Item 1. Business
ITEM 1. BUSINESS.
Overview
Nutriband Inc. (the “Company”, “Nutriband”,
“we” or “us”), was incorporated in Nevada in January 2016. Our primary business is the development of a portfolio
of transdermal pharmaceutical products. Our development pipeline consists of transdermal products that are based on our proprietary AVERSA®
abuse deterrent transdermal technology that we believe can be incorporated into existing transdermal patches that contain drugs that are
susceptible to abuse and misuse. We operate in two distinct business segments: pharmaceuticals and medical devices.
The following is a description of the Company’s revenue types:
service revenues, which include the contracting of research and development related services with the Company’s clients in the life
sciences field on an as-needed basis; and contract manufacturing revenues, which are derived from the manufacture and production of products
for a number of customers in the health, wellness and pharmaceutical space. We manage and evaluate our operations, and report our financial
results, through these two business segments.
Our principal offices are located in Orlando, Florida, and we primarily
operate and derive most of our revenues in the United States.
Our Business
Our lead product under development is AVERSA Fentanyl, an abuse deterrent
fentanyl transdermal system that combines an approved generic fentanyl patch with our AVERSA abuse deterrent technology to reduce the
abuse and misuse of fentanyl patches. We believe that AVERSA technology can be broadly applied to various transdermal products, and our
plan is to follow the development of our abuse deterrent fentanyl transdermal system with the development of additional transdermal abuse
deterrent products for pharmaceuticals that have a risk or history of abuse. Specifically, we have expanded our development pipeline to
include AVERSA Buprenorphine and AVERSA Methylphenidate. In addition, we are developing a portfolio of transdermal pharmaceutical products
to deliver already approved drugs or biologics that are typically delivered by injection but with the potential to improve compliance
and therapeutic outcomes through transdermal delivery.
We have a feasibility agreement with Kindeva Drug Delivery, formerly
3M Drug Delivery (“Kindeva”), for the development of AVERSA Fentanyl using Kindeva’s FDA approved Fentanyl patch. The
feasibility agreement is focused on adapting Kindeva’s commercial transdermal manufacturing process to incorporate AVERSA abuse
deterrent technology.
The product development program for AVERSA Fentanyl includes performing
preclinical and clinical studies to demonstrate the abuse deterrent properties of the product. The program assumes that the fentanyl transdermal
system is already approved and the only change to the approved product will be to incorporate the AVERSA technology into the patch design
with no change being made to the fentanyl drug matrix or its demonstrated safety, patch performance or drug release characteristics. Preclinical
studies to be performed primarily consist of laboratory-based in vitro manipulation and extraction studies in various extraction media
per FDA guidance. Clinical evaluation primarily consists of a Phase 1 Human Abuse Liability (HAL) study to demonstrate the abuse potential
of the product per FDA guidance. The regulatory path for FDA approval is planned to be a 505(b)(2) NDA submission to access the safety
and efficacy information on file for Duragesic ® fentanyl transdermal system as the reference-listed drug and to be able
to obtain approval for abuse deterrent claims as a branded pharmaceutical product.
The product development program for the additional AVERSA pipeline
products, AVERSA Buprenorphine and AVERSA Methylphenidate, are similar to that of AVERSA Fentanyl, assuming that the AVERSA technology
is incorporated into an already approved transdermal patch.
Through January 31, 2023, we had not generated any revenue from our
transdermal consumer patches. Consumer products are products that can be sold over-the-counter and do not require a prescription. Most
transdermal patches are considered drugs in the United States and cannot be marketed in the United States without approval from the FDA.
We have not taken any steps to seek to obtain FDA approval for any of our consumer products in development that would permit sales of
those products in the United States, and we have no plans to do so in the near term.
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Acquisition of 4P Therapeutics
Pursuant to an acquisition agreement dated April 5, 2018 between us
and 4P Therapeutics, on August 1, 2018, we acquired all of the equity interest in 4P Therapeutics from Steven Damon, the owner of 4P Therapeutics.
