approximately 70% of blood stream infections that occur in the intensive care
unit or are associated with hemodialysis or cancer patients (approximately 470,000 per year). Bacteria enter the catheter either from
the skin or intraluminally through the catheter hub. Once in the catheter, bacteria tend to form a protective biofilm on the interior
surface of the catheter that is resistant to most antimicrobial solutions. The most frequently used maintenance flush, heparin, actually
stimulates biofilm formation. Heparin is widely used as a prophylactic lock solution, in spite of the evidence that it contributes to
the promotion of biofilm formation. The formation of bacterial biofilm usually precedes CRBSIs.
The
standard of care in the management of CRBSI patients consists of removing the infected CVC and replacing it with a new catheter at a
different vascular access site. However, in cancer and hemodialysis patients with long-term surgically implantable silicone catheters,
removal of the CVC and reinsertion of a new one at a different site might be difficult, or even impossible, because of the unavailability
of other accessible vascular sites and the need to maintain infusion therapy. Furthermore, critically ill patients with short-term catheters
often have underlying coagulopathy, which makes reinsertion of a new CVC at a different site, in the setting of CRBSIs, risky in terms
of mechanical complications, such as pneumothorax, misplacement, or arterial puncture. Studies have also revealed that CRBSI patients
may be associated with serious complications, including septic thrombosis, endocarditis and disseminated infection, particularly if caused
by Staphylococcus aureus or Candida species. Furthermore, catheter retention in patients with CRBSIs is associated with
a higher risk of relapse and poor response to antimicrobial therapy.
According
to Maki et al., published in the Mayo Clinic Proceedings in 2006, there are approximately 250,000 CRBSIs annually in the U.S.
Subsequent to this study, our estimates have ranged upwards to over 450,000 CLABSIs annually (see analysis in the table below). CRBSIs
are associated with a 12% to 35% mortality rate and an attributable cost of $35,000 to $56,000 per episode.
We
estimate that the potential market for Mino-Lok in the U.S. to be approximately $500 million to $1 billion as shown in the table below
based on a target price of up to $300 per dose of each salvage flush treatment.
Short-Term
CVC
Long-Term
CVC
Total
No. of Catheters
3 million
4 million
7 million
Avg. Duration (Days)
12
100
N/A
Catheter Days
36 million
400 million
436 million
Infection Rate
2/1,000 days
1/1,000 days
N/A
Catheters Infected
72,000
400,000
472,000
Flushes/Catheter
5
7
6.7
Total Salvage Flushes
360,000
2,800,000
3,160,000
Sources:
Ann Intern Med 2000; 132:391-402, Clev Clin J Med 2011; 78(1):10-17, JAVA 2007; 12(1):17-27, J Inf Nurs 2004;27(4):245-250, Joint Commission
website Monograph, CLABSI and Internal Estimates.
Under
various plausible pricing scenarios, we believe that Mino-Lok would be cost-saving to the healthcare system given that the removal of
an infected CVC and replacement of a new catheter in a different venous access site is estimated by us to cost between $8,000 and $10,000.
Furthermore, there are potential additional medical benefits, a reduction in patient discomfort and avoidance of serious adverse events
with the Mino-Lok approach since the catheter remains in place and is not subject to manipulation. We believe there will be an economic
argument to enhance the adoption of Mino-Lok by infection control committees at acute care institutions.
In
January of 2017, we commissioned a primary market research study with MEDACore, a subsidiary of Leerink, a healthcare focused network
with more than 35,000 healthcare professionals, including key opinion leaders, experienced practitioners and other healthcare professionals
throughout North America, Europe, Asia and other locations around the world. This network includes approximately 55 clinical specialties,
21 basic sciences and 20 business specialties. As part of this market research project, we commissioned a third-party survey of 31 physicians
to qualify the need for catheter salvage in patients with infected, indwelling central venous lines, especially when the catheter is
a tunneled or an implanted port. There were 19 infectious disease experts and 12 intensivists surveyed who all agreed that salvage would
be preferable to catheter exchange to avoid catheter misplacements, blood clots, or vessel punctures that can potentially occur during
reinsertion. Most were also concerned that viable venous access may not be available in patients who were vitally dependent on a central
line.
7
Mino-Wrap
Overview
On
January 2, 2019, we entered into a patent and technology license agreement with the Board of Regents of the University of Texas System
on behalf of MDACC, whereby we in-licensed exclusive worldwide rights to the patented technology for any and all uses relating to breast
implants, specifically the Mino-Wrap technology. This includes rights to U.S. Patent No. 9,849,217, which was issued on December 16,
2017. We intend to develop Mino-Wrap as a liquefying, gel-based wrap containing minocycline and rifampin for the reduction of infections
associated with breast implants following breast reconstructive surgeries. We are required to use commercially reasonable efforts to
commercialize Mino-Wrap under several regulatory scenarios and achieve milestones associated with these regulatory options leading to
an approval from the FDA. Mino-Wrap will require pre-clinical development prior to any regulatory pathway. In July 2019, we announced
that we intend to pursue the FDA’s Investigational New Drug (“IND”) regulatory pathway for the development of Mino-Wrap.
On August 4, 2020, we announced that we had submitted a briefing package to the FDA for a pre-IND consultation on Mino-Wrap.
In
December 2020, the Company announced the receipt of a written response and guidance from the FDA Division of Anti-Infective Products
to the Company's Pre-IND consultation request for its Mino-Wrap briefing package. The briefing package contained information regarding
pre-clinical data and a clinical development plan, along with questions for the FDA regarding safety and efficacy data that would be
required to advance Mino-Wrap into clinical trials. The FDA granted a Written Response Only meeting regarding guidance and direction
on our Mino-Wrap development plan. The FDA indicated that bio absorption simulation studies may provide information to support the development
of Mino-Wrap and made suggestions on what should be provided relative to non-clinical support. The FDA provided guidance on the
design of the drug elution studies and agreed that a large animal pharmacology study would be appropriate. They also agreed that
a 28-day toxicology study appears appropriate and that microbiology support through existing data is acceptable. We are pursuing these
studies and anticipate filing an IND for Mino-Wrap in 2022.
