Item 1. Business
Item
1. Business.
Overview
We
are a medical device company focusing on the development and commercialization of our proprietary MicroNet™ stent platform
technology for the treatment of complex vascular and coronary disease. A stent is an expandable “scaffold-like” device,
usually constructed of a metallic material, that is inserted into an artery to expand the inside passage and improve blood flow.
Our MicroNet, a micron mesh sleeve, is wrapped over a stent to provide embolic protection in stenting procedures.
Our
CGuard™ carotid embolic prevention system (“CGuard EPS”) combines MicroNet and a self-expandable nitinol stent
in a single device for use in carotid artery applications. Our CGuard EPS received CE mark approval in the European Union in March
2013 and was fully launched in Europe in September 2015. Subsequently, we launched CGuard EPS in Russia and certain countries
in Latin America and Asia, including India. In September 2020, we launched CGuard EPS in Brazil after receiving regulatory approval
in July 2020 and, as discussed below, on February 3, 2021 we executed a distribution agreement with Chinese partners for the purpose
of expanding our presence in China. Currently, we are seeking strategic partners for a potential launch of CGuard EPS in Japan.
On
September 8, 2020, we received approval from the U.S. Food and Drug Administration (“FDA”) of our Investigation Device
Exemption (“IDE”), thereby allowing us to proceed with a pivotal study of our CGuard™ Carotid Stent System,
CARENET-III, for prevention of stroke in patients in the United States. CARENET-lll is a prospective, multicenter, single-arm,
pivotal study to evaluate the safety and efficacy of the CGuard™ Carotid Stent System when used to treat symptomatic and
asymptomatic carotid artery stenosis in patients undergoing carotid artery stenting. The trial will enroll approximately 315 subjects
in a maximum of 40 study sites located in the United States. Additional sites in Europe may also participate in the study, contributing
a maximum of ~50% of the total enrollees. The primary endpoint of the study will be the composite of the following: incidence
of the following major adverse events: death (all- cause mortality), all stroke, and myocardial infarction (DSMI) through 30-days
post-index procedure, based on the clinical events committee (CEC) adjudication or ipsilateral stroke from 31-365 day follow-up,
based on Clinical Events Committee (CEC) adjudication.
Additionally,
we intend to continue to invest in current and future potential product and manufacturing enhancements for CGuard EPS that are
expected to reduce cost of goods and/or provide the best-in-class performing delivery system. In furtherance of our strategy that
focuses on establishing CGuard EPS as a viable alternative to vascular surgery, we are exploring adding new delivery systems and
accessory solutions for procedural protection to our portfolio.
We
consider the addressable market for our CGuard EPS to be individuals with diagnosed, symptomatic high-grade carotid artery stenosis
(HGCS, ≥70% occlusion) for whom intervention is preferable to medical (drug) therapy. This group includes not only carotid
artery stenting patients but also individuals undergoing carotid endarterectomy, as the two approaches compete for the same patient
population. Assuming full penetration of the intervention caseload by CGuard EPS, we estimate that the addressable market for
CGuard EPS was approximately $1.0 billion in 2017 (source: Health Research International 2017 Results of Update Report on Global
Carotid Stenting Procedures and Markets by Major Geography and Addressable Markets).
Our
MGuard™ Prime™ embolic protection system (“MGuard Prime EPS”) is marketed for use in patients with acute
coronary syndromes, notably acute myocardial infarction (heart attack) and saphenous vein graft coronary interventions (bypass
surgery). MGuard Prime EPS combines MicroNet with a bare-metal cobalt-chromium based stent. MGuard Prime EPS received CE mark
approval in the European Union in October 2010 for improving luminal diameter and providing embolic protection. However, as a
result of a shift in industry preferences away from bare-metal stents in favor of drug-eluting (drug-coated) stents, in 2014 we
decided to curtail further development of this product in order to focus on the development of a drug-eluting stent product, MGuard
DES™. Due to limited resources, however, our efforts have been limited to testing drug-eluting stents manufactured by potential
partners for compatibility with MicroNet and seeking to incorporate MicroNet onto a drug-eluting stent manufactured by a potential
partner. The FDA has clarified that the primary mode of action for drug-eluting cardiovascular stents, which are regulated as
combination products, is that of the device component and has assigned the FDA Center for Devices and Radiological Health (CDRH)
primary responsibility for premarket review and regulation, providing some clarity about what to expect regarding the regulatory
framework related to the development of MGuard DES™.
We
also intend to develop a pipeline of other products and additional applications by leveraging our MicroNet technology to new applications
to improve peripheral vascular and neurovascular procedures, such as the treatment of the superficial femoral artery disease,
vascular disease below the knee and neurovascular stenting to seal aneurysms in the brain.
Presently,
none of our products may be sold or marketed in the United States.
We
were organized in the State of Delaware on February 29, 2008.
Recent
Developments
Public
Offering s
On
February 8, 2021, we closed an underwritten public offering of 29,032,258 units, with each such unit being comprised of one share
of our common stock, par value $0.0001 per share, and one Series G Warrant to purchase one-half of one share of common stock (the
“February 2021 Offering”). The offering price to the public was $0.62 per unit. The Series G Warrants were immediately
exercisable at a price of $0.682 per share, subject to adjustment in certain circumstances, and expire five years from the date
of issuance. We also granted the underwriter of the offering an option to purchase an additional 4,354,838 shares of common stock
and Series G Warrants to purchase 2,177,419 shares of common stock, which the underwriter exercised in full. , In connection with
the offering we granted to the underwriter a compensation warrant to purchase up to 1,669,355 shares of common stock with an exercise
price of $0.682 per share and which are exercisable for five years from February 3, 2021. Our net proceeds from the offering,
after giving effect to the exercise of the underwriter’s over-allotment option, were approximately $18.9 million, after
deducting underwriting discounts and commissions and payment of other expenses associated with the offering, but excluding the
proceeds, if any, from the exercise of Series G Warrants sold in the offering.
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On
June 5, 2020, we closed an underwritten public offering of (i) 7,635,800 Units, with each Unit being comprised of one share of
our common stock, par value $0.0001 per share, and one Series F warrant to purchase one share of common stock, and (ii) 14,586,400
Pre-Funded Units, with each Pre-Funded Unit being comprised of one Pre-Funded Warrant to purchase one share of common stock and
one Series F Warrant. In connection with this public offering, the underwriter exercised the option practically in full, for 3,333,300
shares of common stock and 3,333,300 Series F Warrants. The offering price to the public was $0.45 per Unit and $0.449 per Pre-Funded
Unit. Our net proceeds from the offering and the exercise of the underwriter’s over-allotment option were approximately
$10.7 million, after deducting underwriting discounts and commissions and payment of other estimated expenses associated with
the offering, but excluding the proceeds, if any, from the exercise of Series F Warrants and the Pre-Funded Warrants sold in the
offering.
Distribution
and Purchase Agreement with Chinese Partners
On
February 3, 2021, we entered into a Distribution Agreement with three China-based partners, pursuant to which the Chinese partners
will be responsible for conducting the necessary registration trials for commercial approval of our products in China, followed
by an eight-year exclusive distribution right to sell our products in China with the term of the agreement continuing on a year-to-year
basis unless terminated. Under the Distribution Agreement, the China-based partners will be subject to minimum purchase obligations.
The Distribution Agreement may be terminated for cause upon failure to meet minimum purchase obligations, failure to obtain regulatory
approvals or for other material breaches.
In
addition, and on the same day, we entered into an investment transaction with QIDI, which included (i) an SPA, pursuant to which
QIDI agreed to invest $900,000 in exchange for shares of our common stock at a purchase price of $0.6708 per share, and (ii) an
IRA, whereby QIDI was provided certain customary registration rights, including a commitment by us to file a registration statement
with the SEC on Form S-1 or Form S-3 and have such registration statement become effective not later than 150 days following the
closing of the transactions under the SPA.
The
transactions closed on February 5, 2021.
Sixth
Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan
Effective
as of August 31, 2020, our stockholders approved the Sixth Amendment to the Plan and, accordingly, increased the number of shares
of common stock available for issuance pursuant to awards under such Plan by 6,500,000 shares, to a total of 7,178,395 shares
of common stock.
Regained
Compliance with New York Stock Exchange
On
August 7, 2019, we received a notification from the NYSE American that we did not meet the continued listing standards of the
NYSE American as set forth in Part 10 of the Company Guide. Specifically, we were not in compliance with Section 1003(a)(iii)
of the Company Guide because we reported stockholders’ equity of less than $6 million as of September 30, 2019, and net
losses in our five most recent fiscal years ended December 31, 2018. As a result, we became subject to the procedures and requirements
of Section 1009 of the Company Guide. On October 11, 2019, the NYSE American accepted our plan to regain compliance with Section
1003(a)(iii) of the Company Guide by August 7, 2020.
On
August 7, 2020, following our submission to the NYSE American of our plan for regaining compliance, the NYSE American approved
such plan and, accordingly and as of such date, we are compliant with all of the NYSE American LLC continued listing standards
set forth in Part 10 of the NYSE American Company Guide. In particular, we regained compliance with the continued listing requirement
under NYSE American Company Guide Section 1003(a)(iii). The return to compliance was achieved as a result of our recently-consummated
public offering, in which we raised approximately $10.7 million of net proceeds from the sale of units and pre-funded units.
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FDA
Approval of IDE
On
September 8, 2020, we received approval from the FDA of our IDE, thereby allowing us to proceed with a pivotal study of our CGuard™
Carotid Stent System, CARENET-III, for prevention of stroke in patients in the United States.
ATM
Offering
On
July 28, 2020, we entered into a Sales Agreement with A.G.P. pursuant to which we may offer and sell, from time to time, at our
option, through or to A.G.P., up to an aggregate of approximately $9,300,000 of shares of common stock (the “ATM Facility”).
Any shares to be offered and sold under the Sales Agreement will be issued and sold pursuant to the Company’s Registration
Statement on Form S-3 (File No. 333-223130), filed with the SEC on February 21, 2018 and the prospectus supplement thereto filed
with the SEC on July 28, 2020, by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated
under the Securities Act of 1933, as amended, or if specified by us, by any other method permitted by law. On January 11, 2021,
we increased the aggregate amount of our shares of common stock that may be sold under the Sales Agreement from $9,300,000 to
$10,382,954, and, as a result, utilized and sold the maximum amount allowable under the ATM Facility, which resulted in an aggregate
amount of $10,381,958.
Registration
Clearance for CGuard™ MicroNet ® in Brazil
On
July 23, 2020, we announced that we obtained registration from the Brazilian registration authority, Agéncia Nacional de
Vigiláncia Sanitária (ANVISA), for our CGuard MicroNet covered stent, clearing it for sale and distribution in Brazil.
New
Trial Results for CGuard EPS
On
June 10, 2020, we reported the publication of the results of our PARADIGM trial in the EuroIntervention journal. In that
trial, 101 unselected consecutive real-life patients were treated with our CGuard MicroNET covered stent for carotid stenosis
and were monitored for postprocedural neurologic events for a period of 12 months. The results displayed sustained protection
against any such neurologic events. At 30 days, only one adverse event occurred (a minor transient stroke with no other strokes,
myocardial infarctions, or deaths). Furthermore, those study results showed that no strokes occurred between 30 days and twelve
months.
On
June 25, 2020, we reported the results from an investigator-initiated SIBERIA randomized clinical trial of our CGuard EPS, which
evaluated 30-day silent brain infarcts associated with the use of the Acculink™ conventional open-cell nitinol stent vs.
our CGuard Micronet-covered stent. Those results displayed that CGuard had a statistically significant (greater than three-fold)
reduction in the procedure-generated mean cerebral lesion volume relative to Acculink. At 30 days, there were zero new cerebral
lessons in the CGuard arm, compared to six in the Acculink arm, also statistically significant.