The purchase price of $2,250,000, consisting of 62,500 shares of common stock, valued at $1,850,000, and cash of $400,000, and are to
pay Mr. Damon a 6% royalty on any revenue we receive or derive from our utilization or sale of the abuse deterrent intellectual property
that we acquired as a part of the assets 4P Therapeutics, including partner license milestones and development payments. The royalty is
payable pursuant to the acquisition agreement and continues as long as we generate revenue from our utilization or sale of the abuse deterrent
intellectual property we acquired as part of the acquisition of 4P Therapeutics. The 62,500 shares were issued to Mr. Damon (41,750 shares
pre-split) and Dr. Alan Smith (20,750 shares pre-split). In connection with the acquisition, Mr. Damon retained any cash and accounts
receivable and assumed any liabilities other than those relating to the ongoing business. Pursuant to the acquisition agreement, we appointed
Mr. Damon to our board of directors in April 2018, when we signed the acquisition agreement, and we agreed to pay Mr. Damon the compensation
received by independent board members.
As a result of the acquisition, the focus of our business has changed
from the development and marketing outside of the U.S. of consumer transdermal products to the development of 4P Therapeutics’ portfolio
of pharmaceutical transdermal products. Our lead product under development is AVERSA ® Fentanyl (abuse deterrent fentanyl
transdermal system) which we plan to develop to deter the abuse and accidental misuse of fentanyl transdermal patches. Fentanyl is a potent
synthetic opioid that is marketed as a transdermal patch for chronic pain management. There are currently a number of generic fentanyl
patches on the market but none of them have abuse deterrent properties. We believe that our AVERSA ® abuse deterrent technology,
containing aversive agents will significantly deter the abuse and accidental misuse of fentanyl from transdermal patches.
With the acquisition of 4P Therapeutics, we acquired a research pipeline
of other transdermal products, including peptides and proteins such as exenatide for type 2 diabetes and FSH for infertility. These drugs
are off patent but are currently only available as injections, and we are evaluating the possibility of developing a transdermal delivery
system for these drugs as an alternative to injection but with improved compliance and safety. In addition, we may develop certain generic
transdermal products where we think we can make an improvement to existing patches and where we believe we can take significant market
share with good profit margins. The prioritization of our portfolio product candidates will be reviewed on an ongoing basis and will take
into account technical progress, market potential and R&D funding available. We cannot assure you that we will be able to develop
and obtain FDA approval for any of these potential products or that we can be successful in marketing any such products. The FDA approval
process can take many years to complete successfully, and we will require substantial funding for each product that goes through the process.
We cannot assure you that we will obtain FDA marketing approval for any of our products.
In addition to performing research and development for its own products,
4P Therapeutics performs contract research and development services for a small number of clients in the life sciences field to help support
its ongoing operations. The work includes conducting early-stage drug and device clinical and preclinical studies and providing clinical-regulatory
and formulation/analytical consulting services. Neither we nor current clients have any long-term commitments, and either party can terminate
at any time. We do not expect to generate significant revenues from these services.
Acquisition of Pocono Coated Products
On August 25, 2020, the Company formed Pocono Pharmaceuticals Inc.(“Pocono”),
a wholly owned subsidiary of the Company. Effective August 31, 2020, the Company entered into a Purchase Agreement (“Agreement”)
with Pocono Coated Products (“PCP”), a manufacturer of Topical and transdermal products, pursuant to which PCP agreed to sell
the Company certain of the assets and liabilities associated with its Transdermal, Topical, Cosmetic and Nutraceutical business (the “Business”),
including all related equipment, intellectual property and trade secrets, cash balances, receivables, bank accounts and inventory. The
net assets were contributed to Pocono. Included in the transaction, the Company acquired 100% of the membership interests of Active Intelligence
LLC (“Active Intelligence”). The purchase price for the assets of the Business is (i) $6,000,000 paid in 608,519 shares of
the Company’s common stock, based on the average price for the Company’s common stock for the previous 90 days as of the date
of Closing (the “Shares”); (ii) a promissory note of the Company in the principal amount of $1,500,000, which has been paid
in full as of October 1, 2021.
Our Organization
We are a Nevada corporation, incorporated on January 4, 2016. In January
2016, we acquired Nutriband Ltd, an Irish company which was formed by Gareth Sheridan, our chief executive officer, in 2012, to enter
the health and wellness market by marketing transdermal patches. Our corporate headquarters are located at 121 S. Orange Ave. Suite 1500,
Orlando, Florida 32801, telephone (407) 377-6695. Our website is www.nutriband.com . Information contained on or available through
our website or any other website does not constitute a portion of this annual report.