Market
Opportunity
Breast
cancer is the most frequent cancer in women worldwide representing 25% of all cancer diagnoses with the exception of non-melanoma skin
cancer. In the United States, the overall rate of mastectomies, combining single and double mastectomies, has increased 36% from 2005
to 2013. Additionally, the incidence of post-mastectomy breast reconstruction, following breast cancer treatment, has been increasing
on an annual basis.
In
2017, the American Society of Plastic Surgeons reported that over 105,000 women in the United States underwent a post-mastectomy breast
reconstructive procedure. Approximately 30% of these breast reconstructions occur simultaneously with mastectomy, with most reconstructions
occurring weeks later.
The
current standard of care in post-mastectomy breast reconstruction is the use of a Tissue Expander (“TE”), which is a temporary
implant that is placed below the pectoralis muscle within the mastectomy space. Once a sufficiently large soft tissue envelope has been
created, the TE is then replaced by a permanent breast implant. Approximately 80% of the time, a TE is used in breast reconstructions.
The
rate of infection following a mastectomy with a TE is 2.4 to 24% with an estimated mean of 12-14%. Once the implant becomes infected,
the patient is usually hospitalized requiring approximate two weeks of IV and/or oral antimicrobials. In addition, the TE is removed,
leading to a delay of lifesaving chemo-radiation therapy, and a more complex reconstruction in the future.
8
Currently,
preventive measures are used to decrease the rate of TE infections with include a systemic perioperative antimicrobial agent with the
perioperative immersion of the implant or irrigation of the surgical pocket with an antimicrobial solution prior to insertion of the
device. This is also administered with immediate postoperative oral antimicrobials.
Based
on the in vitro preclinical laboratory work, Mino-Wrap appears to have the characteristics necessary for advancement in the protection
of human implants from subsequent infection.
Halo-Lido
Overview
Halo-Lido
is a topical formulation of halobetasol propionate, a corticosteroid, and lidocaine that is intended for the treatment of hemorrhoids.
To our knowledge, there are currently no FDA-approved prescription drug products for the treatment of hemorrhoids. Some physicians are
known to prescribe topical steroids for the treatment of hemorrhoids. In addition, there are various topical combination prescription
products containing halobetasol propionate along with lidocaine or pramoxine, each a topical anesthetic, that are prescribed by physicians
for the treatment of hemorrhoids. These products contain drugs that were in use prior to the start of the Drug Efficacy Study Implementation
(“DESI”) program and are commonly referred to as DESI drugs. However, none of these single-agent or combination prescription
products have been clinically evaluated for safety and efficacy and approved by the FDA for the treatment of hemorrhoids. Further, many
hemorrhoid patients use over the counter (“OTC”) products as their first line therapy. OTC products contain any one of several
active ingredients including glycerin, phenylephrine, pramoxine, white petrolatum, shark liver oil and/or witch hazel, for symptomatic
relief.
Development
of Hemorrhoids Drugs
Hemorrhoids
are a common gastrointestinal disorder, characterized by anal itching, pain, swelling, tenderness, bleeding and difficulty defecating.
In the U.S., hemorrhoids affect nearly 5% of the population, with approximately 10 million persons annually admitting to having symptoms
of hemorrhoidal disease. Of these persons, approximately one third visit a physician for evaluation and treatment of their hemorrhoids.
The data also indicate that for both sexes a peak of prevalence occurs from age 45 to 65 years with a subsequent decrease after age 65
years. Caucasian populations are affected significantly more frequently than African Americans, and increased prevalence rates are associated
with higher socioeconomic status in men but not women. Development of hemorrhoids before age 20 is unusual. In addition, between 50%
and 90% of the general U.S., Canadian and European population will experience hemorrhoidal disease at least once in life. Although hemorrhoids
and other anorectal diseases are not life-threatening, individual patients can suffer from agonizing symptoms which can limit social
activities and have a negative impact on the quality of life.
Hemorrhoids
are defined as internal or external according to their position relative to the dentate line. Classification is important for selecting
the optimal treatment for an individual patient. Accordingly, physicians use the following grading system referred to as the Goligher’s
classification of internal hemorrhoids:
Grade I
Hemorrhoids not prolapsed
but bleeding.
Grade II
Hemorrhoids prolapse and
reduce spontaneously with or without bleeding.
Grade III
Prolapsed hemorrhoids that
require reduction manually.
Grade IV
Prolapsed and cannot be
reduced including both internal and external hemorrhoids that are confluent from skin tag to inner anal canal.
Development
Activities to Date
In
the fall of 2015, we completed dosing patients in a double-blind dose ranging placebo-controlled Phase 2a study where six different formulations
containing hydrocortisone and lidocaine in various strengths were tested against the vehicle control. The objectives of this study were
to: (1) demonstrate the safety and efficacy of the formulations when applied twice daily for two weeks in subjects with Grade I or II
hemorrhoids, and (2) assess the potential contribution of lidocaine hydrochloride and hydrocortisone acetate, alone or in combination
for the treatment of symptoms of Goligher’s Classification Grade I or II hemorrhoids.
9
Symptom
improvement was observed based on a global score of disease severity (“GSDS”) and based on some of the individual signs and
symptoms of hemorrhoids, specifically itching and overall pain and discomfort. Within the first few days of treatment, the combination
products (containing both hydrocortisone and lidocaine) were directionally favorable versus the placebo and their respective individual
active treatment groups (e.g., hydrocortisone or lidocaine alone) in achieving ‘almost symptom free’ or ‘symptom free’
status according to the GSDS scale. These differences suggest the possibility of a benefit for the combination product formulation.
Overall,
results from adverse event reporting support the safety profile of all test articles evaluated in this study and demonstrate similar
safety profiles as compared to the vehicle. The safety findings were unremarkable. There was a low occurrence of adverse events and a
similar rate of treatment related adverse events across all treatment groups. The majority of adverse events were mild and only one was
severe. None of the adverse events were an SAE and the majority of adverse events were recovered/resolved at the end of the study. There
were only two subjects who were discontinued from the study due to adverse events.
In
addition to the safety and dose-ranging information, information was obtained relating to the use of the GSDS as an assessment tool for
measuring the effectiveness of the test articles. Individual signs and symptoms were also assessed but can vary from patient to patient.
Therefore, the goal of the GSDS was to provide an assessment tool that could be used for all patients regardless of which signs and symptoms
they are experiencing. The GSDS proved to be a more effective tool for assessing the severity of the disease and the effectiveness of
the drug when compared to the assessment of the individual signs and symptoms. Citius believes that we can continue to develop this assessment
tool as well as other patient reported outcome endpoints for use in the next trials and in the pivotal trial.
