Item 1. Business
Item
1. Business
Background
We
were incorporated under the laws of the State of Delaware in February 1994 as Spatializer Audio Laboratories, Inc., which was a shell
company immediately prior to the completion of a “reverse merger” transaction on May 26, 2015, whereby Ameri100 Acquisition,
Inc., a Delaware corporation and newly created, wholly owned subsidiary, was merged with and into Ameri and Partners Inc., a Delaware
corporation (the “2015 Merger”). In connection with the 2015 Merger, we changed our name to “AMERI Holdings, Inc.”
The
Ameri business ceased to be part of the Company on December 30, 2020, pursuant to a spin-off transaction. On December 30, 2020, we completed
a tender offer to purchase all of the outstanding common shares of Jay Pharma Inc., a Canada corporation, for shares of Company common
stock or certain preferred stock, and changed our name to “Enveric Biosciences, Inc.”
On
May 24, 2021, the Company entered into an Amalgamation Agreement (the “Amalgamation Agreement”) with 1306432 B.C. Ltd., a
corporation existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of the Company (“HoldCo”),
1306436 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and a wholly-owned subsidiary of HoldCo
(“Purchaser”), and MagicMed Industries Inc., a corporation existing under the laws of the Province of British Columbia (“MagicMed”),
pursuant to which, among other things, the Company, indirectly through Purchaser, acquired all of the outstanding securities of MagicMed
in exchange for securities of the Company by way of an amalgamation under the British Columbia Business Corporations Act, upon the terms
and conditions set forth in the Amalgamation Agreement, such that, upon completion of the amalgamation, the amalgamated corporation (“Amalco”)
became an indirect wholly-owned subsidiary of the Company. The amalgamation was completed on September 16, 2021.
On
March 21, 2023, the Company established Enveric Therapeutics Pty. Ltd., an Australia-based subsidiary (“Enveric Therapeutics”),
to support the Company’s plans to advance the EVM201 Series, comprised of the next generation synthetic prodrugs of the active
metabolite, psilocin, towards the clinic. Enveric Therapeutics was established to oversee the Company’s intended preclinical, clinical,
and regulatory activities in Australia, including interactions with the local Human Research Ethics Committees (“HREC”) and
the Therapeutic Goods Administration, Australia’s regulatory authority. Enveric has since out-licensed the EVM201 Series asset
to MycoMedica Life Sciences, Inc. and is not currently performing activities in Australia.
Available
Information
We
are required to file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with the Securities and Exchange Commission (the
“SEC”) on a regular basis, and are required to disclose certain material events in Current Reports on Form 8-K. The SEC maintains
an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically
with the SEC. The SEC’s Internet website is located at http://www.sec.gov. We also make available, free of charge, our Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports on our website at https://www.enveric.com/
as soon as reasonably practicable after those reports and other information is electronically filed with, or furnished to, the SEC.
Our
internet address is https://www.enveric.com/, and the information included in, or linked to our website is not part of this Annual Report
on Form 10-K. We have included our website address in this Annual Report on Form 10-K solely as a textual reference.
Business
Overview
We
are a biotechnology company dedicated to the development of novel neuroplastogenic small-molecule therapeutics for the treatment of depression,
anxiety, addiction, and other psychiatric disorders. Leveraging our unique discovery and development platform, the Psybrary™, which
houses proprietary information on the use and development of existing and novel molecules for specific mental health indications, Enveric
seeks to develop a robust intellectual property portfolio of novel drug candidates.
Enveric’s
lead program, the EVM301 Series, and its lead drug candidate, EB-003, are intended to offer a first-in-class, new approach to the treatment
of difficult-to-address mental health disorders, mediated by the promotion of neuroplasticity and without also inducing hallucinations
in the patient. Enveric unveiled its EVM401 Series on February 25, 2025, which is intended to broaden Enveric’s pipeline with additional
non-hallucinogenic molecules and strengthen its ability to target addiction and neuropsychiatric disorders for patients with limited
options. Previously, Enveric was developing the EVM201 Series, and its lead drug candidate EB-002 (formerly EB-373), for the treatment
of neuropsychiatric disorders. The EVM201 Series comprised next generation synthetic prodrugs of the active metabolite, psilocin. Recently,
Enveric out-licensed the EVM201 Series program to MycoMedica Life Sciences, who will seek to develop, manufacture, and commercialize
EB-002, in exchange for certain development and milestone payments to Enveric.
4
Neuroplastogens
Following
our amalgamation with MagicMed in September 2021, we have continued to pursue the development of MagicMed’s proprietary library,
the Psybrary™, which we believe will help us to identify and develop the right drug candidates needed to address mental health
challenges, including depression, anxiety, and addiction disorders. We synthesize novel phenylalkylamines and indolethylamines, using
a mixture of chemistry and synthetic biology, resulting in the expansion of the Psybrary™, which currently includes 20 patent families
with claims covering a million potential molecular structures, over one thousand of which we have so far synthesized in sufficient quantities
to identify and hundreds of which we have screened for receptor binding and other relevant activities.
The
Company developed certain intellectual property rights around the trademark PsyAI™ for potential use. On March 6, 2025, Enveric
announced it is soliciting Requests-For Proposals (“RFPs”) for the license or sale of its PsyAI™ trademark portfolio
as a means of maximizing value for an asset which is no longer strategic given the Company’s focus on drug development. This limited
portfolio of US and Canadian trademark assets is held by its subsidiary, Enveric Biosciences Canada, Inc. Enveric expects the period
for RFPs to remain open until August 31, 2025, with a decision to follow within three (3) months thereafter.
At
this stage, we have entered into several non-binding term sheets with strategic partners to out-license certain molecules from the Psybrary™.
Going forward, in order to build a pipeline of product candidates, we intend to both continue to internally develop new drug candidates
with associated intellectual property and to acquire, through in-licensing, additional intellectual property from pharmaceutical and
biotechnology companies and research institutions. The in-licensed assets could include both research stage and clinical stage drug candidates.