On
September 3, 2020 we reported the award for Best ESC Congress Poster for the presentation of updated data from the large, long-term
PARADIGM-EXTEND study of the CGuard™ Embolic Prevention System (EPS), as part of the European Society of Cardiology 2020
Carotid Update e-presentation at the European Society of Cardiology (ESC) Congress 2020. PARADIGM/EXTEND is an investigator-driven
on-going study performed with CGuard Carotid stent for primary and secondary stroke prevention in a large, consecutive all-comers
population, with 5 years (60 months) follow-up. The results for 480 patients of the expected total of 550 that completed the 30-day
follow-up were presented were no peri-procedural major strokes or death. The total death/stroke /myocardial incidence at 30 days
was 1.04% (5/480) due to two minor strokes, one myocardial infarction and two stent-unrelated deaths. In the study, 354/480 patients
completed the 12-month follow-up with only 1 patient experiencing in-stent restenosis, 0.28% (1/354). At the 12-month follow-up
there were no other device-related adverse clinical events. Finally, 46/480 patients completed the 60-month follow-up period with
one more case of in-stent restenosis and no additional cases of device-related stroke.
Appointment
of Dr. Gary Roubin, M.D. to our Board of Directors
On
October 12, 2020, our board of directors, or the Board, appointed Dr. Gary S. Roubin as a Class I member of the Board, effective
as of that date, with a term expiring at the Company’s 2021 annual meeting of stockholders. Dr. Roubin is an internationally
renowned interventional cardiologist recognized for his pioneering work in carotid stenting and embolic and protection devices.
He is also acknowledged for the development of coronary stenting and the first FDA-approved coronary stent. In connection with
his appointment, Dr. Roubin was granted options to purchase 79,650 shares of common stock and 238,950 shares of restricted stock.
Shortly after his appointment as a director, and on October 16, 2020, Dr. Roubin invested $100,000 in the Company in exchange
for 222,223 units consisting of (i) one share of common stock and (ii) one warrant to purchase our common stock with an exercise
price of $0.495. For additional biographical information about Dr. Roubin, please see “Management” herein.
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COVID-19
Developments
In
an effort to contain and mitigate the spread of COVID-19, which the World Health Organization, or WHO, declared to be a pandemic
on March 12, 2020, many countries have imposed unprecedented restrictions on travel, quarantines and other public health safety
measures. As of the beginning of the second quarter of 2020, we began to experience a significant COVID-19 related impact on our
financial condition and results of operations, which we primarily attribute to the postponement of CGuard EPS procedures (non-emergency
procedures), as hospitals shifted resources to patients affected by COVID-19. To our knowledge, most European countries in which
we operate are slowly reinstating elective procedures, but we do not know when the hospitals will resume to normal pre-pandemic
levels with such procedures in light of recent increases in COVID-19 cases in the territories we sell into. We anticipate that
the continuation of the pandemic and related restrictions and safety measures would likely result in continued fluctuations in
sales of our products for the upcoming periods. For more discussion on our risks related to COVID-19, please see risk factors
included under “Item 1A. Risk Factors” herein.
In
response to significant market volatility and uncertainties relating to COVID-19, the fees and salaries of our Board, management
and most of our employees were reduced in order to alleviate corporate operating expenses.
Effective
April 1, 2020, the Board approved a 50% decrease in the annual cash compensation for non-employee directors from an aggregate
amount of $154,000 to $77,000.
On
April 21, 2020, Marvin Slosman, our President, Chief Executive Officer and Director, signed a waiver reducing his monthly base
salary from $33,333 to $16,666 for the period beginning April 1, 2020 and ending on such date as Mr. Slosman was to determine,
and Craig Shore, our Chief Financial Officer, Chief Administrative Officer, Secretary and Treasurer, signed a waiver reducing
his monthly base salary from NIS 80,125 to NIS 40,063 for the period beginning April 1, 2020 and ending on such date as Mr. Shore
was to determine.
Effective
April 1, 2020, we reduced the annual salaries of most of our employees by 20% to 30% until further notice.
Based
on a determination made by each of Mr. Slosman and Mr. Shore on June 10, 2020, following the closing of our underwritten public
offering in June 2020, as described above, each of Mr. Slosman’s and Mr. Shore’s monthly base salaries were reinstated
to $33,333 and NIS 80,125, respectively, effective as of June 1, 2020. Each of the salaries for the remaining officers, directors
and employees was similarly reinstated by no later than June 30, 2020.
As
a result of the reduction of those fees and salaries during the second quarter of 2020, our operating expenses were reduced by
approximately $235,000 in the second quarter of 2020.
Release
from Former Underwriter
The
terms of our engagement of the underwriter for our September 2019 financing contained a purported 12 month right of first refusal
in favor of such underwriter with respect to future financings. Due to, among other things, difficulties in the relationship with
that prior underwriter and our need to raise additional funds to finance our ongoing operations, we engaged A.G.P./Alliance Global
Partners in May 2020 as underwriter for our June 2020 public offering, and again in July 2020 for an ATM Facility.
On
July 28, 2020, we entered into a settlement agreement and release with that prior underwriter, under which it provided us a final,
unconditional release from any further obligations arising out of or related to the engagement agreements, underwriting agreements
and placement agency agreements which we had been party to with it and with respect to any services which it had provided to us.
We, in turn, provided the prior underwriter a final, unconditional release from any further obligations arising out of or related
to the prior agreements and services.
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As
consideration for the final release provided to us, we paid to the prior underwriter $400,000 in cash and reduced, to $0.495,
the exercise price per share of warrants to purchase 274,029 shares of our common stock that had been issued by us to the prior
underwriter in various offerings that took place between March 2018 and September 2019. That reduced exercise price represents
the exercise price for the Series F Warrants that we issued in our June 2020 public offering. The warrants that were repriced
had existing exercise prices per share ranging from $187.50 to $2.25 and a weighted average exercise price per share of $7.32.
All other terms of those warrants remained unchanged. The related increase in expenses of $400,000 was recorded during the three
months ended June 30, 2020 to “General and Administrative expense” within the Consolidated Statements of Operations.
Our
Industry
Carotid
Carotid
arteries are located on each side of the neck and provide the primary blood supply to the brain. Carotid artery disease, also
called carotid artery stenosis, is a type of atherosclerosis (hardening of the arteries) that is one of the major risk factors
for ischemic stroke. In carotid artery disease, plaque accumulates in the artery walls, narrowing the artery and disrupting the
blood supply to the brain. This disruption in blood supply, together with plaque debris breaking off the artery walls and traveling
to the brain, are the primary causes of stroke. According to the World Health Organization (https://www.who.int/cardiovascular_diseases/resources/atlas/en/)
every year, 15 million people worldwide suffer a stroke, and nearly six million die and another five million are left permanently
disabled. According to the same source, stroke is the second leading cause of disability, after dementia.
In
2017, 2.2 million people were diagnosed with carotid artery disease, of which, approximately 600,000 patients had high grade carotid
stenosis requiring intervention for carotid artery disease (2017 Health Research International Market Report ). Carotid
artery stenting is a minimally invasive treatment option for carotid artery disease and an alternative to carotid endarterectomy,
where a surgeon accesses the blocked carotid artery though an incision in the neck, and then surgically removes the plaque. Endovascular
techniques using stents and carotid embolic prevention system protect against plaque and debris traveling downstream, blocking
off the vessel and disrupting blood flow. We believe that the use of a stent with an embolic protection system should increase
the number of patients being treated since it would avoid the need for complex surgery.
Coronary
Physicians
and patients may select from a variety of treatments to address coronary artery disease, including pharmaceutical therapy, balloon
angioplasty, stenting with bare metal or drug-eluting stents, and coronary artery bypass graft procedures, with the selection
often depending upon the stage of the disease.
The
global market for coronary stents is estimated at $5.5 billion and projected to grow to $8 billion by 2025. (Global Market Insights,
Inc. Nov 06, 2019). Growth will be driven by a continued increases in incidence (Coronary heart disease burden is projected to
rise from around 47 million DALYs globally in 1990 to 82 million DALYs (Disability Adjusted Life Year)in 2020 – WHO Global
Burden of Coronary Heart Disease) – especially in developing countries). However, this market is dominated by drug eluting
stents (DES) which limits the opportunity for MGuard.
Neurovascular
The
neurovascular market focuses on catheter-delivered products used to treat strokes that already happened or unruptured brain aneurysms
that could lead to strokes. In the latter case, coils are wound into blood vessel bulges to block blood flow entering the aneurysms
to prevent the aneurysms from rupturing. Endovascular treatment of arterial aneurysm has evolved substantially over the past two
decades, transitioning from an investigational therapy into routine clinical practice and ultimately emerging as the treatment
of choice for many lesions (source: Medtech Ventures 2009, Aneurysm Flow Modulating Device Market). We believe that the
market for aneurysm flow modulating devices is still in the embryonic stage with windows of opportunities for early entrance.
The
neurovascular market includes over-the-wire, flow-guided microcatheters, guiding catheters, coil and liquid embolics, neurovascular
stents and flow diversion stents. According to iData Research, the market is expected to be driven by the conversion from surgical
procedures to endovascular techniques in the treatment of aneurysms and arteriovenous malformations.
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Peripheral
Peripheral
vascular diseases (“PVD”) are caused by the formation of atherosclerotic plaques in arteries, which carry blood to
organs, limbs and head. It is also known as peripheral artery occlusive disease or peripheral artery disease. It comprises diseases
pertaining to both peripheral veins and peripheral arteries, affecting the peripheral and cardiac circulation in the body. PVD
includes diseases outside of the heart and brain, but most times refers to the leg and foot.
Peripheral
stents are more often used in combination with balloon angioplasty to open the veins, so that blood can flow through the blocked
veins in the body.
The
growing prevalence of PVD is expected to cause increased demand for treatment options. PVD is age related and its prevalence increases
markedly with advancing age. In addition PVD is more prevalent in lower and medium income countries than in higher income countries
(https://www.thelancet.com/journals/langlo/article/PIIS2214-109X(19)30255-4)
Our
Products
Below
is a summary of our current products and products under development, and their intended applications.
MicroNet
MicroNet
is our proprietary circular knitted mesh which wraps around a stent to protect patients from plaque debris flowing downstream
upon deployment. MicroNet is made of a single fiber from a biocompatible polymer widely used in medical implantations. The size,
or aperture, of the current MicroNet ‘pore’ is only 150-180 microns in order to maximize protection against the potentially
dangerous plaque and thrombus.
CGuard
– Carotid Applications
Our
CGuard EPS combines our MicroNet mesh and a self-expandable nitinol stent (a stent that expands without balloon dilation pressure
or need of an inflation balloon) in a single device for use in carotid artery applications. MicroNet is placed over and attached
to an open cell nitinol metal stent platform which is designed to trap debris and emboli that can dislodge from the diseased carotid
artery and potentially travel to the brain and cause a stroke. This danger is one of the greatest limitations of carotid artery
stenting with conventional carotid stents and stenting methods. The CGuard EPS technology is a highly flexible stent system that
conforms to the carotid anatomy.
We
believe that our CGuard EPS design provides advantages over existing therapies in treating carotid artery stenosis, such as conventional
carotid stenting and surgical endarterectomy, given the superior embolic protection characteristics provided by the MicroNet.
We believe the MicroNet will provide acute embolic protection at the time of the procedure, but more importantly, we believe that
CGuard EPS will provide post-procedure protection against embolic dislodgement, which can occur up to 48 hours post-procedure.
It is in this post-procedure time frame that embolization is the source of post-procedural strokes in the brain. Schofer, et al.
(“Late cerebral embolization after emboli-protected carotid artery stenting assessed by sequential diffusion-weighted magnetic
resonance imaging,” Journal of American College of Cardiology Cardiovascular Interventions , Volume 1, 2008) have
shown that the majority of the incidents of embolic showers associated with carotid stenting occur post-procedure.
Our
CGuard EPS with over-the-wire delivery system received CE mark approval in the European Union in March 2013. In October 2014,
we initiated a limited market release of CGuard EPS with over-the-wire delivery system for use in carotid artery applications
in Germany, Poland and Italy.