Information
was also obtained about the formulation of the drug and the vehicle. As a result of this study, we believe that the performance of the
active arms of the study relative to the vehicle could be improved by re-formulating our topical preparation. Therefore, we initiated
work on vehicle formulation and evaluation of higher potency steroids.
In
June and July 2016, we engaged the Dominion Group, a leading provider of healthcare and pharmaceutical marketing research services. The
primary market research was conducted to understand the symptoms that are most bothersome to patients better in order to develop meaningful
endpoints for the clinical trials. We also learned about the factors that drive patients to seek medical attention for hemorrhoids in
an effort to understand the disease impact on quality of life. The results of this survey are able to help us develop patient reported
outcome evaluation tools. These tools can be used in clinical trials to evaluate the patients’ conditions and to assess the performance
of the test articles.
In
March 2018, we announced that we had selected a higher potency corticosteroid in our steroid/anesthetic topical formulation program for
the treatment of hemorrhoids. The original topical preparation, which we referred to as Hydro-Lido or CITI-001, which was used in the
Phase 2a study, was a combination of hydrocortisone acetate and lidocaine hydrochloride. The new formulation, CITI-002, which we refer
to as Halo-Lido, combine lidocaine with the higher potency corticosteroid halobetasol propionate for symptomatic relief of the pain and
discomfort of hemorrhoids.
We
held a Type C meeting with the FDA in December 2017 to discuss the results of the Phase 2a study and to obtain the FDA’s view on
development plans to support the potential formulation change for the planned Phase 2b study. We also requested the FDA’s feedback
on our Phase 2b study design, including target patient population, inclusion/exclusion criteria, and efficacy endpoints. The pre-clinical
and clinical development programs for CITI-002 are planned to be similar to those conducted for the development of CITI-001 to support
the design for a planned Phase 3 clinical trial. We anticipate filing an IND in December 2021 and beginning a Phase 2b clinical study
by March 2022.
10
Market
Opportunity
The
current market for OTC and topical prescription (“Rx”) products for the symptomatic treatment of hemorrhoids is highly fragmented,
and includes approximately 20 million units of OTC and over 4 million prescriptions. None of the Rx products have received FDA approval
and are only available due to the DESI program, which started decades ago after enactment of the 1962 Kefauver-Harris Drug Amendments.
These DESI products have no FDA reviewed evidence of efficacy or safety, and may be subject to withdrawal if an approved product were
to be introduced. Several topical combination prescription products for the treatment of hemorrhoids are available containing hydrocortisone
in strengths ranging from 0.5% to 3.0%, combined with lidocaine in strengths ranging from 1.0% to 3.0%. The various topical formulations
include creams, ointments, gels, lotions, enemas, pads, and suppositories. The most commonly prescribed topical combination gel is sold
as a branded generic product and contains 2.5% hydrocortisone and 3.0% lidocaine.
We
believe there are currently no FDA-approved prescription drug products for the treatment of hemorrhoids. Although there are numerous
Rx and OTC products commonly used to treat hemorrhoids, none possess proven safety and efficacy data generated from rigorously conducted
clinical trials. We believe that a novel topical formulation of halobetasol propionate and lidocaine designed to provide anti-inflammatory
and anesthetic relief and which has an FDA-approved label specifically claiming the treatment of hemorrhoids will become an important
treatment option for physicians who want to provide their patients with a therapy that has demonstrated safety and efficacy in treating
this uncomfortable and often recurring disease. We believe that our Halo-Lido product represents an attractive, low-risk product opportunity
with meaningful upside potential.
Market
Exclusivity
We
believe that we will be the first company to conduct rigorous clinical trials and receive FDA approval of a topical corticosteroid-lidocaine
combination product for the treatment of hemorrhoids. If we receive FDA approval, we will qualify for three years of market exclusivity
for our dosage strength and formulation. In addition, we will also be the only product on the market specifically proven to be safe and
effective for the treatment of hemorrhoids. Generally, if a company conducts clinical trials and receives FDA approval of a product for
which there are similar, but non FDA-approved, prescription products on the market, the manufacturers of the unapproved but marketed
products are required to withdraw them from the market. However, the FDA has significant latitude in determining how to enforce its regulatory
powers in these circumstances. We have not had any communication with the FDA regarding this matter and cannot predict what action, if
any, the FDA will take with respect to the unapproved products.
We
believe that should Halo-Lido demonstrate, proven safety and efficacy data and receive FDA approval, and if Halo-Lido obtains three years
of market exclusivity based on our dosage strength and formulation, we are likely to have a meaningful advantage in our pursuit of achieving
a significant position in the market for topical combination prescription products for the treatment of hemorrhoids.
NoveCite
Overview
In
October 2020, we, through our subsidiary, NoveCite, signed an exclusive agreement with Novellus Therapeutics Limited (“Novellus”)
to license iPSC-derived mesenchymal stem cells (iMSCs). Under this worldwide exclusive license, we are focused on developing cellular
therapies. Specifically, we are seeking to develop and commercialize the NoveCite mesenchymal stem cells (“NC- i MSCs”)
to treat acute respiratory conditions with a near term focus on ARDS.
NC- i MSCs
are the next generation mesenchymal stem cell therapy. We believe them to be differentiated and superior to donor-derived MSCs. Human
donor-derived MSCs are sourced from human bone marrow, adipose tissue, placenta, umbilical tissue, etc. and have significant challenges
(e.g., variable donor and tissue sources, limited supply, low potency, inefficient and expensive manufacturing). NC-iMSCs overcome these
challenges because they:
●
Are more potent and secrete
exponentially higher levels of immunomodulatory proteins;
●
Have practically unlimited
supply for high doses and repeat doses;
●
Are from a single donor
and clonal so they are economically produced at scale with consistent quality and potency, as well as being footprint free (compared
to viral reprogramming methods); and
●
Have a significantly higher
expansion capability.
11
Several
cell therapy companies using donor-derived MSC therapies in treating ARDS have demonstrated that MSCs reduce inflammation, enhance clearance
of pathogens and stimulate tissue repair in the lungs. Almost all these positive results are from early clinical trials or under the
FDA’s emergency authorization program.