While
we intend to pursue development of the EVM401 Series, our primary focus is to develop our lead asset EB-003 in the EVM301 Series. The
development status of EB-003 is shown in the table below:
Product Candidates
Targeted Indications
Status
Expected Next Steps
EB-003
Mental health indication
Preclinical Development
IND Filing
Psychedelic-inspired drug candidate
Intellectual
Property
We
are a party to certain license agreements as described below, to build a pipeline of product candidates going forward, we intend to both
continue to internally develop new drug candidates with associated intellectual property and to acquire, through in-licensing, additional
intellectual property from pharmaceutical and biotechnology companies and research institutions. The in-licensed assets could include
both research stage and clinical stage drug candidates.
The
current focus of Enveric’s intellectual property is in neuroplastogens, including multiple portfolios of psychedelic-inspired compounds
and formulations and methods of making, using, and treating mental and neurological disorders. In addition, Enveric has intellectual
property related to computer assisted methods of discovering promising novel psychedelic-inspired compounds.
Psychedelic-Inspired
Compounds
We
own rights to 20 active patent families related to compounds that are phenylalkylamine and indolethylamine derivatives. The 20 patent
families are represented by a total of 17 issued United States patents and 47 pending United States and non-United States patent applications
for treatment of mental disorders, such as depression, anxiety, addiction, and other neuropsychiatric conditions.
The
patent portfolio includes the following published and unpublished applications:
●
Glycosylated
Psilocybin Derivatives and Methods of Using (WO 2022/040802)
●
Halogenated Psilocybin
Derivatives and Methods of Using (WO2022/047579)
●
Hydroxylated Psilocybin
Derivatives and Methods of Using (WO2022/047580)
●
Nitrated Psilocybin
Derivatives and Methods of Using (WO 2022/047583)
●
Aminated Psilocybin
Derivatives and Methods of Using (WO2023/044556)
●
Nitrilated Psilocybin
Derivatives and Methods of Using (WO2022/104475)
5
●
Carboxylated
Psilocybin Derivatives and Methods of Using (WO2022/115944)
●
Aldehyde and Ketone
Derivatives of Psilocybin and Methods of Using (WO2022/115960)
●
Prenylated Psilocybin
Derivatives and Methods of Using (WO2022/155751)
●
Multi-substituent Psilocybin
Derivatives and Methods of Using (WO2022/170438)
●
N-Heterocycle Substituted
Tryptamine Derivatives and Methods of Using (Unpublished PCT/CA2024/050312)
●
Tri-Halo-Alkoxy-Substituted
Tryptamine Derivatives (Unpublished PCT/CA2024/050242)
●
C-4 Substituted Tryptamine
Derivatives and Methods of Using (WO2023/173227)
●
C-4 Carboxylic Acid
Substituted Tryptamine Derivatives and Methods of Using (WO2023/173196)
●
C-4 Carbanothioate Substituted
Tryptamine Derivatives and Methods of Using (WO2023/173197)
●
Salts of C4-Carboxylic
Acid and C4-Carbonothioate-substituted Tryptamine Derivatives and Methods of Using (WO 2023/173229)
●
Fused Heterocyclic Mescaline
Derivatives ( WO2024/026568A1)
●
C1-Substituted Isopropylamine
Fused Heterocyclic Mescaline Derivatives (WO2024/086933)
●
Substituted N- Propylamine
Fused Heterocyclic Mescaline Derivatives (WO2024/103185)
●
Substituted Ethylamine
Fused Heterocyclic Mescaline Derivatives (WO2024/124353)
Cannabinoid
Conjugates and Formulations
We
own rights held by our wholly-owned subsidiary Akos Biosciences, Inc. to 2 active patent families related to cannabinoids. One patent
family relates to cannabinoid crème formulations for treatment of radiation dermatitis and is licensed to Aries Science &
Technology, LLC, and comprises 1 United States patent and 2 pending non-United States patents applications. The other patent family relates
to cannabinoid conjugates in combination with COX-2 inhibitors for treatment of pain and joint disease and is the subject of a pending
license term sheet with a third party and comprises 3 United States patents, and 3 pending United States and non-United States patent
applications.
●
Compositions
for topical treatment of radiation dermatitis (WO2023154264)
●
Cannabinoid Conjugate
Molecules (WO2023150057)
Diverse
Biotech, Inc. In-License
We
hold limited rights to patent applications owned by Diverse Biotech, Inc. for the use of cannabinoids in conjugate form with five existing,
standard-of-care drugs (celecoxib and four selected steroids) via Diverse Biotech’s patent pending conjugate drug delivery platform.
Our rights extend to all fields of use. The intended target for development of such conjugates is alleviating pain, specifically the
pain of osteoarthritis, rheumatoid arthritis, and cancer, with the goal of achieving improved and novel therapeutic outcomes for patients.
The
in-licensed Diverse Biotech, Inc. portfolio includes two patent families comprising 2 issued United States patents and 13 pending United
States and non-United States applications. Those patents and applications disclose conjugate chemistry that combines cannabinoids with
existing drugs in conjugate form that we believe will provide differentiation in use and efficacy from combination therapy of drugs and
cannabinoids. The license extends for as long as Enveric intends to develop and commercialize the licensed Agents and Products. The patent
applications, should they issue, may expire as late as 2040.
Research
& Development
In
view of the urgent need for new and more effective mental health treatments, we intend to combine innovative scientific discoveries and
bio-chemical synthesis, along with accelerated clinical development plans to create, develop and progress novel therapies using psychedelic-inspired
medications and similar compounds. Our current research and development efforts are focused on developing novel molecules structurally
related to certain naturally occurring psychedelics with improved pharmaceutical characteristics. Some of the naturally occurring psychedelic
molecules are currently being investigated by researchers around the world as potential treatments for a broad range of psychiatric and
neurologic disorders.
Clinical
Studies
We
are currently pursuing drug discovery and preclinical activities in order to advance a number of novel psychedelic-inspired molecules
towards the clinic. Enveric’s lead development candidate is EB-003. EB-003 is a novel derivative of DMT. It is the lead drug candidate
from the EVM301 Series currently advancing through preclinical studies with the aim of initiating first-in-human studies to assess safety
and tolerability including non-hallucinogenic properties, followed by clinical trials targeting the treatment of depression or other
neuropsychiatric disorders.