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Effects of the COVID-19 Pandemic
Our business may be affected by the COVID-19 pandemic and the response
to the pandemic. Factors which may affect our business include, but are not limited to, the following:
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The decision by investors who would invest in early-stage pharmaceutical companies to limit their financing efforts to companies that are dealing with products or services related to COVID-19 diagnosis or treatment.
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The effect of recent stock market declines on the willingness of investors to make an investment in our securities.
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The financial health of our potential contract service customers.
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Our ability to perform contract services.
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Our ability to obtain any goods or services which we may need to perform contract services.
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The ability of our foreign distributors to obtain regulatory approval, which may be affected by the regulatory agencies giving a low priority to products such as our consumer patches.
Pharmaceutical Products in Development
We have a pipeline of transdermal pharmaceutical products that are
primarily in the early stages of development. Our current focus is on the development of AVERSA Fentanyl for which we have a feasibility
agreement with Kindeva Drug Delivery, a contract development and manufacturing organization. We plan to follow on from this with development
of additional products utilizing the AVERSA abuse deterrent transdermal technology, namely, AVERSA Buprenorphine and AVERSA Methylphenidate.
AVERSA Fentanyl is an abuse deterrent fentanyl patch for the treatment
of chronic pain. As the United States faces an epidemic of opioid abuse, fentanyl transdermal patches have become an attractive target
for recreational drug abusers due to the high potency of fentanyl and its ease of abuse by the oral route. We are looking to utilize our
proprietary approach to incorporate aversive agents into the transdermal patch to deter the abuse of fentanyl patches by the oral, buccal
and inhaled routes, which represent as much as 70% of all transdermal fentanyl abuse. The technology is based on the incorporation of
taste and sensory aversive agents into the patch that are intended to make abuse a very unpleasant experience thereby deterring the recreational
abuse of fentanyl patches. These aversive agents have high potency, established safety, and the potential to prevent accidental misuse
by children and pets. The aversive agents are coated onto the backing of the transdermal patch in a controlled release formulation that
provides immediate and sustained release of aversive agents. This provides several advantages including having a physical separation of
the aversive agents from the drug matrix, availability of aversive agents even after the patch is used and making it difficult to separate
the aversive agents from the drug by extraction. The aversive agents are not contained in the drug matrix and are not delivered to the
skin during patch wear. In addition to the fentanyl patch, this technology has broad applicability to any patch where deterring abuse
as well as accidental misuse by children and pets are valuable attributes.
We believe that our abuse deterrent technology can be broadly applied
to various transdermal products and our strategy is to follow the development of our AVERSA Fentanyl with the development of additional
products for pharmaceuticals that have a risk or history of abuse. For example, we believe that our technology can be utilized in other
transdermal products to deter the abuse of other drugs such as buprenorphine, an opioid used to treat acute pain and chronic pain, and
methylphenidate, a central nervous system stimulant. Buprenorphine is an opioid used to treat opioid addiction, acute pain and chronic
pain. It can be used under the tongue, by injection, as a skin patch, or as an implant. For opioid addiction, it is typically only started
when withdrawal symptoms have begun and for the first two days of treatment under direct observation of a health care provider. For longer
term treatment of addiction, a combination formulation of buprenorphine/naloxone is recommended to prevent misuse by injection. Methylphenidate,
sold under various trade names, such as Ritalin in oral form, and in transdermal patch form known as Daytrana, is a central nervous system
stimulant that is used in the treatment of attention deficit hyperactivity disorder and narcolepsy. We plan to develop transdermal delivery
systems for buprenorphine and methylphenidate after we make significant progress on our abuse deterrent fentanyl transdermal system.
Our research pipeline consists primarily of drug compounds which have
been previously approved by the FDA and are now off-patent. In some cases, we are developing a non-injectable version of the drug utilizing
our transdermal technology which represents a new route of administration. In most cases, we plan to utilize the 505(b) (2) NDA regulatory
pathway provided by the FDA which allows us to reference the safety information on file at FDA for the approved drug or to reference the
published literature instead of having to generate new safety information that would typically be required for new chemical entities.
However, we cannot assure you that the FDA will concur with our approach or that we will be able to receive FDA approval to market any
of products that we develop.
