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 primarily 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 such as opioid and stimulant drugs.
The Company’s revenues are based on providing
services through our subsidiaries Pocono Pharmaceuticals operating as Active Intelligence and 4P Therapeutics. Pocono Pharmaceuticals
provides contract manufacturing services for health, wellness and over-the-counter pharmaceutical customers and 4P Therapeutics performs
contract research and development related services for pharmaceutical and medical devices customers. We manage and evaluate our operations,
and report our financial results, through these two separate subsidiaries.
Our principal offices are located in Orlando,
Florida, and our subsidiary, Pocono Pharmaceuticals, has a manufacturing facility in Cherryville, North Carolina. We primarily operate
and derive most of our revenues in the United States.
Recent Developments
On February 13, 2025, we signed an addendum to
the Commercial Development and Clinical Supply Agreement for our lead product, Aversa™ Fentanyl, being developed with our partner,
Kindeva Drug Delivery, a leading global contract development and manufacturing organization (CDMO) focused on drug-device combination
products. Nutriband and Kindeva have revised their agreement to formalize their exclusive product development partnership and long-term
commitment based on shared development costs in exchange for milestone payments. The development work being conducted under this agreement
supports the development of Nutriband’s AVERSA™ abuse-deterrent technology in general, which can be utilized to incorporate
aversive agents into transdermal patches to prevent the abuse, diversion, misuse, and accidental exposure of drugs with abuse potential
including opioids and stimulants.
On April 19, 2024, the Company completed an $8,400,000
equity financing with European investors (the “Offering”) of 2,100,000 units (“Units”), at a price of $4.00 per
Unit, each Unit consisting of one share of common stock (“Shares”) and a Warrant to purchase two Shares of common stock, the
Warrants having an initial exercise price of $6.43, are exercisable by payment of the exercise price in cash only and expire April 19,
2029, five years from the date of issuance (“Warrants”). The Offering was made solely to investors resident outside the United
States and was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws
of any jurisdiction, including any jurisdiction outside the United States, but was made privately by the Company pursuant to the exemptions
from registration provided in the SEC’s Regulation S and other exemptions under the Securities Act.
Our Business
AVERSA Abuse Deterrent Transdermal Products
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 transdermal
technology to reduce the abuse and misuse of fentanyl patches. We believe that our AVERSA technology can be broadly applied to various
transdermal products, and our plan is to follow the development of AVERSA Fentanyl with the development of additional abuse deterrent
transdermal products for pharmaceuticals that have a risk or history of abuse, misuse or accidental exposure. 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.
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In January 2024, we signed a commercial development
and clinical supply agreement with Kindeva Drug Delivery, formerly 3M Drug Delivery (“Kindeva”), for the development of AVERSA
Fentanyl using Kindeva’s FDA-approved fentanyl patch. This agreement replaced the previous feasibility agreement between the two
companies which was focused on establishing the feasibility of incorporating our AVERSA abuse deterrent transdermal technology into Kindeva’s
commercial transdermal manufacturing process. The commercial development and clinical supply agreement is focused on developing the commercial
manufacturing process for AVERSA Fentanyl.
The product development program for AVERSA Fentanyl
includes performing preclinical and clinical studies to demonstrate the abuse deterrent properties of the product. The development program
is based on the fact 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. Laboratory studies to be performed consist of in vitro manipulation and chemical extraction studies per
FDA guidance. Clinical evaluation consists of a Phase 1 human abuse potential study to demonstrate the abuse potential of the product
per FDA guidance. The regulatory path to FDA approval is planned to be a 505(b)(2) NDA submission to access the safety and efficacy information
on file for the 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.
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 consisted of 62,500 shares of common stock, valued at $1,850,000, and cash
of $400,000. The acquisition agreement requires that we 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 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. Mr. Damon resigned as a director in January 2022.
As a result of the acquisition, the focus of our
business 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 several generic
fentanyl patches on the market but none of them have abuse deterrent properties. We believe that AVERSA Fentanyl, once approved by the
U.S. FDA will significantly deter the abuse and accidental misuse of fentanyl transdermal patches.