6
We
intend to assemble a team of clinical experts and principal investigators with experience across multiple mental health and central nervous
system indications to be responsible for the management, monitoring, and integrity of the clinical research.
We
plan to submit filings including Clinical Trial Applications (“CTA”), Investigational New Drug (“IND”) applications
and, eventually, new drug applications (“NDA”) to seek approval with the US FDA and with responsible regulatory agencies
in other jurisdictions, in connection with our product candidates. The selection, timing, duration, and design of any prospective studies
are subject to regulatory filings, approval and finalization of commercial plans.
Our
next step is to advance EB-003 into formal preclinical development studies in support of a future IND filing.
Scientific
Advisory Board
We
have established a scientific advisory board and plan to seek advice and input from these experienced clinical leaders on matters related
to our research and development programs. The members of our scientific advisory board consist of experts across a range of key disciplines
relevant to our programs. We intend to continue to leverage the broad expertise of our advisors by seeking their counsel on important
topics relating to our product development and clinical development programs.
Our
scientific advisors are not our employees and do have commitments to, or consulting or advisory contracts with, other entities that may
limit their availability to us. In addition, our scientific advisors may have arrangements with other companies to assist those companies
in developing products or technologies that may compete with us. All of our scientific advisors are affiliated with other entities and
devote a limited portion of their time to us.
Enveric’s
current scientific advisors are set forth in the table below:
Name
Title
Specialization
Maurizio
Fava, M.D.
Executive
Director of the Clinical Trials Network and Institute
Clinical
Research
Stephen
M. Stahl, M.D., Ph.D.
Director
of Psychopharmacology for the California Department of State Hospitals
Clinical
Research
John
Krystal, M.D.
Director
of Yale Center for Clinical Investigation
Clinical
Research
Michael
Liebowitz, M.D.
Professor
of Psychiatry; Director at Medical Research Network
Clinical
Research
Maurizio
Fava, M.D. has served as a Scientific Advisor of Enveric since 2022. Dr. Maurizio Fava is Chair, Mass General Brigham Academic Centers
Psychiatry Department, Psychiatrist-in-Chief of the Massachusetts General Hospital (MGH), executive director of the Clinical Trials Network
and Institute, (MGH), associate dean for clinical and translational research, and the Slater Family Professor of Psychiatry at Harvard
Medical School. Dr. Fava is a world leader in the field of depression. He has edited eight books and authored or co-authored more than
900 original articles published in medical journals with international circulation, articles which have been cited more than 95,000 times
in the literature and with an H index greater than 150. Dr. Fava founded and was director of MGH’s Depression Clinical and Research
Program from 1990 until 2014. Under Dr. Fava’s direction, the Depression Clinical and Research Program became one of the most highly
regarded depression programs in the country, a model for academic programs that link, in a bi-directional fashion, clinical and research
work. In 2007, he also founded and is now the executive director of the MGH Psychiatry Clinical Trials Network and Institute, the first
academic CRO specialized in the coordination of multi-center clinical trials in psychiatry.
Stephen
M. Stahl, M.D., Ph.D. has served as a Scientific Advisor of Enveric since 2022. Dr. Stephen Stahl has held faculty positions at Stanford
University, the University of California at Los Angeles, the Institute of Psychiatry London, the Institute of Neurology London, and,
currently, as Clinical Professor of Psychiatry and Neuroscience at the University of California Riverside, Adjunct Professor of Psychiatry
at the University of California San Diego and as Honorary Fellow in Psychiatry at the University of Cambridge. Dr. Stahl serves as editor-in-chief
of CNS Spectrums and is Senior Academic Advisor and Director of Psychopharmacology for the California Department of State Hospitals (DSH)
where he has a leadership role in addressing violence and decriminalization of the seriously mentally ill. Author of over 575 articles
and chapters with an H index of 69, and more than 2000 scientific presentations and abstracts, Dr. Stahl is an internationally renowned
clinician, researcher, and teacher in psychiatry with subspecialty expertise in psychopharmacology. Dr. Stahl has written over 50 textbooks
and edited 15 others, including the best-selling and award-winning textbook, Stahl’s Essential Psychopharmacology, now in its fifth
edition, and the best-selling and award-winning clinical manual, Essential Psychopharmacology Prescriber’s Guide, now in its seventh
edition.
7
John
Krystal, M.D. has served as a Scientific Advisor of Enveric since 2022. Dr. John Krystal is the Robert L. McNeil, Jr., Professor
of Translational Research; Professor of Psychiatry, Neuroscience, and Psychology; Chair of the Department of Psychiatry at Yale University;
and Chief of Psychiatry and Behavioral Health at Yale-New Haven Hospital. He is a graduate of the University of Chicago, Yale School
of Medicine, and the Yale Psychiatry Residency Training Program. He has published extensively on the neurobiology and treatment of schizophrenia,
alcoholism, PTSD, and depression. Notably, his laboratory discovered the rapid antidepressant effects of ketamine in humans. Dr. Krystal
directs/co-directs the Yale Center for Clinical Investigation (CTSA), NIAAA Center for the Translational Neuroscience of Alcoholism,
and Clinical Neuroscience Division of the National Center for PTSD (VA). He is a member of the U.S. National Academy of Medicine; co-director
of the Neuroscience Forum of the U.S. National Academies of Sciences, Engineering, and Medicine; Fellow of the American Association for
the Advancement of Science (AAAS); and editor of Biological Psychiatry (IF=13.382). Previously, Dr. Krystal chaired the NIMH Board of
Scientific Counselors and has served as a member of the NIMH National Mental Health Advisory Council and the NIAAA National Alcohol Advisory
Council. He also previously served as the president of the American College of Neuropsychopharmacology (ACNP) and the International College
of Neuropsychopharmacology (CINP).