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We are also exploring transdermal delivery of proteins and peptides
such as exenatide for type 2 diabetes and follicle stimulating hormone (FSH) for infertility. Presently, these products are only available
by injection. We believe that transdermal delivery has the potential to improve compliance, which can lead to improved therapeutic outcomes
associated with these treatments.
In addition, we may seek to develop certain generic transdermal products
where we think we can efficiently make an improvement to existing patches and potentially take significant market share with good profit
margins.
The prioritization of our portfolio of product candidates will be reviewed
on an ongoing basis and will take into account technical progress, market potential, available funding and commercial interest. Our ability
to take any meaningful steps to the development of any of these products is determined by our ability to provide sufficient funding for
such activities. As stated above, without additional financing or a joint venture agreement we will not be able to take any steps to the
development of any of these products.
We currently have no branded OTC or consumer products nor do we plan
to launch any OTC or consumer products in the near term as our focus is primarily on our pharmaceutical development pipeline and continuing
the contract services offered by our subsidiaries.
Pharmaceutical Manufacturing and Supply
Manufacturing of our pharmaceutical transdermal products in development
will be performed in compliance with FDA current Good Manufacturing Practices (cGMP) and all applicable local regulations by contract
manufacturers. All manufacturing processes and facilities will be subject to review by the FDA during development, prior to approval and
during subsequent routine FDA inspections. We plan to continue to rely on contract manufacturers and, potentially, collaboration partners
to manufacture commercial quantities of our products, if and when approved for marketing by the FDA.
Government Regulation
United States
The pharmaceutical business is subject to extensive government regulation.
In the United States, we must comply with the rules and regulations of the FDA. In other countries, we must comply with the laws and regulations
of each country to legally market and sell our products. Obtaining FDA approval does not mean that the product will be approved in other
countries. Each country may require that additional clinical and nonclinical studies be conducted prior to approval.
The process required by the FDA to receive approval prior to marketing
and distributing a drug in the United States generally involves a preclinical phase followed by three phases of clinical trials. The definition
of drug is broadly defined and includes the pharmaceutical products we have in development. Even though the drug used in each of our proposed
products is currently approved by the FDA in other dosage forms, we will still need to conduct a development program that will include
preclinical and clinical trials before we receive FDA marketing approval. The FDA also has a number of abbreviated approval pathways which,
if we are eligible, could shorten the time for approval. For example, the regulatory path for the AVERSA products in development is intended
to follow a 505(b)(2) NDA regulatory pathway which reduces the amount of clinical work that needs to be performed to a single trial to
evaluate the abuse potential of the product as the safety and efficacy of the drug has already been established. However, we cannot be
certain that we will be able to use any abbreviated approval pathway, in which event we will need to comply with the full regulatory pathway
as described below.
The full (although not typical for the AVERSA related products) FDA
regulatory pathway consists of the following phases of development.
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Preclinical phase . Before a drug company can test an experimental treatment in humans, it must prove the drug is safe and effective in animals. Scientists run tests in various animals before presenting the data to the FDA as an investigational new drug application. For already approved drugs, an animal study may not be required prior to testing in humans. In most cases, the company must file an Investigational New Drug (IND) submission to get clearance to test the product in humans.
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Phase one clinical trial . In the first round of clinical trials, the drug company attempts to establish the drug’s safety in humans. Drug researchers administer the treatment to healthy individuals — instead of patients suffering from the disease or condition the drug is intended to treat — and gradually increase the dose to see if the drug is toxic at higher levels or if any possible side effects occur. These drug trials are usually small, containing about 20 to 80 participants, according to the FDA. For drug delivery products incorporating already approved drugs, Phase 1 studies involve measuring blood levels of the drug to understand the pharmacokinetics for a new route of administration.
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Phase two clinical trial . In the second round of clinical trials, researchers give the treatment to patients who have the disease to assess the drug’s efficacy. The trial is randomized, meaning half of the study participants receive the drug and half receive a placebo. These trials usually contain hundreds of participants, according to the FDA. There is about a 30 percent chance of a drug moving on to a phase three clinical trial, according to data from the biotech trade organization BIO. For already approved drugs, as is the case with drug delivery products, a Phase 2 trial may not be necessary as the therapeutic drug doses and blood concentrations are already known. However, a Phase 2 may be conducted to inform the design of the Phase 3 clinical trial in regards to the safety and efficacy of the product when used by patients.