In
December 2020, the Company announced interim data from a proof-of-concept ("POC") large animal study of its proprietary NC-iMSC
therapy. The available results of NC-iMSC therapy in the study show improvement in critical parameters, such as improved oxygenation,
less systemic shock, and reduced lung injury, compared to the control group. The study was conducted in a widely accepted large animal
model.
In
the third quarter 2021, the Company completed the characterization and expansion of its NC-iMSC accession cell bank (ACB) at Waisman
Biomanufacturing at the University of Wisconsin-Madison to create a cGMP master cell bank (MCB).
In
July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). Pursuant to this transaction, the NoveCite
license was assumed by Brooklyn with all of the original terms and conditions in the exclusive license agreement.
Market
Opportunity
Globally,
there are 3 million cases of ARDS every year, out of which approximately 200,000 cases are in the United States. The COVID-19 pandemic
has added significantly to the number of ARDS cases. Once the COVID-19 patients advance to ARDS, they are put on mechanical ventilators.
Death rate among patients on ventilators can be as high as 50% depending on associated co-morbidities. There are no approved treatments
for ARDS, and the current standard of care only attempts to provide symptomatic relief.
Sales
and Marketing
We
are primarily focused on identifying opportunities within the critical care and cancer care market segments. In our product acquisition
criteria, we concentrate on markets that are highly influenced by key opinion leaders, commonly referred to as KOLs, and in which products
are prescribed by a relatively small number of physicians, yet provide opportunities for growth and market share. This strategy allows
for a manageable commercialization effort for our Company in terms of resources and capital. We also seek to provide cost-effective therapies
that would be endorsed by payers, patients, and providers. We believe that we will be able to commercialize products within the scope
of these criteria ourselves, and that we can create marketing synergies by having a common narrow audience for our marketing efforts
(“several products in the bag for the same customer”).
For
our product candidates that fall out of the narrow scope criteria, we have identified pharmaceutical companies with large sales forces,
experienced sales and marketing management teams, direct-to-consumer capabilities, significantly larger resources than ours, and non-competing
product portfolios that we believe would make excellent sales and marketing partners. We intend to license our mass audience, non-specialty
product candidates to such companies for sales and marketing.
Intellectual
Property
We
rely on a combination of patent, trade secret, copyright, and trademark laws, as well as confidentiality, licensing and other agreements,
to establish and protect our proprietary rights. Our policy is to actively seek to obtain, where appropriate, the broadest intellectual
property protection possible for our current product candidates and any future product candidates both in the U.S. and abroad. However,
patent protection may not provide us with complete protection against competitors who seek to circumvent our patents. To help protect
our proprietary know-how that is not patentable, and for inventions for which patents may be difficult to enforce, we currently rely
and will in the future rely on trade secret protection and confidentiality agreements to protect our interests.
12
I/ONTAK
Intellectual Property
On
September 3, 2021, we, through our subsidiary, Citius Acquisition Corp., acquired the exclusive license of E7777 (denileukin diftitox),
a late-stage oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. E7777, an engineered IL-2-diphtheria
toxin fusion protein, is an improved formulation of oncology agent, ONTAK ® ,
which was previously FDA-approved for the treatment of patients with persistent or recurrent CTCL, from Dr. Reddy’s. We refer to
the agent as I/ONTAK. The exclusive license, which was amended as part of the transaction, is with Eisai and includes rights to develop
and commercialize I/ONTAK in all markets except for Japan and certain parts of Asia. Additionally, we have an option on the right to
develop and market the product in India.
Under
the license agreement, Eisai is to receive a $6 million development milestone payment upon initial approval by the FDA of I/ONTAK for
the CTCL indication (which increases to $7 million in the event we have exercised our option to add India to the licensed territory prior
to FDA approval) and an aggregate of up to $22 million related to the achievement of net product sales thresholds. We also are required
to reimburse Eisai for up to $2.65 million of its costs to complete the ongoing Phase 3 pivotal clinical trial for I/ONTAK for the CTCL
indication and reimburse Eisai for all reasonable costs associated with the preparation of a BLA for I/ONTAK.
Pursuant
to the terms of the license agreement, Eisai is responsible for completing the current CTCL clinical trial, and chemistry, manufacturing
and controls development activities through the production of the BLA that we will file with the FDA while we are responsible for the
costs of correcting any major deficiencies in the BLA as well as the costs of any necessary companion diagnostic or pediatric study.
We are responsible for development costs associated with potential additional indications.
The
term of the license agreement will continue until (i) if there has not been a commercial sale of a licensed product in the territory,
until the 10-year anniversary of the original license effective date, March 30, 2016, or (ii) if there has been a first commercial sale
of a licensed product in the territory within the 10-year anniversary of the original license effective date, the 10-year anniversary
of the first commercial sale on a country-by-country basis. The term of the license may be extended for additional 10-year periods for
all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. Either party may terminate the license
agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods.
Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes
related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement
if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent.
We
are responsible for preparing, filing, prosecuting and maintaining all patent applications and patents included in the licensed patents
that we intend to pursue within the territory.
Under
the terms of the agreement with Dr. Reddy’s, we are obligated to pay up to an aggregate of $40 million related to CTCL approvals
in the U.S. and other markets, up to $70 million in development milestones for additional indications, and up to $300 million for commercial
sales milestones. We also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales.
The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received
regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in
the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the
biosimilar product. We will also pay to Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration
or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties
or (ii) a mid-single digit percentage of such licensee’s net sales.
Also
under the agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available
products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator
initiated immuno-oncology trials, (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) to complete
each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement.
Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for
such product in each such jurisdiction.
13
Mino-Lok
Intellectual Property
In
May 2014, our subsidiary LMB entered into a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”),
who licensed the intellectual property from MDACC, to develop and commercialize Mino-Lok on an exclusive, worldwide (except for South
America), sub-licensable basis. LMB incurred a one-time license fee in May 2014. On March 20, 2017, LMB entered into an amendment to
the license agreement that expanded the licensed territory to include South America, providing LMB with worldwide rights. We are obligated
to pay annual maintenance fees that increase annually until reaching a designated amount, which we must pay until the first sale of product.