Michael
Liebowitz, M.D. has served as a Scientific Advisor of Enveric since 2022. Dr. Michael Liebowitz is a Professor of Psychiatry at Columbia
University and New York State Psychiatric Institute (NYSPI) and is currently Director at Medical Research Network where he is engaged
in clinical trials for depression, anxiety, binge eating, ADHD, PTSD, and borderline personality disorders. Dr. Liebowitz completed his
fellowship in psychopharmacology at the Depression Evaluation Service at NYSPI, where he helped develop and validate the DSM criteria
for atypical depression. Dr. Liebowitz established the Anxiety Disorders Clinic at NYSPI, the first research clinic to specialize in
anxiety disorders in the United States. Over the next two decades, Dr. Liebowitz and colleagues helped refine treatments for panic disorder,
broadened the diagnostic criteria and established medication treatment for social anxiety disorder, and collaborated in clinical trials
comparing medications and behavioral treatments for several anxiety disorders. Dr. Liebowitz developed the Liebowitz Social Anxiety Scale
(LSAS) which has been the primary outcome measure for several registration programs in social anxiety disorder and is used worldwide
as a research and clinical measure.
Academic
Partners
We
have also established relationships with certain academic partners, who we believe have the potential to accelerate our product development,
market entry, data collection, analysis and advancement of clinical trials.
Our
primary academic partner is the University of Calgary which brings excellence into advancing brain and mental health research and education.
Competition
The
biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis
on proprietary products. While we believe that our scientific knowledge and technology and development experience provide us with competitive
advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology
companies, academic institutions, governmental agencies, and public and private research institutions. Any product candidates that we
successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.
We
intend to focus on the development of novel and viable psychedelic-inspired drug candidates for mental illnesses and unmet medical needs,
and partner with pharmaceutical and other drug development and biotechnology companies in developing and commercializing psychedelic-inspired
medicines for diverse psychological and neuropsychiatric indications, which will be fundamentally composed of the psychedelic-inspired
drug candidates contained in the Psybrary™. While we believe that our technology, knowledge and experience as well as the scientific
resources at our disposal provide us with significant competitive advantages, we face potential competition from many different sources.
Any product candidates we successfully identify will compete not only with existing therapies but also new therapies that may become
available in the future
Our
commercial opportunities could be reduced or eliminated if our competitors develop and commercialize medicines that are safer, more effective,
have fewer or less severe side effects, are more convenient or are less expensive than any product candidates that we may develop. Our
competitors also may obtain approval from the FDA or other regulatory agencies for their medicines more rapidly than us, which could
result in our competitors establishing a strong market position before we are able to enter the market.
Regarding
our Psybrary™ and the intellectual property kept and developed therein, our success depends on our ability to protect our intellectual
property and our ability to achieve and maintain key partnerships aimed at the development, licensing and marketing of psychedelic-inspired
medicines without infringing on the proprietary rights of others. Patent positions within the pharmaceutical field can be highly uncertain
and involve complex legal, scientific and factual questions for which important legal principles remain unresolved. Patents issued to
us may be challenged, invalidated or circumvented.
8
Government
Regulation and Product Approvals
Pharmaceutical
companies are subject to extensive regulation by the federal government, principally by the FDA under the Federal Food, Drug and Cosmetic
Act, or the FDCA, and, to a lesser extent, by state and local governments. Before our prescription products may be marketed in the U.S.,
they must be approved by the FDA for commercial distribution. Certain OTC products must comply with applicable FDA regulations, known
as OTC Monographs, in order to be marketed, but do not have the benefit of FDA review and approval before marketing. We are also subject
to regulation under federal, state and local laws, including requirements regarding occupational safety, laboratory practices, environmental
protection and hazardous substance control, and may be subject to other present and future local, state, federal and foreign regulations.
We cannot predict the extent to which we may be affected by legislative and other regulatory developments concerning our products and
the healthcare industry in general.
The
FDCA and other federal and state statutes and regulations govern the testing, manufacture, quality control, export and import, labeling,
storage, record keeping, approval, pricing, advertising, promotion, sale and distribution of pharmaceutical products. Noncompliance with
applicable requirements both before and after approval, can subject us, our third party manufacturers and other collaborative partners
to administrative and judicial sanctions, such as, among other things, warning letters, fines and other monetary payments, recall or
seizure of products, criminal proceedings, suspension or withdrawal of regulatory approvals, interruption or cessation of clinical trials,
total or partial suspension of production or distribution, injunctions, limitations on or the limitation of claims we can make for our
products, and refusal of the government to enter into supply contracts for distribution directly by governmental agencies, or delay in
approving or refusal to approve new drug applications. The FDA also has the authority to revoke or withhold approvals of new drug applications.
FDA
approval is required before any “new drug,” can be marketed. Our products are new drugs and require prior FDA approval. Such
approval must be based on extensive information and data submitted in a NDA, including, but not limited to, adequate and well controlled
laboratory and clinical investigations to demonstrate the safety and effectiveness of the drug product for its intended use(s) as well
as the manufacturing suitability of the product. In addition to providing required safety and effectiveness data for FDA approval, a
drug manufacturer’s practices and procedures must comply with current Good Manufacturing Practices (“cGMPs”), which
apply to manufacturing, receiving, holding and shipping, and include, among other things, demonstration of product purity, consistent
manufacturing and quality and at least six months of data supporting product expiration dating based on clinical registration batches.
Accordingly, manufacturers must continue to expend time, money and effort in all applicable areas relating to quality assurance and regulatory
compliance, including production and quality control to comply with cGMPs. Failure to so comply risks delays in approval of drug products
and possible FDA enforcement actions, such as an injunction against shipment of products, the seizure of non-complying products, criminal
prosecution and/or any of the other possible consequences described above. We are subject to periodic inspection by the FDA and the Drug
Enforcement Administration (“DEA”), which inspections may or may not be announced in advance.
The
intellectual property kept and developed in our Psybrary™ is focused solely on developing and commercializing non-hallucinogenic
synthetic derivatives of psychedelic substances. While we use psychedelic-inspired compounds and classic psychedelics as our starting
point for our research and identification of compounds, we do not have any direct or indirect involvement in the illegal selling, production
or distribution of any substances in the jurisdictions in which we operate. Enveric is a neuro-pharmaceutical scientific company and
as such we do not advocate for the legalization of psychedelic substances nor do we deal with psychedelic substances except within laboratory
and clinical trial settings conducted within approved regulatory frameworks. Our products will not be commercialized prior to applicable
regulatory approval and this approval will only be granted if clinical evidence of safety and efficacy for the specific intended use
is successfully developed.