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Phase three clinical trial . In the third phase of clinical trials, researchers work with the FDA to design a larger trial to test the drug’s ideal dosage, patient population and other factors that could decide whether the drug is approved, according to the report. These trials usually contain a few hundred to thousands of participants. In the case of drug delivery products that utilize an approved drug, Phase 3 trials will typically include a comparison to the already approved reference product. For example, a transdermal patch may be compared to an injection.
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New drug application (NDA) . Once a drug company collects and analyzes all data from the clinical trials, it submits a new drug application to the FDA. The application includes trial data, preclinical information and details on the drug’s manufacturing process. If the FDA accepts the application for review, the agency has ten months — or six months if the drug has priority review status — to make a decision, according to the report. The FDA can hold an advisory committee meeting where independent experts assess the data and recommend whether to approve the drug. From there, the FDA will either approve the drug or give the applicant a complete response letter, which explains why the drug did not get approved and what steps the applicant must take before resubmitting the application for approval.
Before approving an NDA, the FDA may inspect the facilities where the
product is being manufactured or facilities that are significantly involved in the product development and distribution process and will
not approve the product unless they determine that compliance with current good manufacturing practices is satisfactory. The FDA may deny
approval of an NDA if applicable statutory or regulatory criteria are not satisfied, or may require additional testing or information,
which can delay the approval process. In pursuing FDA approval there may be various delays and it is possible that approval may never
be granted. In addition, new government requirements may be established that could delay or prevent regulatory approval of our product
candidates under development.
If a product is approved, the FDA may impose limitations on the indications
for use for which the product may be marketed, may require that warning statements be included in the product labeling, may require that
additional studies or trials be conducted following approval as a condition of the approval, may impose restrictions and conditions on
product distribution, prescribing or dispensing in the form of a risk management plan, or impose other limitations.
Once a product receives FDA approval, marketing the product for other
indicated uses or making certain manufacturing or other changes related to the product will require FDA review and approval of a supplemental
NDA or a new NDA, which may require additional clinical safety and efficacy data and may require additional review fees. In addition,
further post-marketing testing and surveillance to monitor the safety or efficacy of a product may be required. Also, product approvals
may be withdrawn if compliance with regulatory standards is not maintained or if safety or manufacturing problems occur following initial
marketing.
With respect to the labeling for our abuse deterrent transdermal fentanyl
system or any other opioid transdermal patch we develop, it is likely that we will need to disclose the risks of improper use or abuse
using language required by the FDA.
FDA Approval Pathways
The FDA has several pathways that can be followed to obtain FDA approval.
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A stand-alone NDA is an application submitted under Section 505(b)(1) of the Food, Drug and Cosmetic Act (“FD&C Act”) and approved under Section 505(c) of the FD&C Act that contains full reports of investigations of safety and effectiveness that were conducted by or for the applicant or for which the applicant has a right of reference or use. This is typically the pathway used for new chemical entities.
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A 505(b)(2) application is an NDA submitted under Section 505(b)(1) and approved under Section 505(c) of the FD&C Act that contains full reports of investigations of safety and effectiveness, where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use. This is the pathway typically taken for off-patent drugs that are being development into alternate dosage forms or routes of administration.
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An ANDA is an application for a duplicate of a previously approved drug product that was submitted and approved under Section 505(j) of the FD&C Act. An ANDA relies on the FDA’s finding that the previously approved drug product is safe and effective. An ANDA generally must contain information to show that the proposed generic product (1) is the same as the drug with respect to the active ingredients, conditions of use, route of administration, dosage form, strength and labeling (with certain permissible differences) and (2) is bioequivalent to the referenced drug. An ANDA may not be submitted if studies are necessary to establish the safety and effectiveness of the proposed product. This is the pathway taken for generic drugs.
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We cannot assure you that we will be able to take advantage of any
of the available abbreviated approval pathways for any of our proposed products.
Post-approval requirements
Any drug products for which we receive FDA approval will be subject
to continuing regulation by the FDA. Certain requirements include, among other things, record-keeping requirements, reporting of adverse
events with the product, providing the FDA with updated safety and efficacy information on an annual basis or more frequently for specific
events, product sampling and distribution requirements, complying with certain electronic records and signature requirements and complying
with FDA promotion and advertising requirements. These promotion and advertising requirements include, among others, standards for direct-to-consumer
advertising, prohibitions against promoting drugs for uses or patient populations that are not described in the drug’s approved
labeling, known as “off-label use,” and other promotional activities, such as those considered to be false or misleading.