We also must pay up to an aggregate of approximately $1.1 million in milestone payments, depending on the achievement of various regulatory
and commercial milestones. Under the terms of the license agreement, we also must pay a royalty equal to mid-single digit percentages
to low-double digit percentages of net sales, depending on the level of sales in that year, and subject to downward adjustment to lower-
to mid-single digit percentages in the event there is no valid patent for the product in the country of sale at the time of sale. After
the first sale of product, we will owe an annual minimum royalty payment that will increase annually until reaching a designated amount,
which we must pay for the duration of the term. We will be responsible for all patent expenses for the term of the agreement although
MDACC is responsible for filing, prosecution and maintenance of all patents.
Unless
earlier terminated by NAT based on the failure to achieve certain development or commercial milestones, the license agreement remains
in effect until the date that all patents licensed under the agreement have expired and all patent applications within the licensed patent
rights have been cancelled, withdrawn or expressly abandoned. The license agreement will terminate in the event we breach any of our
payment or reporting obligations or NAT breaches any of its obligations under the agreement. NAT will have the right to terminate the
agreement if we bring or participate in an action to challenge NAT’s ownership of any of the licensed patent rights. We may terminate
the license agreement upon 180 days’ notice. The license agreement may also be terminated upon our and NAT’s mutual consent.
Mino-Lok
is covered in relation to the composition by issued U.S. patent No. 7,601,731, entitled “Antimicrobial Flush Solutions,”
which was issued on October 13, 2009. Mino-Lok is further covered in relation to its method of use by issued U.S. Patent No. 9,078,441,
which was issued on July 14, 2015. The patents provide intellectual property protection until June 7, 2024. There are corresponding patents
granted in Europe and Canada (European Patent No. EP 1644024, and Canadian Patent No. 2528522).
Stability
Patent Application for Mino-Lok
In
October 2018, the U.S. Patent and Trademark Office (“USPTO”) issued U.S. Patent No. 10,086,114 (the “114 patent”),
entitled “Antimicrobial Solutions with Enhanced Stability.” On October 9, 2019, the European Patent Office (“EPO”)
granted European Patent No. 3370794, which corresponds to the ‘114 patent. The grant of these patents strengthens the intellectual
property protection for Mino-Lok through November 2036. While the original patents for Mino-Lok (discussed above) cover the basic composition,
this invention overcomes limitations in mixing antimicrobial solutions in which components have precipitated because of physical and/or
chemical factors, thus limiting the stability of the post-mix solutions. The scientists and technologists at MDACC have been able to
improve the stability of the post-mixed solutions through adjustments of the post-mixed pH of the solution. This may allow for longer
storage time of the ready-to-use solution. As such, the patents claiming the enhanced stability may effectively extend patent protection
for Mino-Lok beyond the 2024 expiration of the original patents since it is expected that the compositions providing enhanced stability
would be preferred over any non-stabilized versions that a competitor may introduce after June 7, 2024. Citius holds the exclusive worldwide
license which provides access to this patented technology for development and commercialization of Mino-Lok.
Mino-Lok
has received a Qualified Infectious Disease Product (“QIDP”) designation. The QIDP designation provides New Drug Applications
an additional five years of market exclusivity, which together with the potential three years of exclusivity for the new strength and
formulation of Mino-Lok, would result in a combined total of eight years of market exclusivity regardless of patent protection.
14
Mino-Wrap Intellectual Property
In January 2019, we entered into a patent and
technology license agreement with MDACC to develop and commercialize Mino-Wrap on an exclusive worldwide basis, with no rights to sub-license.
We paid a one-time upfront licensing fee upon execution of the agreement. Under the agreement, we are required to use commercially reasonable
efforts to commercialize Mino-Wrap under several regulatory scenarios and achieve milestones that are associated with these regulatory
options leading to an approval from the FDA. We are obligated to pay annual maintenance fees that increase annually until reaching a designated
amount, which we must pay until the first sale of product. We also must pay up to an aggregate of $2.1 million in milestone payments,
depending on the achievement of various regulatory and commercial milestones. Under the terms of the license agreement, we also must pay
a royalty equal to mid- to upper-single digit percentages of net sales, depending on the level of sales in that year, and subject to downward
adjustment to lower- to mid-single digit percentages in the event there is no valid patent for the product in the United States at the
time of sale. After the first sale of product, we will owe an annual minimum royalty payment that will increase annually for the duration
of the term. We will be responsible for all patent expenses incurred by MDACC for the term of the agreement although MDACC is responsible
for filing, prosecution and maintenance of all patents.
The term of the license agreement will end on
the later of the expiration of all licensed patents, or the fifteenth anniversary of the agreement. MDACC may terminate the license agreement
at any time after four years in any country if we have not commercialized or are not actively attempting to commercialize a product in
such country. The license agreement will terminate in the event we breach any of our payment or reporting obligations or MDACC breaches
any of its obligations under the agreement. MDACC will have the right to terminate the agreement if we bring or participate in an action
to challenge MDACC’s ownership of any of the licensed patent rights. We may terminate the license agreement upon 180 days’
notice. The license agreement may also be terminated upon our and MDACC’s mutual consent.
In December 2017, the USPTO issued U.S. Patent
No. 9,849,217, entitled “Antimicrobial Wraps for Medical Implants.” This invention overcomes limitations in breast reconstruction
utilizing tissue expanders and implants following mastectomies by providing, in certain aspects, biodegradable antimicrobial film that
may be wrapped around a medical implant such as a breast implant prior to the insertion into a subject such as a human patient. The scientists
and technologists at MDACC have developed a biodegradable covering for a medical implant comprising a highly plasticized gelatin and at
least one drug to reduce infection. Citius holds the exclusive worldwide license, which provides access to this patented technology for
development and commercialization of Mino-Wrap.
Halo-Lido Intellectual Property
We are developing Halo-Lido to have a unique combination
of excipients as well as unique concentrations of the active ingredients. The goal is to have a product that is optimized for stability
and activity. Once the formulation development is completed and data is obtained, we intend to apply for a patent on this new topical
formulation.
We seek to achieve approval for Halo-Lido by utilizing
the FDA’s 505(b)(2) pathway. This pathway allows an applicant to file an NDA that contains full reports of investigations of safety
and effectiveness, but where at least some of the information required for approval comes from prior studies not conducted by or for the
applicant and for which the applicant has not obtained a right of reference to such prior third-party studies. This pathway would provide
three years of market exclusivity.