Successful
execution of our strategy is in part contingent upon compliance with regulatory requirements enacted by governmental authorities and
obtaining regulatory approvals for the development and license of our psychedelic-inspired drug candidates. The psychedelic-inspired
medicine industry is a new and emerging industry with ambiguous existing regulations and uncertainty as to future regulations; we cannot
predict the impact of the ever-evolving compliance regime in respect of this industry. The impact of compliance regimes, any delays in
obtaining, or failure to obtain regulatory approvals may significantly delay or impact our development of markets, our business, psychedelic-inspired
medicines, and licensing initiatives and could have a material adverse effect on our business, financial condition and operating results.
FDA
New Drug Approval Process
In
the U.S., pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, or the FDCA,
and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage,
recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import
and export of pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative
or judicial sanctions, such as imposition of clinical holds, FDA refusal to approve pending NDAs, warning letters, product recalls, product
seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution,
disgorgement, civil penalties and criminal prosecution.
9
Pharmaceutical
product development in the U.S. typically involves pre-clinical laboratory and animal tests and the submission to the FDA of an IND,
which must become effective before clinical testing may commence. For commercial approval, the sponsor must submit adequate tests by
all methods reasonably applicable to show that the drug is safe for use under the conditions prescribed, recommended or suggested in
the proposed labeling. The sponsor must also submit substantial evidence, generally consisting of adequate, well-controlled clinical
trials to establish that the drug will have the effect it purports or is represented to have under the conditions of use prescribed,
recommended or suggested in the proposed labeling. In certain cases, the FDA may determine that a drug is effective based on one clinical
study plus confirmatory evidence. Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time
required may vary substantially based upon the type, complexity and novelty of the product or disease.
Pre-clinical
tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal trials to assess the characteristics
and potential safety and efficacy of the product. The conduct of the pre-clinical tests must comply with federal regulations and requirements,
including the FDA’s good laboratory practices regulations and the U.S. Department of Agriculture’s (USDA’s) regulations
implementing the Animal Welfare Act. The results of pre-clinical testing are submitted to the FDA as part of an IND application along
with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol.
Long-term pre-clinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND application
is submitted.
A
30-day waiting period after the submission of each IND application is required prior to the commencement of clinical testing in humans.
If the FDA has not imposed a clinical hold on the IND application or otherwise commented or questioned the IND application within this
30-day period, the clinical trial proposed in the IND application may begin.
Clinical
trials involve the administration of the IND to healthy volunteers or patients under the supervision of a qualified investigator. Clinical
trials must be conducted: (i) in compliance with federal regulations, (ii) in compliance with GCP (“Good Clinical Practice”),
an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators
and monitors, and (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the
effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted
to the FDA as part of the IND application.
The
FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time or impose other sanctions if it believes that
the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical
trial patients. The trial protocol and informed consent information for patients in clinical trials must also be submitted to an institutional
review board, or IRB, for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently,
for failure to comply with the IRB’s requirements or may impose other conditions.
Clinical
trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In general,
in Phase 1, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics,
pharmacological actions, side effects associated with increasing doses and, if possible, early evidence on effectiveness. Phase 2 usually
involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication, dosage tolerance
and optimum dosage, and to identify common adverse effects and safety risks.
If
a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken
to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed
clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information
for the labeling of the drug. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate
the efficacy of the drug. The FDA may, however, determine that a drug is effective based on one clinical study plus confirmatory evidence.
Only a small percentage of investigational drugs complete all three phases and obtain marketing approval. In some cases, the FDA may
require post-market studies, known as Phase 4 studies, to be conducted as a condition of approval in order to gather additional information
on the drug’s effect in various populations and any side effects associated with long-term use. Depending on the risks posed by
the drugs, other post-market requirements may be imposed.
After
completion of the required clinical testing, an NDA is prepared and submitted to the FDA. The FDA approval of the NDA is required before
marketing of the product may begin in the U.S. The NDA must include the results of all pre-clinical, clinical, and other testing and
a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting
an NDA is substantial. Under federal law, the submission of most NDAs is additionally subject to a substantial application user fee.
The
FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s
threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the
FDA begins an in-depth review. Under the statute and implementing regulations, the FDA has 180 days (the initial review cycle) from the
date of filing to issue either an approval letter or a complete response letter, unless the review period is adjusted by mutual agreement
between the FDA and the applicant or as a result of the applicant submitting a major amendment. In practice, the performance goals established
pursuant to the Prescription Drug User Fee Act have effectively extended the initial review cycle beyond 180 days. The FDA’s current
performance goals call for the FDA to complete review of 90 percent of standard (non-priority) NDAs within 10 months of receipt and within
six months for priority NDAs, but two additional months of review are added to standard and priority NDAs for a new molecular entity
(NME).
10
The
FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to
an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation
as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally
follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance
with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve
the product unless compliance with current GMP is satisfactory and the NDA contains data that provide substantial evidence that the drug
is safe and effective in the indication studied.
After
the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete
response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information,
in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction
in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing 90 percent of resubmissions within
two to six months depending on the type of information included.
An
approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition
of NDA approval, the FDA may require a risk evaluation and mitigation strategy, or REMS, to help ensure that the benefits of the drug
outweigh the potential risks. REMS can include medication guides, communication plans for health care professionals, and elements to
assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing,
dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS can materially
affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and
surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory
standards is not maintained or problems are identified following initial marketing.
Disclosure
of Clinical Trial Information
Sponsors
of clinical trials of certain FDA-regulated products, including prescription drugs, are required to register and disclose certain clinical
trial information on a public website maintained by the U.S. National Institutes of Health. Information related to the product, patient
population, phase of investigation, study sites and investigator, and other aspects of the clinical trial is made public as part of the
registration. Sponsors are also obligated to disclose the results of these trials after completion. Disclosure of the results of these
trials can be delayed for up to two years if the sponsor certifies that it is seeking approval of an unapproved product or that it will
file an application for approval of a new indication for an approved product within one year. Competitors may use this publicly available
information to gain knowledge regarding the design and progress of our development programs.