In
September 2014, we reported the results of the CGuard CARENET trial at the Transcatheter Cardiovascular Therapeutics (“TCT”)
conference in Washington D.C. In the CARENET trial, the CGuard EPS system demonstrated better results over historical data using
conventional commercially available carotid stents. In the third quarter of 2015 the results of the CGuard CARENET trial were
published in the Journal of the American College of Cardiology. In November 2015, positive twelve-month follow-up data from the
CGuard CARENET trial was presented at the 42nd Annual Symposium on Vascular and Endovascular Issues, documenting the benefits
of the CGuard MicroNet technology as well as the patency benefits (maintaining the artery open) of the internal and external carotid
arteries at twelve months.
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In
the first quarter of 2015, we introduced CGuard RX, the new rapid exchange delivery system for CGuard EPS. The rapid exchange
delivery system has a guidewire that passes through the delivery system, running through the guiding catheter. It has one port,
and thus, can be operated by one operator, while an over-the-wire-delivery system has two lumens and ports and requires two operators
to perform the procedure. Our rapid exchange delivery system received CE mark approval in January 2015. We launched our CGuard
EPS in Europe with the rapid exchange delivery system in multiple medical specialties that perform carotid artery stenting. These
customers include interventional cardiologists, vascular surgeons, interventional neuroradiologists and interventional radiologists.
In
September 2015, we announced full market launch of CGuard EPS in Europe. Subsequently, we launched CGuard EPS in Russia and certain
countries in Latin America and Asia, including India. In September, 2020, we launched CGuard EPS in Brazil after receiving regulatory
approval in July 2020, and we are seeking strategic partners for a potential launch of CGuard EPS in Japan and China.
In
April 2017, we had a pre-IDE submission meeting with the FDA regarding CGuard EPS where we presented materials that we believed
would support a formal IDE submission seeking approval to conduct a human clinical trial in the United States which included our
draft synopsis for the clinical trial design. The FDA agreed to our pre-clinical test plan and clinical trial design. On July
26, 2019, we submitted an IDE application for CGuard EPS. In connection with such application, on August 23, 2019, we received
a request for additional information from the FDA in support of our application. On September 8, 2020, we received IDE approval
for CGuard™ Carotid Stent System, CARENET-III.
Additionally,
we intend to continue to evaluate potential product enhancements and manufacturing enhancements for CGuard EPS expected to reduce
cost of goods and/or provide the best-in-class performing delivery system. We cannot give any assurance that we will receive sufficient
(or any) proceeds from future financings or the timing of such financings, if ever for potential product enhancements and manufacturing
enhancements. In addition, such additional financings may be costly or difficult to complete. Even if we receive sufficient proceeds
from future financings, there is no assurance that we will be able to timely apply for CE mark approval following our receipt
of such proceeds. We believe these improvements may allow us to reduce cost of goods and increase penetration in our existing
geographies and better position us for entry into new markets.
MGuard
Products– Coronary Applications
Bare-Metal
Stent MGuard Product.  Our MGuard Prime EPS coronary product is comprised of MicroNet wrapped around a cobalt-chromium
based bare-metal stent. In comparison to a conventional bare-metal stent, we believe our MGuard Prime EPS coronary product with
MicroNet mesh provides protection from dangerous embolic showers in patients experiencing ST-segment elevation myocardial infarction,
the most severe form of a heart attack, referred to as STEMI. Standard stents were not engineered for heart attack patients. Rather,
they were designed for treating stable angina patients whose occlusion is different from that of an occlusion in a heart attack
patient. In acute heart attack patients, the plaque or thrombus is unstable and often breaks up as the stent is implanted causing
downstream blockages in a significant portion of heart attack patients. Our MGuard Prime EPS is integrated with a precisely engineered
micro net mesh that is designed to prevent the unstable arterial plaque and thrombus that caused the heart attack blockage from
breaking off.
NGuard
— Neurovascular Applications
We
began developing a neurovascular flow diverter, which we refer to as NGuard, which is an endovascular device that diverts blood
flow away from cerebral aneurysms and ultimately seals the aneurysms. We have tested early flow diverter prototypes in initial
pre-clinical testing in both simulated aneurysm bench models using various MicroNet configurations with varying aperture sizes,
as well as in standard in vivo pre-clinical models, in which we observed aneurysm sealing and also wide open side branch vessels
across which the device was placed. We have suspended all further development activity of NGuard until we obtain sufficient funding
for such purpose.
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PVGuard
— Peripheral Vascular Applications
We
intend to develop our MicroNet mesh sleeve and a self-expandable stent for use in peripheral vascular applications, to which we
refer to as PVGuard. PVDs are usually characterized by the accumulation of plaque in arteries in the legs. This accumulation can
lead to the need for amputation or even death, when untreated. PVD is treated either by trying to clear the artery of the blockage,
or by implanting a stent in the affected area to push the blockage out of the way of normal blood flow.
As
in carotid procedures, peripheral procedures are characterized by the necessity of controlling embolic showers both during and
post-procedure. Controlling embolic showers is so important in these indications that physicians often use fully covered stents,
at the risk of blocking branching vessels, to ensure that emboli do not fall into the bloodstream and move to the brain. We believe
that our MicroNet design will provide substantial advantages over existing therapies in treating peripheral artery stenosis.
However,
as we plan to focus our resources on the further expansion of our sales and marketing activities for CGuard EPS and, provided
that we have sufficient resources, potential product enhancements and manufacturing enhancements for CGuard EPS expected to reduce
cost of goods and/or provide the best-in-class performing delivery system and its submission for CE mark approval, we do not intend
to pursue the development of PVGuard in the near future.
Completed
Clinical Trials for CGuard EPS
CARENET
The
CARENET trial was the first multi-center study of CGuard EPS following the receipt of CE mark of this device in March 2013. The
CARENET trial was designed to evaluate feasibility and safety of CGuard EPS in treatment of carotid lesions in consecutive patients
suitable for coronary artery stenting (“CAS”) in a multi-operator, real-life setting. The acute, 30 day, magnetic
resonance imaging (“MRI”), ultrasound and six month clinical event results were presented at the LINC conference in
Leipzig, Germany in February, 2015. In the third quarter of 2015, the results of the CGuard CARENET trial were published in the
Journal of the American College of Cardiology. In November 2015, positive twelve month follow-up data from the CGuard CARENET
trial was presented at the 42nd Annual Symposium on Vascular and Endovascular Issues, documenting the benefits of the CGuard MicroNet
technology as well as the patency benefits (maintaining the artery open) of the internal and external carotid arteries at twelve
months.
MACCE
(myocardial infarction (“MI”), stroke or death) rate was 0.0% at 30 days. At six months, there was one death, which
was not device or procedure-related but did result in a MACCE rate of 3.6% at six months. At twelve months there were two additional
deaths, which were not device or procedure-related resulting in a MACCE rate of 10.7% at one year.
30 days
(n=30)
6 months
(n=28)
12 months
(n=28)
MACCE (MI, stroke, death)
(0) 0.0 %
(1) 3.6 %
(3) 10.7 %
MI
(0) 0.0 %
(0) 0.0 %
(0) 0.0 %
stroke
(0) 0.0 %
( 0) 0.0 %
(0) 0.0 %
death
(0) 0.0 %
(1) 3.6 %
(3) 10.7 %
CAS
carries the risk of cerebral embolization during and following the procedure, leading to life-threatening complications, mainly
cerebral ischemic events. Diffusion-weighted magnetic resonance imaging (DW-MRI) is a sensitive tool used to identify cerebral
emboli during CAS by measuring “lesions” within the brain which are areas that are ischemic and do not receive oxygenated
blood due to cerebral emboli. In the CARENET trial, 37.0% of patients treated with CGuard EPS had new ischemic lesions at 48 hours
after the procedure, with an average volume of 0.039 cm3. Of these lesions, there was only one that remained at 30 days following
the procedure and all others had resolved. Complete details appear in the following table. Where there is a second number shown
below after a ± symbol, it indicates the potential error in the measurement.
48 hours
n=27
30 days
n=26
Subjects with new Acute Ischemic Lesions (“AIL”)
10
1
Incidence of new lesions
37.0 %
4.0 %
Total number new AIL
83
1
Avg. number new AIL per patient
3.19 ± 10.33
0.04 ± 0.20
Average lesion volume (cm 3 )
0.039 ± 0.08
0.08 ± 0.00
Maximum lesion volume (cm 3 )
0.445
0.116
Permanent AIL at 30 days
—
1
- 10 -
The
healing process of the tissue and in-stent restenosis can be measured by a non-invasive form of ultrasound called duplex ultrasound.
This type of ultrasound measures the velocity of the blood that flows within the carotid arteries, which increases exponentially
as the lumen of the internal carotid artery narrows and the percent stenosis increases. One of the measurements is called PSV
(peak systolic volume) and is known to be highly correlated to the degree of in-stent restenosis; PSV values higher than 300 cm/sec
are indicative of >70% stenosis, while PSV values lower than 104 cm/sec are indicative of <30% restenosis and healthy healing.
In the CARENET trial, duplex ultrasound measurements done at 30 days, 6 months and 12 months following the stenting procedure
all attest to healthy normal healing without restenosis concerns, as the PSV values were 60.96 cm/sec ± 22.31, 85.24 cm/sec
± 39.56, and 90.22 cm/sec ± 37.72 respectively. The internal carotid artery was patent in all patients (100%).
The
conclusions of the CARENET trial were:
●
The
CARENET trial demonstrated safety of the CGuard EPS stent, with a 30 day MACCE rate of 0%.
●
Incidence
of new ipsilateral lesions (percent of patients with new lesions on the ipsilateral side (same side where the stent was employed))
at 48 hours was reduced by almost half compared to published data, and volume was reduced almost tenfold.
●
All
but one lesion had resolved completely by 30 days.
●
Twelve
month data showed no stroke or stroke-related deaths, and no cardiac adverse events.
●
CGuard
EPS offers enhanced benefits for patients undergoing CAS with unprecedented safety.
Physician-Sponsored
Clinical Trials for CGuard—PARADIGM-101 Study
PARADIGM-101
( P rospective evaluation of A ll-comer pe R cutaneous c A roti D
revascularization I n symptomatic and increased-risk asymptomatic carotid artery stenosis, using C G uard™
M esh-covered embolic prevention stent system-101) was an investigator-led, single center study with the objective
of evaluating feasibility and outcome of routine use of CGuard EPS in 101 consecutive unselected all-comer patients referred for
carotid revascularization, initiated in 2015. In May 2016, the 30-day results were presented at the EuroPCR 2016 Late-Breaking
Clinical Trial Session in Paris, and in the Journal of EuroIntervention.
Key
findings from the PARADIGM-101 study and the follow-up data are as follows:
●
CGuard
EPS delivery success was 99.1%. The clinical evaluation also found no device foreshortening or elongation;
●
Angiographic
diameter stenosis or vessel narrowing was reduced from 83±9% to only 6.7±5% (p<0.001);
●
Periprocedural
death/major stroke/ myocardial infarction (“MI”) rates were 0%;
●
One
event was adjudicated by the Clinical Events Committee as a minor stroke (0.9%), with no change in NIH Stroke Scale or modified
Ranking scale;
The
results of the PARADIGM-101 study demonstrated that CGuard EPS can safely be used in a high risk, all-comer population of patients
with carotid artery stenosis and indicated that routine use of CGuard EPS may prevent cerebral events, such as strokes, by holding
plaque against the vessel wall, preventing emboli from being released into the blood stream. The PARADIGM-101 study found that
CGuard EPS is applicable in up to 90% of all-comer patients with carotid stenosis.
- 11 -
Clinical
Results and Mechanical Properties of the Carotid CGUARD Double-Layered Embolic Prevention Stent Study
“Clinical
Results and Mechanical Properties of the Carotid CGUARD Double-Layered Embolic Prevention Stent Study” was an investigator-led,
prospective single-center study which evaluated CGuard EPS in 30 consecutive patients with internal carotid artery stenosis disease
with the objective of reporting early clinical outcomes with a novel MicroNet covered stent for the internal carotid artery and
the in vitro investigation of the device’s mechanical properties. In October 2016, the 30-day positive results were published
online-ahead-of-print in the Journal of Endovascular Therapy.