NoveCite Intellectual Property
In October 2020, we, through our subsidiary NoveCite,
Inc., entered into a license agreement with Novellus Therapeutics Limited (“Licensor”), whereby NoveCite acquired an exclusive,
worldwide license, with the right to sublicense, to develop and commercialize a stem cell therapy based on the Licensor’s patented
technology for the treatment of acute pneumonitis of any etiology in which inflammation is a major agent in humans. The patented technology
consists of mesenchymal stem cells (“MSCs”) derived from an induced pluripotent stem cell line that is made by Licensor using
the mRNA cell reprogramming methods in the patents covering the licensed technology.
Upon execution of the license agreement, NoveCite
paid an upfront payment of $5,000,000 and issued to Licensor shares of Novecite’s common stock representing 25% of Novecite’s
currently outstanding equity. We own the other 75% of NoveCite’s currently outstanding equity.
15
NoveCite is obligated to pay Licensor up to an
aggregate of $51,000,000 in milestone payments upon the achievement of various regulatory and developmental milestones. NoveCite also
must pay on a fiscal quarter basis a royalty equal to low double-digit percentages of net sales, commencing upon the first commercial
sale of a licensed product. This royalty is subject to downward adjustment on a product-by-product and country-by-country basis to an
upper-single digit percentage of net sales in any country in the event of the expiration of the last valid patent claim or if no valid
patent claim exists in that country. The royalty will end on the earlier of (i) the date on which a biosimilar product is first marketed,
sold, or distributed by Licensor or any third party in the applicable country or (ii) the 10-year anniversary of the date of expiration
of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will
end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of
the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Licensor an
amount equal to a mid-twenties percentage of any sublicensee fees it receives.
During the term of the license agreement, NoveCite
is required to use commercially reasonable efforts to make commercially available at least one product in at least two markets: the United
States and either the United Kingdom, France, Germany, China or Japan. Additionally, NoveCite shall (i) on or before the five-year anniversary
of the date of the license agreement, file an IND for a licensed product in the field of acute pneumonitis treatment and (ii) receive
regulatory approval for a licensed product in the field of acute pneumonitis treatment in the United States or in a major market country
on or before the ten-year anniversary of the date of the license agreement.
Pursuant to the terms of the license agreement,
NoveCite has been granted a right of first negotiation to exclusively license the rights to any new products developed or acquired by
Licensor which cannot include MSC’s, that may be used within the field of acute pneumonitis treatment. After receiving notice from
the Licensor of the new product opportunity, NoveCite has 30 days to notify Licensor of its desire to negotiate a license agreement for
the new product. If such notice is given by NoveCite, the parties shall then have a period of 150 days from the date of Licensor’s
notice to NoveCite to negotiate, exclusively and in good faith, the terms and conditions for the new product license agreement.
The term of the license agreement will continue
on a country-by-country and licensed product-by-licensed product basis until the expiration of the last-to-expire royalty term for any
and all licensed products unless earlier terminated in accordance with its terms. Either party may terminate the license agreement upon
written notice if the other party is in material default or breach of the agreement, subject to cure within the designated time periods.
Either party also may terminate the license agreement if the other party files for bankruptcy or takes related actions or is unable to
pay its debts as they become due, subject to cure within the designated time period. Additionally, Licensor will have the right to terminate
the agreement if NoveCite directly or indirectly challenges the patentability, enforceability or validity of any licensed patent. NoveCite
may terminate the license agreement at any time without cause upon 90 days prior written notice.
Licensor will be responsible for preparing, filing,
prosecuting and maintaining all patent applications and patents included in the licensed patents in the territory. Provided however, that
if Licensor decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting a licensed
patent, it will promptly advise NoveCite in writing and NoveCite will have the right, but not the obligation, to assume such responsibilities
in the territory at NoveCite’s sole cost and expense.
During the term of the license agreement, Licensor
is prohibited from commercializing or exploiting (directly or indirectly) any product that includes mesenchymal stem cells for any purpose
in acute pneumonitis treatment (subject to certain sponsored research exceptions), or exploiting (directly or indirectly) or enabling
a third party to exploit, for any purpose in acute pneumonitis treatment or otherwise, the original licensed cell banks line or any GMP-grade
cell banks of a cell line derived therefrom and that can be used as starting material for the manufacture of products derived from the
licensed technology. During the term of the license agreement, each party is prohibited from soliciting any employee of the other party,
subject to certain exceptions.
In July 2021, Novellus was acquired by Brooklyn.
Pursuant to this transaction, the NoveCite license was assumed by Brooklyn with all of its original terms and conditions.
16
Competition
We operate in a highly competitive and regulated
industry which is subject to rapid and frequent changes. We face significant competition from organizations that are pursuing drugs that
would compete with the drug candidates that we are developing and the same or similar products that target the same conditions we intend
to treat. Due to our limited resources, we may not be able to compete successfully against these organizations, which include many large,
well-financed and experienced pharmaceutical and biotechnology companies, as well as academic and research institutions and government
agencies.
Mino-Lok Competition
Currently, the only alternative to Mino-Lok in
the treatment of infected CVCs in CRBSI/CLABSI patients of which we are aware, is the standard of care of removing the culprit CVC and
replacing a new CVC at a different vascular site. Citius is not aware of any INDs for a salvage antibiotic lock solution and does not
expect any to be forthcoming due to the difficulty of meeting the necessary criteria to be effective and practical.
At this time, there are no pharmacologic agents
approved in the U.S. for the prevention or treatment of CRBSIs or CLABSIs in central venous catheters. Citius is aware that there are
several agents in development for prevention but none for salvage. The most prominent of these appear to be Defencath from CorMedix Inc.
and B-Lock from Great Lakes Pharmaceuticals, Inc. (“GLP”). Neither of these lock solutions have been shown to be effective
in salvaging catheters in bacteremic patients as Mino-Lok is intended to do, and Citius does not expect that either would be pursued for
this indication.
Defencath TM
(CorMedix Inc.)
Defencath is a formulation of Taurolidine 1.35%,
Citrate 3.5%, and Heparin 1000 units/mL. Neutrolin is an anti-microbial catheter lock solution being developed by CorMedix to prevent
CRBSIs and to prevent clotting. In January 2015, the FDA granted Fast Track and QIDP designations for Defencath. In December 2015, CorMedix
initiated its Phase 3 clinical trial in hemodialysis patients in the United States. On June 20, 2018, CorMedix announced that it had completed
its review and source-verification of the data required for the interim analysis of the Phase 3 LOCK-IT-100 study for Neutrolin. The data
was then locked and transferred to the independent biostatistician for un-blinding and analysis, who then provided the results to the
Data and Safety Monitoring Board (“DSMB”) for its review.