Special
Protocol Assessment
A
company may reach an agreement with the FDA under the Special Protocol Assessment, or “SPA”, process as to the required design
and size of clinical trials intended to form the primary basis of an efficacy claim. According to its performance goals, the FDA is supposed
to evaluate the protocol within 45 days of the request to assess whether the proposed trial is adequate, and that evaluation may result
in discussions and a request for additional information. A SPA request must be made before the proposed trial begins, and all open issues
must be resolved before the trial begins. If a written agreement is reached, it will be documented and made part of the administrative
record. Under the FDCA and FDA guidance implementing the statutory requirement, an SPA is generally binding upon the FDA except in limited
circumstances, such as if the FDA identifies a substantial scientific issue essential to determining safety or efficacy after the study
begins, public health concerns emerge that were unrecognized at the time of the protocol assessment, the sponsor and the FDA agree to
the change in writing, or if the study sponsor fails to follow the protocol that was agreed upon with the FDA.
Advertising
and Promotion
Pre-approval
promotion of investigational drug candidates is prohibited by the FDA. Therefore, sponsors must ensure that any pre-approval communications
disseminated about its drug candidates do not state or imply that such candidates have been proven safe or effective for the applicable
use(s) or that they have been approved for commercialization in the United States. Further, once an NDA for a given candidate is approved,
if ever, the product will be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-approval
marketing and promotion of drugs.
Drugs
may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Changes to some of
the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities,
require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new
indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions
in reviewing NDA supplements as it does in reviewing NDAs.
11
Adverse
Event Reporting and GMP Compliance
Adverse
event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-marketing
testing, known as Phase 4 testing, may require under a REMS special communication regarding the safety of the drug or heightened surveillance
to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or
use of the product. In addition, quality-control, drug manufacture, packaging, and labeling procedures must continue to conform to GMP,
after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and
certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the
agency inspects manufacturing facilities to assess compliance with GMP. Accordingly, manufacturers must continue to expend time, money
and effort in the areas of production and quality control to maintain compliance with GMP. Regulatory authorities may withdraw product
approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial
marketing or if previously unrecognized problems are subsequently discovered.
Pediatric
Exclusivity and Pediatric Use
The
Best Pharmaceuticals for Children Act, or “BPCA”, provides NDA holders a six-month period of exclusivity attached to any
other exclusivity listed with the FDA — patent or non-patent — for a drug, if certain conditions
are met. Conditions for pediatric exclusivity include a determination by the FDA that information relating to the use of a new drug in
the pediatric population may produce health benefits in that population; a written request by the FDA for pediatric studies; and agreement
by the applicant to perform the requested studies and the submission to the FDA, completion of the studies in accordance with the written
request, and the acceptance by the FDA, of the reports of the requested studies within the statutory time frame. Applications under the
BPCA are treated as priority applications.
In
addition, under the Pediatric Research Equity Act, or “PREA”, NDAs or supplements to NDAs must contain data to assess the
safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration
for each pediatric subpopulation for which the drug is safe and effective, unless the sponsor has received a deferral or waiver from
the FDA. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has
been granted. The sponsor or the FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations. A deferral
may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric studies
are complete or that additional safety or effectiveness data need to be collected before the pediatric studies begin. Under PREA, the
FDA must send a noncompliance letter requesting a response within 45 days to any sponsor that fails to submit the required assessment,
keep a deferral current or fails to submit a request for approval of a pediatric formulation.
Controlled
Substances
The
federal Controlled Substances Act of 1970, or “CSA”, and its implementing regulations establish a “closed system”
of regulations for controlled substances. The CSA imposes registration, security, recordkeeping and reporting, storage, manufacturing,
distribution, importation and other requirements under the oversight of the Drug Enforcement Agency (“DEA”). The DEA is the
federal agency responsible for regulating controlled substances, and requires those individuals or entities that manufacture, import,
export, distribute, research, or dispense controlled substances to comply with the regulatory requirements in order to prevent the diversion
of controlled substances to illicit channels of commerce.
The
DEA categorizes controlled substances into one of five schedules — Schedule I, II, III, IV or V — with
varying qualifications for listing in each schedule. Schedule I substances by definition have a high potential for abuse, have no currently
accepted medical use in treatment in the U.S., and lack accepted safety for use under medical supervision. Marijuana and psychedelics
such as psilocybin, DMT, mescaline and MDMA are currently Schedule I controlled substances, which means that no preclinical or clinical
studies of product candidates containing these substances may be conducted in the United States without the required DEA registration(s)
and related approvals, as applicable. Pharmaceutical products having a currently accepted medical use that are otherwise approved for
marketing may be listed as Schedule II, III, IV or V substances, with Schedule II substances presenting the highest potential for abuse
and physical or psychological dependence, and Schedule V substances presenting the lowest relative potential for abuse and dependence.
Facilities
that manufacture, distribute, import, or export any controlled substance must register annually with the DEA. The DEA registration is
specific to the particular location, activity(ies) and controlled substance schedule(s). For example, separate registrations are required
for importation and manufacturing activities, and each registration authorizes which schedules of controlled substances the registrant
may handle. However, certain coincidental activities are permitted without obtaining a separate DEA registration, such as distribution
of controlled substances by the manufacturer that produces them.
12
The
DEA inspects all manufacturing facilities to review security, recordkeeping, reporting, and handling prior to issuing a controlled substance
registration. The specific security requirements vary by the type of business activity and the schedule and quantity of controlled substances
handled. The most stringent requirements apply to manufacturers of Schedules I and Schedule II substances. Required security measures
commonly include background checks on employees and physical control of controlled substances through storage in approved vaults, safes
and cages, and through use of alarm systems and surveillance cameras. An application for a manufacturing registration as a bulk manufacturer
(not a dosage form manufacturer or a repacker/relabeler) for a Schedule I or II substance must be published in the Federal Register,
and is open for 60 days to permit interested persons to submit comments, objections or requests for a hearing. A copy of the notice of
the Federal Register publication is simultaneously forwarded by DEA to all those registered, or applicants for registration, as bulk
manufacturers of that substance.
Once
registered, manufacturing facilities must maintain records documenting the manufacture, receipt and distribution of all controlled substances.