Key
findings from the study are as follows:
●
100%
success in implanting CGuard EPS without residual stenosis;
●
No
peri- or post-procedural complications;
●
No
deaths, major adverse events, minor or major strokes, or new neurologic symptoms during the six months following the procedure;
●
Modified
Rankin Scale improved for the symptomatic patients from 1.56 prior to the procedure to 0 afterwards;
●
All
vessels treated with CGuard EPS remained patent (open) at six months; and
●
DW-MRI
performed in 19 of 30 patients found no new ipsilateral lesions after 30 days and after six months compared with the baseline
DW-MRI studies.
Additionally,
based on engineering evaluations, the study concluded that CGuard EPS provides a high radial force and strong support in stenotic
lesions. The stent is easy to use and safe to implant because it does not foreshorten and its structure adapts well to changes
in diameter and direction of tortuous vascular anatomies. The MicroNet mesh of CGuard did not cause any changes to specific mechanical
parameters of the underlying stent.
CGUARD
Mesh-Covered Stent in Real World: The IRON-Guard Registry
“CGUARD
Mesh-Covered Stent in Real World: The IRON-Guard Registry using CGuard EPS” was a physician initiated prospective multi-center
registry that included 200 patients from 12 medical centers in Italy. The objective of the study was to report 30-day outcomes
(including MACCE) in a prospective series of patients who were treated with CGuard EPS between April 2015 and June 2016. In January
2017, 30-day results were presented at the Leipzig Interventional Course (LINC) 2017 and published in the Journal of EuroIntervention
in May 2017. The 12 month follow-up was published in the Journal of EuroIntevention in October 2018.
Key
30-day results presented were:
●
100%
success in implanting CGuard EPS;
●
No
MI, major stroke or death at 30 days;
●
There
were two transient ischemic attacks and five periprocedural minor strokes, including one thrombosis solved by surgery.
●
Total
elimination of post-procedural neurologic complications by 30 days;
●
DW-MRI
performed pre-procedure and between 24 and 72 hours post-procedure in 61 patients, indicated that 12 patients had new micro
emboli (19%).
●
At
12 months, there were no new major neurological adverse events, thrombosis or external carotid occlusion recorded;
●
One
myocardial infarction occurred at 12 months.
- 12 -
Peri-procedural
brain lesions prevention in CAS (3PCAS): Randomized trial comparing CGuard stent vs. WallStent™ Study
3PCAS
study was an independent investigator-led single center randomized clinical trial, comparing CGuard EPS vs. WallStent™,
intended to evaluate the incidence of peri-procedural diffusion-weighted-magnetic-resonance-imaging (DW-MRI) new brain lesions
after carotid artery stenting. Sixty-one consecutive patients referred for carotid revascularization (between January 2015 and
October 2016) were eligible for the study. The results of the 3PCAS study was published in the International Journal of Cardiology
in September 2018. The discussion distinguished between peri-procedural (from procedure to 48h -72h) and post-procedural periods
(72h to 30 days) where the CGuard EPS demonstrated a reduction in the post-procedural embolic effect during the carotid plaque
healing period. In contrast, there was no difference between the two stent groups during the peri-procedural stage because of,
according to the published article, the presence of bilateral/contralateral lesions (lesions resulting from the contralateral
artery from the non-treated carotid) which suggest that the peri-procedural neurological damage may have originated from extra-carotid
sources (outside of the artery which was treated and outside the stent itself).
Initial
Clinical Study of the New CGuard EPS MicroNet Covered Carotid Stent: “One Size Fits All”
“Initial
Clinical Study of the New CGuard EPS MicroNet Covered Carotid Stent: ‘One Size Fits All’” was an investigator-led,
single-center study, which evaluated CGuard EPS in 30 consecutive patients with symptomatic stenosis of the internal carotid artery
with the objective of evaluating the CGuard EPS MicroNet covered stent for its ability to adjust to different vessel diameters.
The results of the study were published in the Journal of Endovascular Therapy in May 2019. The conclusion of the study as reported
was that CGuard EPS has high conformability combined with an almost equivalent outward radial force at expansion diameters ranging
from 5.5 to 9.0 mm. The first clinical results demonstrate the “One Size Fits All” stent can be implanted in internal
carotid arteries with reference diameters within this range.
Key
findings from the study were as follows:
●
100%
technical success in implanting CGuard EPS;
●
No
neurological events within 30 days;
●
The
chronic outward force normalized by stent length demonstrated a near-equivalent radial force outcome; and
●
The
stent displayed only a minor difference between the minimal radial force at 9.0 mm (0.195 N/mm) and the maximal radial force
at 5.5 mm (0.330 N/mm).
Preliminary
Results from a Prospective Real-World Multicenter Clinical Practice of Carotid Artery Stenting Using the CGuard Embolic Prevention
System: The IRONGUARD 2 Study
“Preliminary
Results From a Prospective Real-World Multicenter Clinical Practice of Carotid Artery Stenting Using the CGuard Embolic Prevention
System: The IRONGUARD 2 Study” is a physician initiated prospective multi-center registry enrolling 733 patients from 20
medical centers in Italy, from January 2017 to June 2019. The objective of the study is to evaluate periprocedural (24 hours),
post-procedural (up to 30 days), and 12-month outcomes in a largest, prospective, multicenter series of patients submitted for
protected carotid artery stenting with the CGuard Embolic Prevention System. The 24-hour, 30-day and 12-month preliminary results
(data available on 726 patients out of the 733 treated) were presented at the Leipzig Interventional Course (LINC) in January
2021. The study’s preliminary results from the IRONGUAURD 2 study suggested in a real-world evaluation of carotid artery
stenting, Cguard EPS can be safely used for treatment of extracranial carotid artery stenosis, allowing a low rate of post procedural
adverse events by 12 months.
Key
findings from the study are as follows:
●
100%%
procedural success in implanting CGuard EPS;
●
1
death from hemorrhagic stroke (patient was admitted for immediate treatment of CAS due to stroke), 2 minor strokes, 6 TIAs
and one nonfatal AMI at 24 hours;
1
minor stroke, 2 TIAs, three AMIs, no deaths and no stent thrombosis/occlusions between 24 hours and 30 days; and
●
1
minor stroke, 4 TIAs, 2 AMIs and 8 deaths (the 2 mentioned AMIs, 4 malignancies, 1 suicide and 1 undefined complication in
Guillain-Barré Syndrome) between 30 days and 1 year.
- 13 -
The
SIBERIA Trial for Carotid Artery Stenosis: A Randomized Controlled Trial of Conventional Versus Micronet™-Covered Stent
Use in Percutaneous Neuroprotected Carotid Artery Revascularization: Peri-procedural and 30-day Diffusion-Weighted Magnetic Resonance
Imaging and Clinical Outcomes
“The
SIBERIA Trial for Carotid Artery Stenosis: A Randomized Controlled Trial of Conventional Versus Micronet™-Covered Stent
Use in Percutaneous Neuroprotected Carotid Artery Revascularization: Peri-procedural and 30-day Diffusion-Weighted Magnetic Resonance
Imaging and Clinical Outcomes” was an investigator-initiated randomized clinical trial, single-center study, which evaluated
one hundred patients who qualified for carotid revascularization with high risk for surgery and were randomized 1:1 to either
CGuard EPS or Acculink TM . The primary endpoints were incidence and volume of new cerebral embolic post-procedural lesions
(24-48 hours) as determined by diffusion weighted magnetic resonance imaging (DW-MRI). The principal secondary endpoints included
incidence of periprocedural or postprocedural stroke, myocardial infarction and death at 30 days. The results of the study were
presented in a late-breaking session at the EuroPCR in June 2020. The conclusion of the study was that the CGuard™ Micronet™-covered
stent use in consecutive unselected patients subjected to neuroprotected carotid artery stenting was associated with a greater
than three-fold reduction in the procedure-generated mean cerebral lesion volume, and with zero post-procedural cerebral embolisms
observed.
Key
findings from the study are as follows:
●
Post
Procedure (24-48 hours), the CGuard™ arm was observed to have a 78% reduction in the average volume of new cerebral
lesions (157 mm3 vs. 700 mm3), a statistically significant improvement (p=0.007;
●
At
30 days, DW-MRI showed zero new cerebral lessons in the CGuard™ arm versus six in the Acculink™ arm (p=0.03);
●
At
30 days, there were zero strokes, myocardia infarctions or deaths in the CGuard arm and three events the Acculink™ arm
(two strokes and one myocardial infarction).
Completed
Clinical Trials for MGuard Bare-Metal Coronary Products
We
have completed eight clinical trials with respect to our first generation stainless steel-based MGuard coronary device and our
cobalt-chromium based MGuard Prime EPS stent. Our first generation MGuard stent combining the MicroNet with a stainless steel
stent received CE mark approval for the treatment of coronary artery disease in the European Union in October 2007. We subsequently
replaced the stainless steel stent with a more advanced cobalt-chromium based stent for MGuard Prime EPS.
The
First in Men (FIM) study conducted in Germany from the fourth quarter of 2006 through the second quarter of 2008 focused on patients
with occlusion in their stent graft. This group is considered to be in “high risk” for complications during and shortly
after the procedure due to the substantial risk of occurrence of a thromboembolic event. The study demonstrated MGuard’s
safety in this high risk group. This study was followed by the GUARD study in Brazil in 2007 with a similar patient population
which reinforced the safety profile of MGuard in patients prone to procedural complications. The MAGICAL study was a pilot study
in STEMI patients conducted in Poland from 2008 through 2012 which demonstrated safety, measured by MACE rates at 30 days following
the procedure, as well as efficacy results, measured by the ability of MGuard to reestablish blood flow into the infarcted area
of the muscle. Furthermore, we conducted three registries (iMOS, IMR and iMOS Prime) that confirmed the feasibility of MGuard
and MGuard Prime EPS for the treatment of STEMI patients and the safety of MGuard and MGuard Prime EPS in the STEMI patient group.
Safety was repeatedly demonstrated in these trials and registries by the low mortality rate in the first month after the procedure.
In
the second calendar quarter of 2011, we began the MGuard for Acute ST Elevation Reperfusion Trial (which we refer to as our “MASTER
I trial”), a prospective, randomized study, which demonstrated that among patients with acute STEMI undergoing emergency
PCI, patients treated with MGuard had superior rates of epicardial coronary flow (blood flow within the vessels that run along
the outer surface of the heart) and complete ST-segment resolution, or restoration of blood flow to the heart muscle after a heart
attack, compared to those treated with commercially-approved bare metal or drug-eluting stents. The results of this trial are
summarized in greater detail below.
- 14 -
Finally,
the MASTER II trial, which we initially initiated as part of our efforts to seek approval of our MGuard Prime EPS by the FDA,
was discontinued at our election in its current form in light of market conditions moving toward the use of drug-eluting stents
over bare-metal stents. Analysis of the patients already enrolled in the MASTER II trial prior to its suspension, however, reconfirmed
the MASTER I safety results due to a continued low mortality rate.
MASTER
I Trial
In
the second calendar quarter of 2011, we began the MASTER I trial, a prospective, randomized study in Europe, South America and
Israel to compare the MGuard with commercially-approved bare metal and drug-eluting stents in achieving superior myocardial reperfusion
(the restoration of blood flow) in primary angioplasty for the treatment of acute STEMI, the most severe form of heart attack.
The MASTER I trial enrolled 433 subjects, 50% of whom were treated with MGuard and 50% of whom were treated with a commercially-approved
bare metal or drug-eluting stents. The detailed acute and 30 days results from the trial were presented at the TCT conference
on October 24, 2012 and published (Prospective, Randomized, Multicenter Evaluation of a Polyethylene Terephthalate Micronet Mesh–Covered
Stent (MGuard) in ST-Segment Elevation Myocardial Infarction, Stone et. al, JACC , 60; 2012). The results were as follows:
●
The
primary endpoint of post-procedure complete ST-segment resolution (restoration of blood flow to the heart muscle after a heart
attack) was statistically significantly improved in patients randomized to the MGuard compared to patients receiving a commercially-approved
bare metal or drug-eluting stent (57.8% vs. 44.7%).