On July 25, 2018, CorMedix announced that the
DSMB had completed its review of the interim analysis of the data from the currently ongoing Phase 3 LOCK-IT-100 study for Neutrolin.
Because the pre-specified level of statistical significance was reached and efficacy had been demonstrated, the DSMB recommended the study
be terminated early. No safety concerns were reported by the DSMB based on the interim analysis.
CorMedix submitted its NDA for Defencath to the
FDA, which accepted the NDA in August 2020. The FDA set a target review date of February 28, 2021. In March 2021, CorMedix reported that
the FDA, in its Complete Response Letter (“CRL”), informed CorMedix that the FDA 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 manufacturer (“CMO”). Additionally, the FDA is requiring a manual extraction study to demonstrate
that the labeled volume can be consistently withdrawn from the vials despite an existing in-process control to demonstrate fill volume
within specifications. In April 2021, CorMedix and the CMO met with the FDA to discuss proposed resolutions for the deficiencies identified
in the CRL and the Post-Application Action Letter 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 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 the manufacture of DefenCath. CorMedix and the CMO determined that additional process qualification is needed with subsequent
validation to address these issues. The FDA stated that the review timeline would be determined when the NDA resubmission is received
and that it expected all corrections to facility deficiencies to be complete at the time of resubmission so that all corrective actions
may be verified during an onsite evaluation of the manufacturing facility in the next review cycle, if the FDA determines it will do an
onsite evaluation. Satisfactory resolution of these issues is required for FDA approval of the DefenCath NDA.
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B-Lock™
(Great Lakes Pharmaceuticals, Inc.)
B-Lock is a triple combination of trimethoprim,
EDTA and ethanol from Great Lakes Pharmaceuticals, Inc. (“GLP”). On July 24, 2012, GLP announced the initiation of a clinical
study of B-Lock. We are unaware as to the progress or results of these studies. In addition, we are not aware of any IND being filed in
the U.S. for B-Lock, nor are we aware of any clinical studies to support salvage of infected catheters in bacteremic patients.
There has been no further public information available
on GLP. GLP’s web site and phone number are no longer active and the Company believes that they have ceased operations.
Mino-Wrap Competition
The primary competition for Mino-Wrap would be
the existing standard of care treatment, which includes a systemic perioperative antimicrobial agent with the perioperative immersion
of the implant or irrigation of the surgical pocket with an antimicrobial solution prior to insertion of the tissue expander device. This
is also administered with immediate postoperative oral antimicrobials.
Halo-Lido Competition
The primary competition in the hemorrhoid market
is non-prescription OTC products. If approved by the FDA, Halo-Lido will be the only prescription product for the treatment of hemorrhoids.
NoveCite Competition
There are multiple participants in the cell therapy
field both in the United States and abroad. We believe that the following companies most directly compete with NoveCite in our licensed
field of acute pneumonitis treatment.
Cynata Therapeutics Limited develops and commercializes
a proprietary mesenchymal stem cell technology under the Cymerus brand for human therapeutic use in Australia. The company’s lead
therapeutic product candidate is CYP-001, which has completed a Phase 1 clinical trial for the treatment of graft versus host disease.
Cynata also develops products for the treatment of asthma, heart attack, diabetic wounds, coronary artery disease, acute respiratory distress
syndrome, brain cancer, melanoma, sepsis, osteoarthritis, and critical limb ischemia, which are in a preclinical model.
Athersys, Inc. is a biotechnology company that
focuses on the research and development activities in the field of regenerative medicine. Its clinical development programs are focused
on treating neurological conditions, cardiovascular diseases, inflammatory and immune disorders, and pulmonary and other conditions. The
company’s lead platform product includes MultiStem cell therapy, an allogeneic stem cell product, which has an ongoing Phase 2/3
clinical trial for the treatment of ARDS and has an ongoing clinical trial on Japan for the treatment of RDS. The MultiStem therapy also
is in a Phase 3 clinical study for the treatment of patients suffering from neurological damage from an ischemic stroke, as well as in
a Phase 2 clinical study for the treatment of patients with acute myocardial infarction, and has completed a Phase 1 clinical study for
the treatment of patients suffering from leukemia or various other blood-borne cancers. The company has license and collaboration agreements
with Healios K.K. to develop and commercialize MultiStem cell therapy for ischemic stroke, acute respiratory distress syndrome, and ophthalmological
indications, as well as for the treatment of liver, kidney, pancreas, and intestinal tissue diseases; and the University of Minnesota
to develop MultiStem cell therapy platform.
Pluristem Therapeutics Inc. operates as a bio-therapeutics
company in Israel. It focuses on the research, development, clinical trial, and manufacture of placental expanded (PLX) based cell therapeutic
products and related technologies for the treatment of various ischemic, inflammatory, and hematologic conditions, as well as autoimmune
disorders. A Phase 2 study of PLX cells as a treatment for severe COVID-19 cases complicated by acute respiratory distress syndrome has
been initiated in the U.S. as well as in Europe and Israel.
Mesoblast Limited is a biopharmaceutical company
that develops and commercializes allogeneic cellular medicines. The company offers products in the areas of cardiovascular, spine orthopedic
disorder, oncology, hematology, and immune-mediated and inflammatory diseases. Its proprietary regenerative medicine technology platform
is based on specialized cells known as mesenchymal lineage adult stem cells. In April 2020, Mesoblast initiated a Phase 3 trial using
mesenchymal stromal cells for the treatment of moderate to severe COVID-19 acute respiratory distress syndrome. The trial was halted in
December 2020 after the Data Safety Monitoring Board (DSMB) performed a third interim analysis on the trial’s first 180 patients,
noting that the trial was not likely to meet the 30-day mortality reduction endpoint at the planned 300 patient enrolment. The trial was
powered to achieve a primary endpoint of 43% reduction in mortality at 30 days for treatment with remestemcelL on top of maximal care.