Failure to comply with FDA regulations can have negative consequences, including the immediate discontinuation of noncomplying materials,
adverse publicity, enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal
penalties. Such enforcement may also lead to scrutiny and enforcement by other government and regulatory bodies.
Although physicians may prescribe legally available drugs for off-label
uses, manufacturers may not encourage, market or promote such off-label uses. As a result, “off-label promotion” has formed
the basis for litigation under the Federal False Claims Act, violations of which are subject to significant civil fines and penalties.
In addition, manufacturers of prescription products are required to disclose annually to the Center for Medicaid and Medicare any payments
made to physicians and teaching hospitals in the U.S. under the federal Physician Payment Sunshine Act. Reportable payments may be direct
or indirect, in cash or kind, for any reason, and are required to be disclosed even if the payments are not related to the approved product.
Failure to fully disclose or not in time reporting could lead to penalties up to $1.15 million per year.
The manufacturing of any of our products will be required to comply
with the FDA’s current Good Manufacturing Practices (cGMP) regulations. These regulations require, among other things, quality control
and quality assurance, as well as the corresponding maintenance of comprehensive records and documentation. Drug manufacturers and other
entities involved in the manufacture and distribution of approved drugs are also required to register with the FDA their establishments
and list any products they make and to comply with related requirements in certain states. These entities are further subject to periodic
unannounced inspections by the FDA and certain state agencies for compliance with current good manufacturing practices and other laws.
Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP
compliance.
Discovery of problems with a product after approval may result in serious
and extensive restrictions on a product, manufacturer or holder of an approved NDA, as well as lead to potential market disruptions. These
restrictions may include recalls, suspension of a product until the FDA is assured that quality standards can be met, and continuing oversight
of manufacturing by the FDA under a “consent decree,” which frequently includes the imposition of costs and continuing inspections
over a period of many years, as well as possible withdrawal of the product from the market. In addition, changes to the manufacturing
process generally require prior FDA approval before being implemented. Other types of changes to the approved product, such as adding
new indications and additional labeling claims, are also subject to further FDA review and approval.
The FDA also may require post-marketing testing, or Phase IV testing,
as well as risk minimization action plans and surveillance to monitor the effects of an approved product or place conditions on an approval
that could otherwise restrict the distribution or use of our products.
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Other Government Regulations
We may be subject to government regulations that are applicable to
businesses generally, including those relating to workers’ health and safety, environmental and waste disposal, wage and hour and
labor practices, including sexual harassment laws and regulations, and anti-discrimination laws and regulations.
In addition, we must comply with the laws and regulations governing
the research and manufacture of products containing controlled substances such as fentanyl and other opioids. We or our contract manufacturer
must be licensed by the Drug Enforcement Agency (DEA) and the state(s) in which we conduct research and development activities.
Europe and Other Countries
If we market our products in any countries other than the United States,
we would be subject to the laws of those countries. To obtain market access for our products in other countries we must comply with numerous
and varying regulatory requirements of such countries regarding safety and efficacy and governing, among other things, clinical trials
and commercial sales, pricing and distribution of our products.
The European medicines regulatory system is based on a network of around
50 regulatory authorities from the 31 countries in the European Economic Area, the European Commission and the European Medicines
Agency. All medicines must be authorized before they can be placed on the market in the European Union. The European system offers different
routes for authorization. A centralized procedure allows the marketing of a medicine on the basis of a single European Union assessment
and marketing authorization which is valid throughout the European Union. However, a majority of medicines authorized in the European
Union do not fall within the scope of the centralized procedure, and we do not know whether our proposed products will fall within the
centralized authorization. We also do not know how the withdrawal of Great Britain from the European Union will affect the procedure for
approval of medicines in the United Kingdom. If we are not able to use the centralized procedure, we would need to use one of the following
procedures. One method is the decentralized procedure where we would apply for simultaneous authorization in more than one European Union
member. The second method is the mutual-recognition procedure where we would have a medicine authorized in one European Union country
apply for authorization to be recognized in other European Union countries. In either case, we would be required to complete clinical
trials to demonstrate the safety and efficacy of the medicine and show that the medicine is manufactured in accordance with good manufacturing
practices based upon European Union standards.