●
Patients
receiving MGuard exhibited superior rates of thrombolysis in myocardial infarction (TIMI) 3 flow, which evidences normal coronary
blood flow that fills the distal coronary bed completely, as compared to patients receiving a commercially-approved bare metal
or drug-eluting stent (91.7% vs. 82.9%), with comparable rates of myocardial blush grade 2 or 3 (83.9% vs. 84.7%) and corrected
TIMI frame count (cTFC) (17.0 vs. 18.1
●
Angiographic
success rates (attainment of <50% final residual stenosis of the target lesion and final TIMI 3 flow) were higher in the
MGuard group compared to commercially-approved bare metal or drug-eluting stents (91.7% vs 82.4%).
●
Mortality
(0% vs. 1.9%) and major adverse cardiac events (1.8% vs. 2.3%) at 30 days post procedure were not statistically significantly
different between patients randomized to MGuard as opposed to patients randomized to commercially-approved bare metal or drug-eluting
stents. All other major adverse cardiac event components, as well as stent thrombosis, were comparable between the MGuard
and commercially-approved bare metal or drug-eluting stents.
The
six month results from the MASTER I trial were presented at the 2013 EuroPCR Meeting, the official annual meeting of the European
Association for Percutaneous Cardiovascular Interventions, on May 23, 2013 in Paris, France. The results were as follows:
●
Mortality
(0.5% vs. 2.8%) and major adverse cardiac events (5.2% vs. 3.4%) at 6 months post procedure were not statistically significantly
different between patients randomized to the MGuard as compared to patients randomized to commercially-approved bare metal
or drug-eluting stents. All other major adverse cardiac event components, as well as stent thrombosis, were comparable between
patients treated with MGuard and those treated with commercially-approved bare metal or drug-eluting stents.
The
twelve month results from the MASTER I trial were presented at the TCT conference on October 29, 2013 and published (Mesh-Covered
Embolic Protection Stent Implantation in ST-Segment–Elevation Myocardial Infarction Final 1-Year Clinical and Angiographic
Results From the MGUARD for Acute ST Elevation Reperfusion Trial, Dudek et. al, Coronary Interventions , 2014). The results
were as follows:
●
Mortality
(1.0% vs. 3.3%) and major adverse cardiac events (9.1% vs. 3.3%) at 12 months post procedure were not statistically significantly
different between patients randomized to the MGuard as opposed to those randomized to commercially-approved bare metal or
drug-eluting stents. All other major adverse cardiac events, as well as stent thrombosis, were comparable between the MGuard
and commercially-approved bare metal or drug-eluting stents.
- 15 -
In
summary, the MASTER I trial demonstrated that among patients with acute STEMI undergoing emergency PCI patients treated with MGuard
had superior rates of epicardial coronary flow (blood flow within the vessels that run along the outer surface of the heart) and
complete ST-segment resolution compared to those treated with commercially-approved bare metal or drug-eluting stents. In addition,
patients treated with MGuard showed a slightly lower mortality rate and a slightly higher major adverse cardiac event rate as
compared to patients treated with commercially-approved bare metal or drug-eluting stents six and twelve months post procedure.
A
detailed table with the results from the MASTER I trial is set forth below. The “p-Value” refers to the probability
of obtaining a given test result. Any p value less than 0.05 is considered statistically significant.
MGuard
Bare Metal Stents/Drug
Eluting Stents
p-Value
Number of Patients
217
216
—
TIMI 0-1
1.8
5.6
0.01
TIMI 3
91.7
82.9
0.006
Myocardial blush grade 0-1
16.1
14.8
0.71
Myocardial blush grade 3
74.2
72.1
0.62
ST segment resolution >70
57.8
44.7
0.008
30 day major adverse cardiac event
1.8
2.3
0.75
6 month major adverse cardiac event
5.2
3.4
0.34
12 month major adverse cardiac event
9.1
3.3
0.02
Future
Clinical Trials for CGuard EPS and MGuard Prime EPS
Post-marketing
clinical trials (outside the United States) could be conducted to further evaluate the safety and efficacy of CGuard EPS in specific
indications. These trials would be designed to facilitate market acceptance and expand the use of the product. We expect to be
able to rely upon CE mark approval of the product and other supporting clinical data to obtain local approvals.
We
do not anticipate conducting additional post-marketing clinical trials for our bare-metal MGuard coronary products.
Growth
Strategy
Our
primary business objective is to utilize our proprietary MicroNet technology and products to become the industry standard for
treatment of stroke, complex vascular and coronary disease and to provide a superior solution to the common acute problems caused
by current stenting procedures, such as restenosis, embolic showers and late thrombosis. We are pursuing the following business
strategies to achieve this objective.
●
Widen
the adoption of CGuard EPS . We are seeking to expand the population of CGuard EPS patients in those countries in which
CGuard EPS is commercially available. In particular, our focus is on establishing CGuard EPS as a viable alternative (in appropriate
cases) to conventional carotid stents and vascular surgery within the applicable medical communities. We intend to accomplish
this goal by continuing to publish and present our clinical data, support investigator-initiated clinical registries and exploring
addition of a procedural protection device to our portfolio incorporating the principal of reverse flow of the carotid artery
as an adjuctive alternative to femoral access. We have partnered and will continue to seek out partnerships with organizations
focused on the treatment of stroke. We will also continue to engage advisory boards and to develop a network of key opinion
leaders to assist us in our efforts to widen the adoption of CGuard EPS.
●
Grow
our presence in existing and new markets for CGuard EPS. We have launched CGuard EPS in most European and Latin American
countries through a comprehensive distributor sales organizations network. We are continuing to focus on larger growing markets
through this network by supporting our distributors with a comprehensive marketing and clinical education programs. In November
2018, we obtained approval for reimbursement and commercial sale for CGuard EPS in Australia and immediately launched the
product. We are also pursuing additional product registrations and distribution contracts with local distributors in other
countries in Europe, Asia and Latin America.
- 16 -
●
Continue
to leverage our MicroNet technology to develop additional applications for interventional cardiologists and vascular surgeons.
In addition to the applications described above, we believe that we will eventually be able to utilize our proprietary
MicroNet technology to address imminent market needs for new product innovations to significantly improve patients’
care. We continue to broadly develop and protect intellectual property using our mesh technology. Examples of some areas include
peripheral vascular disease, neurovascular disease, renal artery disease and bifurcation disease.
●
Establish
relationships with collaborative and development partners to fully develop and market our existing and future products. We
are seeking strategic partners for collaborative research, development, marketing, distribution, or other agreements, which
could assist with our development and commercialization efforts for CGuard EPS and MGuard DES, and other potential products
that are based on our MicroNet technology.
●
Resume
development and successfully commercialize MGuard DES. While we have limited the focus of product development to our carotid
products, if we resume development of our coronary products, we plan to evaluate opportunities to further develop MGuard DES.
●
Portfolio
expansion and pipeline development We will continue to invest in advancing our portfolio with new delivery system alternatives
to facilitate the use of CGuard by all physicians. Our delivery systems will enable all endovascular access points including
accessory devices for Arterial Venous (AV) shunting .
Competition
The
markets in which we compete are highly competitive, subject to change and impacted by new product introductions and other activities
of industry participants.
Carotid
The
carotid stent markets in the United States and Europe are dominated by Abbott Laboratories, Boston Scientific Corporation, Covidien
Ltd. (currently part of Medtronic, Inc.), and Cordis Corporation (currently part of Cardinal Health, Inc.). Gore Medical and Terumo
Medical Corporation produce a polytetrafluoroethylene mesh-covered stent and a double layer metal stent, respectively. All of
these larger companies have substantially greater capital resources, larger customer bases, broader product lines, larger sales
forces, greater marketing and management resources, larger research and development staffs and larger facilities than ours and
have established reputations and relationships with our target customers, as well as worldwide distribution methods that are more
effective than ours. However, we believe that the European market is somewhat fragmented, and, in our opinion, smaller competitors
may be able to gain market share with greater flexibility.
Coronary
The
bare-metal stent and the drug-eluting stent markets in the United States and Europe are dominated by Abbott Laboratories, Boston
Scientific Corporation, and Medtronic, Inc. In Europe, the market is now almost exclusively dominated by drug eluding stents and
is rapidly becoming so in the rest of the world. (Catheter Cardiovasc Interv. 2018 Oct 1;(92(4):E262-E270. doi: 10.1002/ccd.27375.
Epub 2017 Oct 13. https://www.ncbi.nlm.nih.gov/pubmed/29027735 ). We believe physicians look to next-generation stent technology
to compete with existing therapies. Such next-generation technologies include bio-absorbable stents, stents that focus on treating
bifurcated lesions, and stents with superior polymer and drug coatings, and many industry participants are working to improve
stenting procedures as the portfolio of available stent technologies rapidly increases.
According
to the MEDTECH OUTLOOK, the three major players (Abbott Laboratories, Boston Scientific Corporation and Medtronic, Inc.) in the
worldwide coronary stent market have a combined total market share of approximately 92%. To date, our sales are not significant
enough to register in market share. As such, one of the challenges we face to further our product growth is the competition from
numerous pharmaceutical and biotechnology companies in the therapeutics area, as well as competition from academic institutions,
government agencies and research institutions. Most of our current and potential competitors, including but not limited to those
listed above, have, and will continue to have, substantially greater financial, technological, research and development, regulatory
and clinical, manufacturing, marketing and sales, distribution and personnel resources than we do. Due to ongoing consolidation
in the industry, there are high barriers to entry for small manufacturers in the European and the U.S. markets and the rest of
the world.
- 17 -
Neurovascular
Leading
industry players in the global neurovascular devices market include Medtronic, Stryker, Terumo and Johnson & Johnson. Acquisitions
and mergers are increasingly used as a strategy for product portfolio expansion and to grow footprint. (Global Market Insights,
Inc. - Devices Market Share 2018-2024 Industry Size Report. https://www.gminsights.com/industry-analysis/neurovascular-devices-market)
Sales
and Marketing
Sales
and Marketing
Based
on the positive CGuard EPS clinical data, we initiated the commercial launch of CGuard EPS in CE marked countries in early 2015.
In September 2015, we announced full market launch of CGuard EPS in Europe.
In
2017, we decided to shift our commercial strategy to focus on sales of our products through local distribution partners and our
own internal sales initiatives to gain greater reach into all the relevant clinical specialties and to expand our geographic coverage.
Our current strategy seeks to broaden our sales efforts to transition vascular surgeons from carotid endarterectomy procedures
to carotid stenting with CGuard EPS, which we believe can greatly expand our customer base. We have focused and we plan to continue
to focus our marketing efforts primarily on key growth markets and to evaluate opportunities in new territories if and when they
become available. In addition, we are using international trade shows and industry conferences to gain market exposure and brand
recognition. We continue to work with leading physicians to enhance our marketing effort and are developing relationships with
new key opinion leaders to champion our technology and work with us in clinical studies
Currently,
we are actively selling our MGuard coronary products with a bio-stable MicroNet through local distributors in Europe, Latin America,
the Middle East and Asia.
Product
Positioning
When
treating carotid artery disease, we believe that there is an opportunity to enter the market with bare-metal stent platform and
to become a competitive player without a drug-eluting stent platform. Therefore, we believe that CGuard EPS is poised for commercial
growth in 2020 as more and more positive clinical data is presented.
Additionally,
we intend to continue to evaluate potential product enhancements and manufacturing enhancements for CGuard EPS expected to reduce
cost of goods or provide the best-in-class performing delivery system. We believe these improvements may allow us to reduce cost
of goods and increase penetration in our existing geographies and better position us for entry into new markets. Finally, we do
not expect that it would be crucial to use a drug-eluting stent platform to compete in certain new markets such as the neurovascular
market, and hence, we plan to continue to explore this area of opportunity.
The
MGuard coronary products have initially penetrated the market by entering segments with indications that present high risks of
embolic dislodgement, notably acute MI and saphenous vein graft coronary interventions. Even though MGuard technology has demonstrated
its advantages with clinical data, it is based on a bare-metal platform while the market demand has shifted away from bare-metal
stents in favor of drug-eluting stents.