The DSMB recommended that the trial complete with the enrolled 222 patients, and that all be followed-up as planned. At follow-up through
day 60, remestemcel-L showed a positive but non-significant trend in overall mortality reduction across the entire population of treated
patients (n=217). In the pre-specified population of patients under age 65 (n=123), remestemcel-L reduced mortality through day 60 by
46%, but not in patients 65 or older (n=94). In an exploratory analysis through day 60, remestemcelL reduced mortality by 75% and increased
days alive off mechanical ventilation in patients under age 65 when combined with dexamethasone, in comparison with controls on dexamethasone.
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I/ONTAK Competition
The following products are approved for the systemic
treatment of advanced CTCL.
Mogamulizumab, sold under the brand name Poteligeo,
is a humanized, afucosylated monoclonal antibody targeting CC chemokine receptor 4. The FDA approved it for treatment of relapsed or refractory
mycosis fungoides and Sézary disease.
Brentuximab vedotin, sold under the brand name
Adcetris, is an antibody-drug conjugate medication used to treat relapsed or refractory Hodgkin lymphoma and systemic anaplastic large
cell lymphoma, a type of T-cell non-Hodgkin lymphoma. It selectively targets tumor cells expressing the CD30 antigen, a defining marker
of Hodgkin lymphoma and ALC.
Romidepsin sold under the brand name Istodax,
is a histone deacetylase (“HDAC”) inhibitor indicated for the treatment of CTCL in adult patients who have received at least
one prior systemic therapy.
Vorinostat sold under the brand name Zolinza,
is a HDAC inhibitor indicated for the treatment of cutaneous manifestations in patients with CTCL who have progressive, persistent or
recurrent disease on or following two systemic therapies.
There are limitations in these targeted therapies,
which often are discontinued due to toxicity and adverse events as well as a limited duration of response due to resistance over time.
Supply and Manufacturing
We do not currently have and we do not intend
to set up our own manufacturing facilities. We expect to use approved contract manufacturers for manufacturing our product candidates
in all stages of development after we file for FDA approval. Each of our domestic and foreign contract manufacturing establishments, including
any contract manufacturers we may decide to use, must be listed in the NDA or the BLA, as applicable, and must be registered with the
FDA. Also, the FDA imposes substantial annual fees on manufacturers of branded products.
In general, our suppliers purchase raw materials
and supplies on the open market. Substantially all such materials are obtainable from a number of sources so that the loss of any one
source of supply would not have a material adverse effect on us.
If we elect to conduct product development and
manufacturing, we will be subject to regulation under various federal and state laws, including the Occupational Safety and Health Act,
the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act, the Controlled Substances
Act and other present and potential future federal, state or local regulations.
We have contracted with proven suppliers and manufacturers
for active pharmaceutical ingredient, development and packaging. We are confident that all materials meet or will meet specifications
discussed at the chemistry, manufacturing and controls meeting with the FDA.
Regulation
United States Government Regulation
The research, development, testing, manufacture,
labeling, promotion, advertising, distribution and marketing, among other things, of our product candidates are extensively regulated
by governmental authorities in the United States and other countries. All of our current product candidates are considered drugs. Consequently,
we intend to submit an NDA to the FDA for each of Mino-Lok, Halo-Lido, Mino-Wrap and a BLA to the FDA for each of I/ONTAK and NoveCite.
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In the United States, the FDA regulates drugs
under the Federal Food, Drug, and Cosmetic Act and the agency’s implementing regulations. If we fail to comply with the applicable
United States requirements at any time during the product development process, including clinical testing, as well as at any time before
and after the approval process, 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. Any agency enforcement action could have a material adverse effect on our company and its operations.
Before any of our drug product candidates may
be marketed in the United States, it must be approved by the FDA. The steps required before a drug may be approved for marketing in the
United States generally include:
●
preclinical laboratory and animal tests, and formulation studies;
●
the submission to the FDA of an IND application for human clinical testing that must become effective before human clinical trials may begin;
●
adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for each indication for which approval is sought;
●
the submission to the FDA of an NDA or a BLA and the FDA’s acceptance of the NDA or BLA for filing;
●
satisfactory completion of an FDA inspection of the manufacturing facilities at which the product is to be produced to assess compliance with the FDA’s current Good Manufacturing Practices (“cGMP”); and
●
FDA review and approval of the NDA or BLA.
Foreign Regulation
We and any of our collaborative partners may be
subject to widely varying foreign regulations, which may be 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 such 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.
Employees
As of September 30, 2021, we had fifteen employees
and various consultants providing support. Through our consulting and collaboration arrangements, and including our Scientific Advisory
Board, we have access to more than 30 additional professionals, who possess significant expertise in business development, legal, accounting,
regulatory affairs, clinical operations and manufacturing. We also rely upon a network of consultants to support our clinical studies
and manufacturing efforts.
Executive Officers of Citius
Myron Holubiak, President, Chief
Executive Officer and Director – Mr. Holubiak, 74, was appointed President, Chief Executive Officer and Director in March 2016.
He previously served as a Director of Citius since October 2015 and was the founder and Chief Executive Officer and President of Leonard-Meron
Biosciences, Inc., an acquired subsidiary of Citius, from March 2013 until March 2016.
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Leonard Mazur , Executive Chairman
and Secretary – Mr. Mazur, 76, has been a member of the Board since September 2014. Mr. Mazur previously served as Chief Executive
Officer, President, and Chief Operating Officer from September 2014 until March 2016.
Jaime Bartushak , Chief Financial
Officer and Principal Financial Officer – Mr. Bartushak, 54, was appointed as Chief Financial Officer in November 2017. Previously,
he was one of the founders and Chief Financial Officer of Leonard-Meron Biosciences, Inc., an acquired subsidiary of Citius.
Myron Czuczman , Chief Medical Officer
and Executive Vice President – Dr. Czuczman, 62 was appointed as Chief Medical Officer and Executive Vice President in July 2020.
Dr. Czuczman previously served as Vice President, Global Clinical Research and Development, Therapeutic Head of Lymphoma/CLL at Celgene
Corporation.
Other Information
We make available, free of charge through our
website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports
as soon as is reasonably practicable after such material is electronically filed with or furnished to the SEC pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The SEC maintains an Internet site that
contains these reports at www.sec.gov.
Our website address is http://www.citiuspharma.com .
The information contained in, or that can be accessed through, our website is not part of this report.