In countries other than the United States and the European Union, we
would be required to comply with the applicable laws of those countries, which may require us to perform additional clinical testing.
Failure to obtain regulatory approval in any country would prevent
our product candidates from being marketed in those countries. In order to market and sell our products in jurisdictions other than the
United States and the European Union, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements.
The regulatory approval process outside the United States and the European Union generally includes all of the risks associated with obtaining
FDA and European Union approval but can involve additional testing.
In addition, in many countries worldwide, it is required that the product
be approved for reimbursement before the product can be approved for sale in that country. We may not obtain approvals from regulatory
authorities outside the United States on a timely basis, if at all. Even if we were to receive approval in the United States or the European
Union, approval by the FDA or the European Medicines Agency does not ensure approval by regulatory authorities in other countries or jurisdictions.
Similarly, approval by one regulatory authority outside the United States would not ensure approval by regulatory authorities in other
countries or jurisdictions. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize
our products in any market. If we are unable to obtain approval of our product candidates by regulatory authorities in other foreign jurisdictions,
the commercial prospects of those product candidates may be significantly diminished and our business prospects could decline.
Outside the United States, particularly in member states of the European
Union, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations or the successful
completion of health technology assessment procedures with governmental authorities can take considerable time after receipt of marketing
approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement
levels, including as part of cost containment measures.
In addition to regulations in the United States, if we market outside
of the United States, we will be subject to a variety of regulations governing, among other things, clinical trials and any commercial
sales and distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from
regulatory authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries.
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Intellectual Property
The AVERSA abuse deterrent technology utilized in our AVERSA product
pipeline is covered by an international intellectual property portfolio with patents issued in 45 countries including the United States,
Europe, Japan, Korea, Russia, Mexico, Canada, and Australia and pending in China. These patents provide patent coverage to 2035. We continue
to build on our proprietary positions in the United States and internationally for our product candidates AVERSA Fentanyl, AVERSA buprenorphine
and AVERSA methylphenidate as well as other products and technology that we may have in development. Our policy is to pursue, maintain
and defend patent rights developed internally or acquired externally and to protect the technology, inventions and improvements that are
commercially important to the development of our business. We cannot be sure that patents will be granted with respect to any of our pending
patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing
patents or any patents granted to us in the future will be commercially useful in protecting our technology. We also may rely on trade
secrets to protect our commercial products and product candidates. Our commercial success also depends in part on our non-infringement
of the patents or proprietary rights of third parties.
Further, we plan to seek trademark protection in the United States
and internationally where available and when appropriate. We have registered the name Nutriband in the United States. We have received
a notice of allowance for the AVERSA trademark for our abuse deterrent technology in the United States.
Competition
The pharmaceutical industry is highly competitive and subject to rapid
change as new products are developed and marketed. Potential competitors include large pharmaceutical and biotechnology companies, specialty
pharmaceutical and generic drug companies, and medical technology companies. We believe the key competitive factors that will affect the
development and commercial success of our products are product performance including safety and efficacy, level of patient compliance,
healthcare professional acceptance, and the extent of insurance reimbursement of our products.
As our development pipeline includes products that contain opioids
(AVERSA Fentanyl and AVERSA Buprenorphine), we continually monitor the market for opioid products, particularly in the United States.
Pharmaceutical companies engaged in the distribution and sale of opioids, in particular for the treatment of chronic pain, are promoting
responsible opioid use. In 2022, the CDC revised its clinical practice guideline for prescribing opioids to ease the restrictions on prescribers
and encourage responsible opioid use particularly for patients with moderate to severe pain. Our opioid products potentially offer a unique
proposition to meet the unmet needs of patients by deterring the abuse and misuse of opioids while making opioids accessible to those
patients who need them. If approved, our AVERSA pipeline products will compete with the currently marketed products that do not contain
abuse deterrent features as well as other products that may employ different abuse deterrent technology. We may also have to compete with
products that do not contain opioids or other drugs that are susceptible to abuse. We are not aware of any abuse deterrent transdermal
products that are in development or being marketed at this time. If we obtain regulatory approval to market our products, we cannot assure
you that we will be successful in the marketplace.
8
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.