Insurance
Reimbursement
In
most countries, a significant portion of a patient’s medical expenses is covered by third-party payors. Third-party payors
can include both government funded insurance programs and private insurance programs. While each payor develops and maintains
its own coverage and reimbursement policies, payors, in many instances, have similarly established policies, and in the U.S.,
for example, coverage policies and reimbursement rates of private payors are often influenced by those established by the U.S.
Department of Health and Human Services Centers for Medicare and Medicaid Services (CMS). The CGuard products and MGuard coronary
products sold to-date in applicable foreign countries have been designed and labeled to facilitate the utilization of existing
reimbursement codes for such countries, and we intend to continue to design and label our present and future products in a manner
consistent with this goal.
- 18 -
While
most countries have established reimbursement codes for stenting procedures, certain countries may require additional clinical
data before recognizing coverage and/or to obtain a certain level of reimbursement for one or more of our products. In these situations,
we intend to complete the required clinical studies to obtain reimbursement approval in countries where it makes economic sense
to do so.
Intellectual
Property
Patents
We
have 52 issued patents, including 14 patents issued in the U.S., and seven pending patent applications, four of which are pending
in the United States. Many of these patents and applications cover aspects of our CGuard and MGuard technology. Patents outside
the U.S. have been filed in Canada, China, Europe, Israel, India, Japan, Australia, and South Africa. The patents and applications
fall into a number of patent families, as listed below:
Base
Title of Patent Family
Pending
patent
applications
(Countries)
Issued
patents
(Country
and Patent No.)
Issue
Date
Bifurcated
Stent Assemblies
US
8,961,586
China ZL200780046676.2
02/24/2015
9/26/2012
Deformable
Tip for Stent Delivery and Methods of Use
US
10,258,491
Israel 260,945
4/16/2019
07/01/2020
Visualization
of blood flow in a venous/arterial shunting system
US
In
Vivo Filter Assembly
US
9,132,261
09/15/2015
Filter
Assemblies
Israel
198,189
2/1/2014
Knitted
Stent Jackets
Canada
2,666,728
Canada 2,887,189
China ZL200780046697.4
China ZL201210320950.3
Israel 198,190
EP 2076212
(Germany, France, & UK)
US 10,137,015
6/23/2015
5/1/2018
10/10/2012
12/2/2015
2/1/2014
3/29/2017
11/27/2018
India
323792
10/28/2019
Optimized
Stent Jacket
Canada
EPO
US
Canada
2,670,724
China ZL201210454357.8
China ZL200780043259.2
India 297,257
Israel 230,922
US 9,132,003
US 9,526,644
US 9,782,281
US 10,070,976
US 10,406,006
US 10,406,008
EP 2088962
(validated in 9 countries: BE, CH, DE, FR, UK, IT, IE, LX, NL)
12/11/2018
12/9/2015
1/2/2013
5/30/2018
10/01/2020
9/15/2015
12/27/2016
10/10/2017
9/11/2018
9/10/2019
9/10/2019
10/11/2017
Stent
Apparatuses for Treatment Via Body Lumens and Methods of Use
US
EPO
South
Africa 2007/10751
Canada 2,609,687
Canada 2,843,097
EP 1885281
(CH, DE, FR, GB, IE, IT)
US 10,058,440
US 10,070,977
10/27/2010
4/22/2015
10/27/2015
2/13/2019
3/1/2017
8/28/2018
9/11/2018
Stent
Thermoforming Apparatus and Methods
JP
6553178
US 9,527,234
US 10,376,393
Australia 2015326517
Canada 2962713
7/12/2019
12/27/2016
8/13/2019
05/21/2020
02/19/2019
Methods
or using a self-adjusting stent assembly and kits including the same
US
PCT
- 19 -
The
patents and patent applications listed above cover various aspects of our products, specifically focusing on the mesh sleeve covering
our stents, as well as methods for production and delivery mechanisms of the stents. We believe that our patents, in particular
those covering the use of a knitted micron-level mesh sleeve over a stent for various indications, as well as our pending patent
applications (if issued as patents with claims substantially in their present form), create a significant barrier against other
companies seeking to use similar technology. We believe these patents and patent applications collectively cover all our existing
products and may be useful in protecting our future technological developments. We intend to aggressively continue patenting new
technologies and to actively pursue any infringement of our key patents.
Trade
Secrets
We
also rely on trade secret protection to protect our interests in proprietary know-how and/or for processes for which patents are
difficult to obtain or enforce. As part of our trade secret policy, we rely on non-disclosure and confidentiality agreements with
employees, consultants and other parties to protect trade secrets and other proprietary technology.
Trademarks
We
have registered or applied to register the following trademarks, which we use in connection with our products:
●
InspireMD ®
(US, European Union, and UK)
●
MGuard ®
(European Union, and UK)
●
CGuard ®
(US, European Union, and UK)
●
MGuard
Prime ® (US, European Union, and UK)
●
NGuard ®
US, European Union)
●
PVGuard®
(US, European Union, and UK)
●
Micronet®
)US(
●
MNP
Micronet Protection logo )European Union and UK)
●
Carenet®
)European Union and UK)
●
SmartFit™
(US)
The
trademarks are renewable indefinitely, so long as we continue using the marks and make the appropriate filings when required.
We also use and may have common-law rights to various trademarks, trade names, and service marks.
Government
Regulation
The
manufacture and sale of our products are subject to regulation by numerous governmental authorities, principally the European
Union CE mark and other corresponding foreign agencies.
- 20 -
Sales
of medical devices outside the United States are subject to foreign regulatory requirements that vary widely from country to country.
These laws and regulations range from simple product registration requirements in some countries to complex approval process,
clinical trials and production controls in others. As a result, the processes and time periods required to obtain foreign marketing
approval may be longer or shorter than those necessary to obtain FDA market authorization. These differences may affect the timeliness
of international market introduction of our products. For the European Union nations, medical devices must obtain a CE mark before
they may be placed on the market. In order to obtain and maintain the CE mark, we must comply with the Medical Device Directive
93/42/EEC (“MDD”) by presenting comprehensive technical files for our products demonstrating safety and efficacy of
the product to be placed on the market and passing initial and annual quality management system audit as per ISO 13485 standard
by an European Notified Body. We have obtained ISO 13485 quality system certification and the products we currently distribute
into the European Union display the required CE mark. In order to maintain certification, we are required to pass an annual surveillance
audit conducted by Notified Body auditors. The European Union replaced the MDD with the new European Medical Devices Regulation,
or MDR (MDR 2017/745). The MDR will apply after a transitional period of three years ending on May 26, 2020, which is expected
to change several aspects of the existing regulatory framework in Europe. Manufacturers have the duration of the transition period
to update their technical documentation and processes to meet the new requirements in order to obtain a CE Mark. After May 26,
2020, medical devices can still be placed on the market under the provision of the MDD until May 27, 2024; provided the CE Mark
was issued prior to this date and the manufacturer continues to comply with this directive. By May 27, 2024, all medical devices
entering the EU will need to have a CE Mark under the MDR, even if they have been on the market previously under the MDD. In our
case, CGuard and MGuard can continue to be marketed under the MDD until November 12, 2022. Specifically, the EU MDR will require
changes in the clinical evidence required for medical devices, post-market clinical follow-up evidence, annual reporting of safety
information for Class III products, Unique Device Identification (“UDI”) for all products, submission of core data
elements to a European UDI database prior to placement of a device on the market, and multiple other labeling changes. Approvals
for certain of our currently-marketed products could be curtailed or withdrawn as a result of the implementation and recertification
process of the EU MDR and acquiring approvals for new products could be more challenging, time consuming and costly.
As
noted below, we have or had regulatory approval and made sales of CGuard EPS, MGuard Prime EPS or both products either through
distributors pursuant to distribution agreements or directly, in the following countries: Argentina, Australia, Austria, Belarus,
Belgium, Brazil, Bulgaria, Chile, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Ecuador, Estonia, Finland, France, Germany,
Hong Kong, Hungary, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Netherlands, New Zealand,
Norway, Peru, Poland, Portugal, Romania, Russia, Saudi Arabia, Serbia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland,
Turkey Vietnam and the United Kingdom In addition, we are awaiting regulatory approval to sell our products in Taiwan. While each
of the European Union member countries accepts the CE mark as its sole requirement for marketing approval, some of these countries
still require us to take additional steps in order to gain reimbursement rights for our products. Furthermore, while we believe
that certain of the above-listed countries that are not members of the European Union accept the CE mark as a primary requirement
for marketing approval, each such country requires additional regulatory requirements for final marketing approval of our products.
Furthermore, we are currently targeting additional countries in Europe, Asia, and Latin America, however, even if all governmental
regulatory requirements are satisfied in each such country, we anticipate that obtaining marketing approval in each country could
take as few as three months or as many as twelve months or more, due to the nature of the approval process in each individual
country, including typical wait times for application processing and review, as discussed in greater detail below.
In
October 2007, our first generation MGuard stent combining the MicroNet with a stainless steel stent received CE mark approval
for the treatment of coronary artery disease in the European Union. We subsequently replaced the first generation MGuard product
with MGuard Prime EPS, which uses a more advanced cobalt-chromium based stent. Our MGuard Prime EPS received CE mark approval
in the European Union in October 2010 and marketing approval in those countries listed in the table below.
The
CGuard EPS received CE mark approval in the European Union on March 14, 2013 and marketing approval in the countries listed in
the table below. We are currently seeking marketing approval for CGuard EPS in, South Korea and Taiwan.
Please
refer to the table below setting forth the approvals and sales made for CGuard EPS and the MGuard Prime EPS on a country-by-country
basis
- 21 -
Approvals
and Sales of MGuard Prime EPS and CGuard EPS on a Country-by-Country Basis
Countries
CGuard
EPS Approval
CGuard
EPS Sales
MGuard
Prime
EPS Approval
MGuard
Prime EPS Sales
Argentina
Y
Y
Y
Y
Australia
Y
Y
N
Y
(1)
Austria
Y
Y
Y
Y
Belarus
Y
Y
Y
Y
Belgium
Y
Y
Y
Y
Brazil
Y
Y
Y
Y
Bulgaria
Y
Y
Y
Y
Chile
Y
Y
N
Y
(2)
Colombia
Y
Y
Y
Y
Croatia
Y
N
Y
Y
Cyprus
Y
Y
Y
Y
Czech
Republic
Y
Y
Y
Y
Denmark
Y
Y
Y
N
(3)
Dominican
Republic
Y
Y
Y
Y
Ecuador
Y
Y
Y
Y
Estonia
Y
Y
Y
Y
Finland
Y
Y
Y
Y
France
Y
Y
Y
Y
Germany
Y
Y
Y
Y
Greece
Y
Y
Y
N
(3)
Netherlands
Y
Y
Y
Y
Hong
Kong
Y
Y
N
N
Hungary
Y
Y
Y
Y
Iceland
Y
N
Y
N
India
Y
Y
N
N
Ireland
Y
Y
Y
Y
Israel
Y
Y
Y
Y
Italy
Y
Y
Y
Y
Latvia
Y
Y
Y
Y
Lithuania
Y
Y
Y
Y
Liechtenstein
Y
N
Y
N
Luxembourg
Y
N
Y
Y
Malaysia
N
N
N
Y
(3)
Malta
Y
N
Y
Y
Mexico
Y
Y
Y
Y
Montenegro
Y
N
Y
N
New
Zealand
Y
N
N
N
Norway
Y
N
Y
Y
Peru
Y
Y
Y
N
Poland
Y
Y
Y
Y
Portugal
Y
Y
Y
N
Romania
Y
Y
Y
Y
Russia
Y
Y
Y
Y
Saudi
Arabia
N
N
N
Y
(4)
Serbia
Y
Y
Y
N
Slovakia
Y
Y
Y
Y
Slovenia
Y
Y
Y
Y
South
Africa
Y
Y
Y
(5)
Y
Spain
Y
Y
Y
Y
Sweden
Y
Y
Y
Y
Switzerland
Y
Y
Y
Y
Turkey
Y
Y
Y
Y
Venezuela
N
N
N
N
Vietnam
Y
Y
Y
Y
Ukraine
Y
Y
N
N
United
Kingdom
Y
Y
Y
Y
(1)
The
approval expired and per management decision it was decided not to renew it.