Manufacturers must submit periodic reports to the DEA of the distribution of Schedules I and II controlled substances, Schedule III narcotic
substances, and other designated substances. Registrants must also report any controlled substance thefts or significant losses, and
must obtain authorization to destroy or dispose of controlled substances.
As
with applications for registration as a bulk manufacturer, an application for an importer registration for a Schedule I or II substance
must also be published in the Federal Register, which remains open for 30 days for comments. Imports of Schedules I and II controlled
substances for commercial purposes are generally restricted to substances not already available from a domestic supplier or where there
is not adequate competition among domestic suppliers. In addition to an importer or exporter registration, importers and exporters must
obtain a permit for every import or export of a Schedules I and II substance or Schedules III, IV and V narcotic, and submit import or
export declarations for Schedules III, IV and V non-narcotics. In some cases, Schedule III non-narcotic substances may be subject to
the import/export permit requirement, if necessary to ensure that the U.S. complies with its obligations under international drug control
treaties.
For
drugs manufactured in the U.S., the DEA establishes annually an aggregate quota for the amount of substances within Schedules I and II
that may be manufactured or produced in the U.S. based on the DEA’s estimate of the quantity needed to meet legitimate medical,
scientific, research and industrial needs.
The
states also maintain separate controlled substance laws and regulations, including licensing, recordkeeping, security, distribution,
and dispensing requirements. State Authorities, including Boards of Pharmacy, regulate use of controlled substances in each state. Failure
to maintain compliance with applicable requirements, particularly as manifested in the loss or diversion of controlled substances, can
result in enforcement action that could have a material adverse effect on our business, operations and financial condition. The DEA may
seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations. In certain circumstances,
violations could lead to criminal prosecution.
Europe/Rest
of World Government Regulation
In
addition to regulations in the U.S., we are and will be subject, either directly or through our distribution partners, to a variety of
regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales (including pricing and reimbursement)
and distribution of our product candidates, if approved.
Whether
or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in non-U.S. countries
prior to the commencement of clinical trials or marketing of the product in those countries.
In
the European Union, medicinal products are subject to extensive pre- and post-marketing regulation by regulatory authorities at both
the European Union and national levels. Additional rules also apply at the national level to the manufacture, import, export, storage,
distribution and sale of controlled substances. In many European Union member states the regulatory authority responsible for medicinal
products is also responsible for controlled substances. Responsibility is, however, split in some member states. Generally, any company
manufacturing or distributing a medicinal product containing a controlled substance in the European Union will need to hold a controlled
substances license from the competent national authority and will be subject to specific record-keeping and security obligations. Separate
import or export certificates are required for each shipment into or out of the member state.
Clinical
Trials and Marketing Approval
Whether
or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable regulatory authorities
of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies
from country to country and can involve additional product testing and additional administrative review periods. The time required to
obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in
one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may
negatively impact the regulatory process in others.
13
Certain
countries outside of the U.S. have a process that requires the submission of a clinical trial application much like an IND application
prior to the commencement of human clinical trials. In Europe, for example, a clinical trial application, or “CTA”, must
be submitted to the competent national health authority and to independent ethics committees in each country in which a company intends
to conduct clinical trials. Once the CTA is approved in accordance with a country’s requirements and a company has received favorable
ethics committee approval, clinical trial development may proceed in that country.
The
requirements and process governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary from country to
country, even though there is already some degree of legal harmonization in the European Union member states resulting from the national
implementation of underlying European Union legislation. In all cases, the clinical trials must be conducted in accordance with the International
Conference on Harmonization, or “ICH”, guidelines on GCP and other applicable regulatory requirements.
To
obtain regulatory approval to place a drug on the market in European Union countries, Enveric must submit a marketing authorization application.
This application is similar to the NDA in the U.S., with the exception of, among other things, country-specific document requirements.
All application procedures require an application in the common technical document, or CTD, format, which includes the submission of
detailed information about the manufacturing and quality of the product, and nonclinical and clinical trial information. Drugs can be
authorized in the European Union by using (i) the centralized authorization procedure, (ii) the mutual recognition procedure, (iii) the
decentralized procedure, or (iv) national authorization procedures.
The
European Commission created the centralized procedure for the approval of human drugs to facilitate marketing authorizations that are
valid throughout the European Union and, by extension (after national implementing decisions) in Iceland, Liechtenstein and Norway, which,
together with the European Union Member States, comprise the European Economic Area, or “EEA”. Applicants file marketing
authorization applications with the EMA (European Medicines Agency), where they are reviewed by a relevant scientific committee, in most
cases the Committee for Medicinal Products for Human Use (the “CHMP”). The EMA forwards CHMP opinions to the European Commission,
which uses them as the basis for deciding whether to grant a marketing authorization. This procedure results in a single marketing authorization
granted by the European Commission that is valid across the European Union, as well as in Iceland, Liechtenstein and Norway. The centralized
procedure is compulsory for human drugs that are: (i) derived from biotechnology processes, such as genetic engineering, (ii) contain
a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases,
autoimmune and other immune dysfunctions and viral diseases, (iii) officially designated “orphan drugs” (drugs used for rare
human diseases), and (iv) advanced-therapy medicines, such as gene-therapy, somatic cell-therapy or tissue-engineered medicines. The
centralized procedure may at the voluntary request of the applicant also be used for human drugs that do not fall within the above-mentioned
categories if the CHMP agrees that the human drug (a) contains a new active substance not yet approved on November 20, 2005; (b) constitutes
a significant therapeutic, scientific or technical innovation, or (c) authorization under the centralized procedure is in the interests
of patients at the European Union level.
Under
the centralized procedure in the European Union, the maximum time frame for the evaluation of a marketing authorization application by
the EMA is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response
to questions asked by the CHMP), with adoption of the actual marketing authorization by the European Commission thereafter.
Accelerated
evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest
from the point of view of therapeutic innovation, defined by three cumulative criteria: the seriousness of the disease to be treated;
the absence of an appropriate alternative therapeutic approach, and anticipation of exceptional high therapeutic benefit. In this circumstance,
EMA ensures that the evaluation for the opinion of the CHMP is completed within 150 days and the opinion issued thereafter.