(2)
Chile
is a non-regulated market, the health system in Chile only relies on CE mark or FDA certificates.
(3)
The
approval expired and per management decision it was decided not to renew it.
(4)
The
approval expired in November 2017. We have not had sales of MGuard Prime EPS in Saudi Arabia since 2014.
(5)
The
certificate evidencing regulatory approval for MGuard Prime EPS in South Africa was held by our former distributor in South
Africa, and we cannot guarantee that it is in full force and effect. Our distribution agreement with the distributor in South
Africa expired pursuant to the terms of such distribution agreement on February 1, 2015, and we have not had sales of MGuard
Prime EPS in South Africa since 2015
- 22 -
FDA
Government Regulation of Medical Devices for Human Subjects
Many
of our activities are subject to regulatory oversight by the FDA under provisions of the Federal Food, Drug, and Cosmetic Act
and regulations thereunder, including regulations governing the development, marketing, labeling, promotion, manufacturing, and
export of medical devices.
FDA
Approval/Clearance Requirements
In
the United States, Class II or III medical devices must be cleared or approved by the FDA prior to commercialization. Unless an
exemption applies, each medical device that we market or wish to market in the United States must receive 510(k) clearance or
premarket approval. Medical devices that receive 510(k) clearance are “cleared” by the FDA to market, distribute,
and sell in the United States. Medical devices that obtain a premarket approval by the FDA are “approved” to market,
distribute, and sell in the United States. We anticipate filing a premarket approval application in the future and do not anticipate
filing a 510(k) premarket notification. Even though we do not anticipate filing a 510(k), we cannot be certain that the FDA will
find it more appropriate for us to file a 510(k) premarket notification instead of a premarket approval application. Further,
we cannot be sure that we will ever obtain premarket approval. Descriptions of the premarket approval and 510(k) clearance processes
are provided below.
Class
I devices are those for which safety and effectiveness can be assured by adherence to the FDA’s general regulatory controls
for medical devices, or the General Controls, which include compliance with the applicable portions of the FDA’s quality
system regulations, facility registration and product listing, reporting of adverse medical events, and appropriate, truthful
and non-misleading labeling, advertising, and promotional materials. Some Class I devices also require premarket clearance by
the FDA through the 510(k) process described below.
Class
II devices are subject to the FDA’s General Controls, and any other special controls as deemed necessary by the FDA
to ensure the safety and effectiveness of the device. Premarket review and clearance by the FDA for Class II devices is accomplished
through the 510(k) process. Pursuant to the Medical Device User Fee and Modernization Act of 2002 (MDUFMA), as of October 2002,
unless a specific exemption applies, 510(k) submissions are subject to user fees. Certain Class II devices are exempt from this
premarket review process. The FDA has recently indicated that it intends to modernize the 510(k) process and has issued new guidance
documents that may change the way that devices are cleared by the FDA.
Class
III includes devices with the greatest risk. Devices in this class must meet all of the requirements in Classes I and II.
In addition, Class III devices cannot generally be marketed until they receive a premarket approval. The safety and effectiveness
of Class III devices cannot be assured solely by the General Controls and the other requirements described above. These devices
require formal clinical studies to demonstrate safety and effectiveness. Under MDFUMA, premarket approval applications (and supplemental
premarket approval applications) are subject to significantly higher user fees than 510(k) applications, and they also require
considerably more time and resources.
The
FDA decides whether a device line must undergo either the 510(k) clearance or premarket approval based on statutory criteria that
utilize a risk-based classification system. Premarket approval is the FDA process of scientific and regulatory review to evaluate
the safety and effectiveness of Class III medical devices and, in many cases, Class II medical devices. Class III devices are
those that support or sustain human life, are of substantial importance in preventing impairment of human health, or which present
a potential, unreasonable risk of illness or injury. The FDA uses these criteria to decide whether a premarket approval or a 510(k)
is appropriate, including the level of risk that the agency perceives is associated with the device and a determination by the
agency of whether the product is a type of device that is similar to devices that are already legally marketed. Devices deemed
to pose relatively less risk are placed in either Class I or II. In many cases, the FDA requires the manufacturer to submit a
510(k) requesting clearance (also referred to as a premarket notification), unless an exemption applies. The 510(k) must demonstrate
that the manufacturer’s proposed device is “substantially equivalent” in intended use and in safety and effectiveness
to a legally marketed predicate device. A “predicate device” is a pre-existing medical device to which equivalence
can be drawn, that is either in Class I, Class II, or is a Class III device that was in commercial distribution before May 28,
1976, for which the FDA has not yet called for submission of a premarket approval application.
- 23 -
We
expect that unless an exemption applies, each medical device that we market or wish to market in the United States must receive
510(k) clearance or premarket approval. Medical devices that receive 510(k) clearance are “cleared” by the FDA to
market, distribute, and sell in the United States. Medical devices that obtain a premarket approval by the FDA are “approved”
to market, distribute, and sell in the United States. We anticipate that each device that we wish to commercialize will be considered
a Class III device by the FDA and therefore we anticipate filing a premarket approval application in the future and do not anticipate
filing a 510(k) premarket notification. Even though we do not anticipate filing a 510(k), we cannot be certain that the FDA will
find it more appropriate for us to file a 510(k) premarket notification instead of a premarket approval application or that applications
of our technology may not be considered Class II devices. Further, we cannot be sure that we will ever obtain a premarket approval.
Descriptions of the premarket approval and 510(k) clearance processes are provided below.
Premarket
Approval Pathway
We
expect that current and future applications of our technology will result in medical devices that are considered Class III devices
subject to premarket approval. A premarket approval application must be submitted if a device cannot be cleared through the 510(k)
process. A premarket approval application must be supported by extensive data including, but not limited to, analytical, preclinical,
clinical trials, manufacturing, statutory preapproval inspections, and labeling to demonstrate to the FDA’s satisfaction
the safety and effectiveness of the device for its intended use. Before a premarket approval application is submitted, a manufacturer
must apply for an IDE. If the device presents a “significant risk,” as defined by the FDA, to human health, the FDA
requires the device sponsor to file an IDE application with the FDA and obtain IDE approval prior to initiation of enrollment
of human subjects for clinical trials. The IDE provides the manufacturer with a legal pathway to perform clinical trials on human
subjects where without the IDE, only approved medical devices may be used on human subjects.
The
IDE application must be supported by appropriate data, such as analytical, animal and laboratory testing results, manufacturing
information, and an Investigational Review Board (IRB) approved protocol showing that it is safe to test the device in humans
and that the testing protocol is scientifically sound. If the clinical trial design is deemed to have “non-significant risk,”
the clinical trial may be eligible for “abbreviated” IDE requirements.
A
clinical trial may be suspended by either the FDA or the IRB at any time for various reasons, including a belief that the risks
to the study participants outweigh the benefits of participation in the study. Even if a study is completed, clinical testing
results may not demonstrate the safety and efficacy of the device, or they may be equivocal or otherwise insufficient to obtain
approval of the product being tested. After the clinical trials have been completed, if at all, and the clinical trial data and
results are collected and organized, a manufacturer may complete a premarket approval application.
After
a premarket approval application is sufficiently complete, the FDA will accept the application and begin an in-depth review of
the submitted information. By statute, the FDA has 180 days to review the “accepted application,” although, generally,
review of the application can take between one and three years, but it may take significantly longer. During this review period,
the FDA may request additional information or clarification of information already provided. Also, during the review period, an
advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations
to the FDA as to the approvability of the device. The preapproval inspections conducted by the FDA include an evaluation of the
manufacturing facility to ensure compliance with the Quality Systems Regulations, as well as inspections of the clinical trial
sites by the Bioresearch Monitoring group to evaluate compliance with good clinical practice and human subject protections. New
premarket approval applications or premarket approval supplements are required for modifications that affect the safety or effectiveness
of the device, including, for example, certain types of modifications to the device’s indication for use, manufacturing
process, labeling and design. Significant changes to an approved premarket approval require a 180-day supplement, whereas less
substantive changes may utilize a 30-day notice, or a 135-day supplement. Premarket approval supplements often require submission
of the same type of information as a premarket approval application, except that the supplement is limited to information needed
to support any changes from the device covered by the original premarket approval application, and it may not require as extensive
clinical data or the convening of an advisory panel.
- 24 -
510(k)
Clearance Pathway
We
do not currently market, distribute, or sell any products that have market clearance by the FDA under its 510(k) process. If,
in the future, we develop products where 510(k) clearance is required, we would be required to submit a 510(k) demonstrating that
such proposed devices are substantially equivalent to a respective previously cleared 510(k) device or a device that was in commercial
distribution before May 28, 1976, for which the FDA has not yet called for the submission of 510(k). The FDA’s 510(k) clearance
pathway usually takes from three to twelve months but could take longer. In some cases, the FDA may require additional information,
including clinical data, to make a determination regarding substantial equivalence.
If
a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would
constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, a
premarket approval. The FDA requires each device manufacturer to determine whether the proposed change requires submission of
a new 510(k) or a premarket approval, but the FDA can review any such decision and can disagree with a manufacturer’s determination.
If the FDA disagrees with a manufacturer’s determination, the FDA can require the manufacturer to cease marketing and/or
recall the modified device until 510(k) clearance or premarket approval of the modified device is obtained.
Pervasive
and Continuing FDA Regulation
A
host of regulatory requirements apply to our approved devices, including the quality system regulation (which requires manufacturers
to follow elaborate design, testing, control, documentation and other quality assurance procedures), the Medical Device Reporting
regulations (which require that manufacturers report to the FDA specified types of adverse events involving their products), labeling
regulations, and the FDA’s general prohibition against promoting products for unapproved or “off-label” uses.
Class II devices also can have special controls such as performance standards, post-market surveillance, patient registries, and
FDA guidelines that do not apply to Class I devices.
A
noncomprehensive list of the regulatory requirements that apply to our approved products classified as medical devices include:
●
product
listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;
●
Quality
Systems Regulations, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing,
control, documentation and other quality assurance procedures during all aspects of the development and manufacturing process;
●
labeling
regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label use or indication;
●
clearance
of product modifications that could significantly affect safety or efficacy or that would constitute a major change in intended
use of one of our cleared devices;
●
approval
of product modifications that affect the safety or effectiveness of one of our cleared devices;
●
medical
device reporting regulations, which require that manufacturers comply with FDA requirements to report if their device may
have caused or contributed to a death or serious injury, or has malfunctioned in a way that would likely cause or contribute
to a death or serious injury if the malfunction of the device or a similar device were to recur;
●
post-approval
restrictions or conditions, including post-approval study commitments;
●
post-market
surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness
data for the device;
●
the
FDA’s recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the
market a product that is in violation of governing laws and regulations;
●
regulations
pertaining to voluntary recalls; and,
●
notices
of corrections or removals.
- 25 -
We
do not currently have a registered establishment with the FDA. If we are approved or cleared to manufacture, prepare, or process
a device in the United States, we and any third-party manufacturers that we may use must will be required to register our establishments
with the FDA. As such, we and our manufacturing facilities will be subject to FDA inspections for compliance with the FDA’s
Quality System Regulation. Additionally, some of our subcontractors may also be subject to FDA announced and unannounced inspections
for compliance with the FDA’s Quality System Regulation. These regulations will require that we manufacture our products
and maintain our documents in a prescribed manner with respect to design, manufacturing, testing and quality control activities.
As a medical device manufacturer, we will further be required to comply with FDA requirements regarding the reporting of adverse
events associated with the use of our medical devices, as well as product malfunctions that would likely cause or contribute to
death or serious injury if the malfunction were to recur. FDA regulations also govern product labeling and prohibit a manufacturer
from marketing a medical device for unapproved applications.
Our
CGuard EPS is classified as a Class III medical device by the FDA. Class III medical devices are generally the highest risk devices
and are therefore subject to the highest level of regulatory control by the FDA, since the FDA process of premarket approval involves
scientific and regulatory review to evaluate the safety and effectiveness of Class III medical devices for the purpose(s) intended.
The FDA will either approve or deny a premarket approval application and we cannot market a device unless or until the FDA approves
a premarket approval application.
We
expect the approval process in the U.S. to take a significant amount of time, require the expenditure of significant resources,
involve rigorous clinical investigations and testing, and potentially require changes to products. The approval process may result
in limitations on the indicated uses of the medical devices for which we are able to obtain approval (since the FDA can take action
against a company that promotes off-label uses) and will also require increased post-market surveillance.
U.S.
Healthcare Laws and Regulations
In
addition to the FDA regulations, there are a variety of other healthcare laws and regulations to which we may be subject if any
of our products are marketed, sold, distributed, and/or utilized in the United States. Of specific note are federal and state
fraud and abuse laws, which prohibit the payment or receipt of kickbacks, bribes or other remuneration, including the offer or
solicitation of such payment, intended to induce or reward the purchase, recommendation or generation of business involving healthcare
products any item or service payable by a health-care program. Other provisions of federal and state laws prohibit presenting,
or causing to be presented, to third party payors (including, government program, such as Medicare and Medicaid) for reimbursement,
claims that are false or fraudulent, or which are for items or services that were not provided as claimed. In addition, other
healthcare laws and regulations may apply, such as transparency and reporting requirements, and privacy and security requirements.
Violations of these laws can lead to civil and criminal penalties, including exclusion from participation in federal and state
healthcare programs, any of which could have a material adverse effect on our business. These laws are potentially applicable
to manufacturers of products regulated by the FDA as medical devices, such as us, and hospitals, physicians and other institutional
or individual providers that may refer or purchase such products. The healthcare laws that may be applicable to our business or
operations include, but are not limited to:
●
The
federal Anti-Kickback Statute, which prohibits the offer, payment, solicitation or receipt of any form of remuneration in
return for referring, ordering, leasing, purchasing or arranging for, or recommending the ordering, purchasing or leasing
of, items or services payable by Medicare, Medicaid or any other federal healthcare program;
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●
Federal
false claims laws and civil monetary penalty laws, including the False Claims Act, that prohibit, among other things, individuals
or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other government
healthcare programs that are false or fraudulent, or making a false statement to avoid, decrease or conceal an obligation
to pay money to the federal government;
●
The
federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which includes provisions that
prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or
obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or
under the custody or control of, any healthcare benefit program, and for knowingly and willfully falsifying, concealing or
covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare
benefits, items or services;
●
HIPAA,
as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and its implementing regulations,
also imposes obligations and requirements on healthcare providers, health plans, and healthcare clearinghouses as well as
their respective business associates that perform certain services for them that involve the use or disclosure of individually
identifiable health information, with respect to safeguarding the privacy and security of certain individually identifiable
health information;
●
The
federal transparency requirements under the Affordable Care Act, including the provision commonly referred to as the Physician
Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable
under Medicare, Medicaid or Children’s Health Insurance Program to report annually to Centers for Medicare and Medicaid
Services, or CMS, information related to payments and other transfers of value to physicians and teaching hospitals, and ownership
and investment interests held by physicians and their immediate family members; and
●
Analogous
state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may be broader in scope and
apply to referrals and items or services reimbursed by both governmental and non-governmental third-party payors, including
private insurers, many of which differ from each other in significant ways and often are not preempted by federal law, thus
complicating compliance efforts.
Customers
Our
customer base is varied. We began shipping our product to customers in Europe in January 2008 and have since expanded our global
distribution network to Southeast Asia, India, Latin America and Israel. We currently have distribution agreements for our CE
mark-approved MGuard Prime EPS and/or CGuard EPS with medical product distributors based in Europe, the Middle East, Asia Pacific
and Latin America. We are currently in discussions with additional distribution companies in Europe, Asia, and Latin America.
Most
of our current agreements with our distributors stipulate that, and we expect our future agreements with our distributors to stipulate
that, while we shall assist in training by providing training materials, marketing guidance, marketing materials, and technical
guidance, each distributor will be responsible for carrying out local registration, sales and marketing activities. In addition,
in most cases, all sales costs, including sales representatives, incentive programs, and marketing trials, will be borne by the
distributor. Under current agreements, distributors purchase stents from us at a fixed price. Our current agreements with distributors
are generally for a term of two to three years.
Manufacturing
and Suppliers
The
polymer fiber for MicroNet is supplied by Biogeneral, Inc., a San Diego, California-based specialty polymer manufacturer for medical
and engineering applications.
Natec
Medical Ltd. supplies us with catheters that help create the base for our CGuard EPS stents. Our agreement with Natec Medical
Ltd., as amended, may be terminated by us upon eight months’ notice. On August 1, 2017, we amended the agreement with Natec
Medical Ltd., so that we are responsible for purchasing and handling inventory of CGuard EPS delivery system, and Natec Medical
Ltd.is responsible for the manufacturing process.
Natec
Medical Ltd. supplies us with catheters that help create the base for our MGuard Prime EPS. Our agreement with Natec Medical Ltd.,
which may be terminated by either party upon six months’ notice, calls for non-binding minimum orders.
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The
cobalt-chromium stent for our MGuard Prime EPS was designed by Svelte Medical Systems Inc. We have an agreement with Svelte Medical
Systems Inc., as amended, that grants us a non-exclusive, worldwide license for production and use of the MGuard Prime cobalt-chromium
stent for the life of the stent’s patent, subject to the earlier termination of the agreement upon the bankruptcy of either
party or the uncured default by either party under any material provision of the agreement. Our royalty payments to Svelte Medical
Systems Inc. are determined by the sales volume of MGuard Prime EPS. Currently, the royalty rate is 2.9% of all net sales.
We
manufacture our CGuard EPS and MGuard Prime EPS at our own facility. The bare-metal cobalt-chromium stents for our MGuard Prime
EPS and the self-expanding bare-metal stents for our CGuard EPS are being manufactured and supplied by MeKo Laserstrahl-Materialbearbeitung.
Our agreement with MeKo Laserstrahl-Materialbearbeitung for the production of electro polished L605 bare-metal stents for MGuard
Prime EPS and CGuard EPS is priced on a per-stent basis, subject to the quantity of stents ordered. The complete assembly process
for MGuard Prime EPS and CGuard EPS, including knitting and securing the sleeve to the stent and the crimping of the sleeve stent
on to a delivery catheter, is done at our Israel manufacturing site. Once MGuard Prime EPS and CGuard EPS have been assembled,
they are sent for sterilization in a third-party facility in Israel, and then back to our facility for final packaging and distribution.
During
the quarter ended March 31, 2019, our former third-party sterilizer’s equipment failures resulted in significant interruption
in sterilized product supply for the majority of the quarter. As a result of this interruption in the delivery of sterilized products
and our limited inventory levels on hand prior to this interruption, we were unable to fulfill a significant portion of the orders
received during the three months ended March 31, 2019.
Each
MGuard stent is manufactured from two main components, the stent and the mesh polymer. The stent is made out of cobalt chromium.
This material is readily available, and we acquire it in the open market. The mesh is made from polyethylene terephthalate (polyester).
This material is readily available in the market as well, because it is used for many medical applications. In the event that
our supplier can no longer supply this material in fiber form, we would need to qualify another supplier, which could take several
months. In addition, in order to retain the approval of the CE mark, we are required to perform periodic audits of the quality
control systems of our key suppliers in order to insure that their products meet our predetermined specifications.
A
CGuard EPS consists of a CGuard stent and the delivery system. Each CGuard stent is manufactured from two main components, a self-expending
nickel-titanium stent and the mesh polymer. This material is readily available and we acquire it in the open market. The mesh
is made from polyethylene terephthalate (polyester). We have pending patent rights that cover the proposed CGuard stent with mesh.
This material is readily available in the market as well, because it is used for many medical applications. In the event that
our supplier can no longer supply this material in fiber form, we would need to qualify another supplier, which could take several
months. The delivery system for CGuard is made out of polymer tubes we acquire from an original equipment manufacturer. In the
event that our supplier can no longer supply this material, we would need to qualify another supplier, which could take several
months. In addition, in order to retain the approval of the CE mark, we are required to perform periodic audits of the quality
control systems of our key suppliers in order to insure that their products meet our predetermined specifications.
Properties
Our
headquarters are located in Tel Aviv, Israel, where we lease a 1,000 square meter office and manufacturing facility that has the
capacity to manufacture and assemble 1,200 stents per month, based upon the production schedule of one shift per day. We believe
that our current facility is sufficient to meet anticipated future demand by adding additional shifts to our current production
schedule.
Legal
Proceedings
From
time to time, we may be involved in litigation that arises through the normal course of business.
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On
July 10, 2019, Bosti Trading Ltd., a former distributor in Russia (“Bosti”), filed suit with the Tel Aviv-Jaffa District
Court in Israel, or the Complaint, against InspireMD Ltd., claiming damages for alleged breaches by InspireMD Ltd. under the Distribution
Agreement, dated May 26, 2011, between Bosti and InspireMD Ltd., in connection with the voluntary field corrective action of our
MGuard Prime EPS we initiated in 2014. Bosti claimed that Bosti and its Russian subsidiary returned 1,830 units of MGuard Prime
EPS to InspireMD Ltd. upon initiation of the voluntary filed action, and, since the Russian Ministry of Health prohibited distribution
of MGuard Prime EPS on August 28, 2014, and did not approve distribution MGuard Prime EPS until September 20, 2016, Bosti was
entitled to recover from InspireMD Ltd. €1,830,000 (which is approximately $2 million), the amount Bosti was due to receive
from its Russian subsidiary, or alternatively, €1,024,000 (which is approximately $1.1 million), the amount Bosti paid to
InspireMD Ltd., for the MGuard Prime EPS returned to InspireMD Ltd. On January 31, 2020, InspireMD Ltd. filed with court its letter
of defense in which it contested this matter vigorously. On January 21, 2021, we executed a Mediation Agreement with Bosti and
InspireMD Ltd., pursuant to which Bosti agreed to release the Company from all claims stated in the Complaint in exchange for
a payment of $580,000, which we paid on January 25, 2021.
As
of the date of this filing, we are not aware of any other material legal proceedings to which we or any of our subsidiaries is
a party or to which any of our property is subject, nor are we aware of any such threatened or pending litigation or any such
proceedings known to be contemplated by governmental authorities.
We
are not aware of any material proceedings in which any of our directors, officers or affiliates or any registered or beneficial
stockholder of more than 5% of our common stock, or any associate of any of the foregoing, is a party adverse to or has a material
interest adverse to, us or any of our subsidiaries.
Human
Capital Management
As
of December 31, 2020, we had 48 employees 45 full-time and 3 part-time, consisting of two in executive management, five in research
and development, four in quality assurance and compliance, five in finance and accounting, 18 in operations/production, 11 in
sales, marketing and clinical, and three in all other miscellaneous roles, including business development, information technology
services, and administration. Except for four of our employees in Europe, our employees are not party to any collective bargaining
agreements. We do not expect the collective bargaining agreements to which our employees are party to have a material effect on
our business or results of operations. We also employ two independent contractors in Poland.
We
believe that our future success will depend, in part, on our continued ability to attract, hire and retain qualified personnel.
In particular, we depend on the skills, experience and performance of our senior management and research personnel. We compete
for qualified personnel with other medical device, biotechnology, pharmaceutical and healthcare companies, as well as universities
and non-profit research institutions.
We
provide competitive compensation and benefits programs to help meet the needs of our employees. In addition to salaries, these
programs (which vary by country/region and employment classification) include incentive compensation plan, pension, healthcare
and insurance benefits, paid time off, family leave, and on-site services, among others. We also use targeted equity-based grants
with vesting conditions to facilitate retention of personnel, particularly for our key employees.
The
success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health
and safety of our employees. In response to the COVID-19 pandemic, we implemented significant changes that we determined were
in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.
This includes having employees work from home, while implementing additional safety measures for employees continuing critical
on-site work.
We
consider our relations with our employees to be good.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.