For
those medicinal products for which the centralized procedure is not available, the applicant must submit marketing authorization applications
to the national medicines regulators through one of three procedures: (i) the mutual recognition procedure (which must be used if the
product has already been authorized in at least one other European Union member state, and in which the European Union member states
are required to grant an authorization recognizing the existing authorization in the other European Union member state, unless they identify
a serious risk to public health), (ii) the decentralized procedure (in which applications are submitted simultaneously in two or more
European Union member states), or (iii) national authorization procedures (which results in a marketing authorization in a single European
Union member state).
Mutual
Recognition Procedure
The
mutual recognition procedure, or “MRP”, for the approval of human drugs is an alternative approach to facilitate individual
national marketing authorizations within the European Union. Fundamentally, the MRP may be applied for all human drugs for which the
centralized procedure is not obligatory. The MRP is applicable to the majority of conventional medicinal products, and must be used if
the product has already been authorized in one or more European Union member states.
The
MRP functions by building on an already-existing marketing authorization in a member state of the European Union which is used as a reference
in order to obtain marketing authorizations in other European Union member states. Under the MRP, if a marketing authorization for a
drug already exists in one or more member states of the European Union and subsequently marketing authorization applications are made
in other European Union member states by referring to the initial marketing authorization. The member state in which the marketing authorization
was first granted will then act as the reference member state. The member states where the marketing authorization is subsequently applied
for act as concerned member states. The concerned member states are required to grant an authorization recognizing the existing authorization
in the reference member state, unless they identify a serious risk to public health.
14
The
MRP is based on the principle of the mutual recognition by European Union member states of their respective national marketing authorizations.
Based on a marketing authorization in the reference member state, the applicant may apply for marketing authorizations in other member
states. In such case, the reference member state shall update its existing assessment report about the drug in 90 days. After the assessment
is completed, copies of the report are sent to all member states, together with the approved summary of product characteristics, labeling
and package leaflet. The concerned member states then have 90 days to recognize the decision of the reference member state and the summary
of product characteristics, labeling and package leaflet. National marketing authorizations shall be granted within 30 days after acknowledgement
of the agreement.
Should
any European Union member state refuse to recognize the marketing authorization by the reference member state, on the grounds of potential
serious risk to public health, the issue will be referred to a coordination group. Within a time frame of 60 days, member states shall,
within the coordination group, make all efforts to reach a consensus. If this fails, the procedure is submitted to an EMA scientific
committee for arbitration. The opinion of this EMA Committee is then forwarded to the European Commission, for the start of the decision-making
process. As in the centralized procedure, this process entails consulting various European Commission Directorates General and the Standing
Committee on Human Medicinal Products.
Data
Exclusivity
In
the European Union, marketing authorization applications for generic medicinal products do not need to include the results of pre-clinical
and clinical trials, but instead can refer to the data included in the marketing authorization of a reference product for which regulatory
data exclusivity has expired. If a marketing authorization is granted for a medicinal product containing a new active substance, that
product benefits from eight years of data exclusivity, during which generic marketing authorization applications referring to the data
of that product may not be accepted by the regulatory authorities, and a further two years of market exclusivity, during which such generic
products may not be placed on the market. The two-year period may be extended to three years if during the first eight years a new therapeutic
indication with significant clinical benefit over existing therapies is approved.
Orphan
Medicinal Products
The
EMA’s Committee for Orphan Medicinal Products (“COMP”) may recommend orphan medicinal product designation to promote
the development of products that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating
conditions affecting not more than 5 in 10,000 persons in the European Union. Additionally, designation is granted for products intended
for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without
incentives, it is unlikely that sales of the product in the European Union would be sufficient to justify the necessary investment in
developing the medicinal product. The COMP may only recommend orphan medicinal product designation when the product in question offers
a significant clinical benefit over existing approved products for the relevant indication. Following a positive opinion by the COMP,
the European Commission adopts a decision granting orphan status. The COMP will reassess orphan status in parallel with EMA review of
a marketing authorization application and orphan status may be withdrawn at that stage if it no longer fulfills the orphan criteria (for
instance because in the meantime a new product was approved for the indication and no convincing data are available to demonstrate a
significant benefit over that product). Orphan medicinal product designation entitles a party to financial incentives such as reduction
of fees or fee waivers and ten years of market exclusivity is granted following marketing authorization. During this period, the competent
authorities may not accept or approve any similar medicinal product, unless it offers a significant clinical benefit. This period may
be reduced to six years if the orphan medicinal product designation criteria are no longer met, including where it is shown that the
product is sufficiently profitable not to justify maintenance of market exclusivity.
Pediatric
Development
In
the European Union, companies developing a new medicinal product must agree to a Pediatric Investigation Plan, or “PIP”,
with the EMA and must conduct pediatric clinical trials in accordance with that PIP unless a waiver applies, for example, because the
relevant disease or condition occurs only in adults. The marketing authorization application for the product must include the results
of pediatric clinical trials conducted in accordance with the PIP, unless a waiver applies, or a deferral has been granted, in which
case the pediatric clinical trials must be completed at a later date. Products that are granted a marketing authorization on the basis
of the pediatric clinical trials conducted in accordance with the PIP are eligible for a six-month extension of the protection under
a supplementary protection certificate (if the product covered by it qualifies for one at the time of approval). This pediatric reward
is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.
15
If
we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension of clinical
trials, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
In
addition, most countries are parties to the Single Convention on Narcotic Drugs 1961, which governs international trade and domestic
control of narcotic substances. Countries may interpret and implement their treaty obligations in a way that creates a legal obstacle
to us obtaining marketing approval for our product candidates in those countries. These countries may not be willing or able to amend
or otherwise modify their laws and regulations to permit our product candidates to be marketed, or achieving such amendments to the laws
and regulations may take a prolonged period of time. In that case, we would be unable to market our product candidates in those countries
in the near future or perhaps at all.
Employees
We
have consolidated our employee base to save capital and focus on development of our leading candidates EB-003. As of the date of this
report, we employ five full-time employees and one part-time employee. We also work with scientific advisors, consultants and service
providers, mainly through academic institutions and contract research organizations.
We
have never had a work stoppage and none of its employees are covered by collective bargaining agreements or represented by a labor union.
We believe that we have good relationships with our employees.