With the acquisition of 4P Therapeutics, we acquired
a research pipeline of other transdermal products, including novel transdermal products that involve delivery of peptides and proteins
through the skin. 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 passive 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.
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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 availability.
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; (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.
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 developing our AVERSA abuse deterrent transdermal
patch products. Our lead product is AVERSA Fentanyl for which we have a commercial development agreement with Kindeva Drug Delivery, a
contract development and manufacturing organization. We plan to follow on from this with the development of additional products utilizing
the AVERSA abuse deterrent transdermal technology, namely, AVERSA Buprenorphine and AVERSA Methylphenidate.
Transdermal patches containing opioid and stimulant
drugs are designed to provide an alternative route of administration for treatment of conditions such as chronic pain, opioid use disorder
or attention deficit/hyperactivity disorder. Although transdermal versions offer improved pharmacokinetic delivery as well as patient
convenience with wear times of up to 7 days, they contain an increased drug payload which can often be a target for recreational drug
abusers or subject to accidental pediatric exposure, particularly with infants and toddlers. Abuse of opioids in general, and in particular
fentanyl abuse and overdose, continues to be an epidemic which can lead to the abuse of prescription transdermal fentanyl and other opioid
containing transdermal products.
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, the high drug content contained in patches designed
for delivery over three days, 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.
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According to the FDA 1 , accidental
exposure to medication is a leading cause of poisoning in children. Young children, in particular, have died or become seriously ill
after being exposed to a skin patch containing fentanyl, a powerful opioid pain reliever. Children can overdose on new and used fentanyl
patches by putting them in their mouth or sticking the patches on their skin. This can cause death by slowing the child’s breathing
and decreasing the levels of oxygen in their blood.
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, misuse or accidental exposure. 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,
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 as research and development funding becomes available.
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. 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.
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.
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.
Pharmaceutical Manufacturing and Supply
Manufacturing of our pharmaceutical transdermal
products will be performed in compliance with FDA current Good Manufacturing Practices (cGMP) and all applicable local regulations. 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.
1 https://www.fda.gov/consumers/consumer-updates/accidental-exposures-fentanyl-patches-continue-be-deadly-children
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Government Regulation and Regulatory Path
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 which culminates in a New Drug Application (NDA) to the FDA for approval. 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 may reduce 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.
In general, the full NDA product development program
required for new drugs for FDA approval consists of the following phases of development listed below. The full NDA pathway is not expected
to be required for products incorporating AVERSA technology into an already approved transdermal patch.
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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 typically has ten months, or six months if the drug has priority review status, to make a decision whether to approve the drug or not. 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 the FDA will require us to disclose the
risks of improper use or abuse using language required by the FDA upon approval.
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 a limited 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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Nutriband plans to utilize the 505(b)(2) New Drug
Application (NDA) regulatory pathway for Aversa Fentanyl which limits the development required for products that contain drugs that have
already been approved, and allows applicants to reference data already on file at the FDA. As a result, the NDA application will be primarily
based on a single Phase 1 human abuse potential clinical study with no Phase 2 or 3 clinical trials needed. A clinical abuse potential
study is typically performed in recreational drug abusers and is designed to demonstrate that the abuse-deterrent product is less preferable
to recreational drug abusers than conventional fentanyl patches which contain no abuse-deterrent technology.
Following a successful Phase 1 clinical abuse
potential study, Nutriband intends to file a 505(b)(2) NDA to the FDA for marketing approval of AVERSA™ Fentanyl, which has the
potential to be the first and only abuse deterrent patch approved anywhere in the world. The AVERSA™ Fentanyl NDA has the potential
to receive an expedited review by FDA as has been granted for certain abuse-deterrent oral opioid products, which shortens the regulatory
review period to six months from the conventional 10-month FDA review cycle for NDAs.
Combined, the clinical development and regulatory
path for AVERSA Fentanyl is substantially limited compared to conventional pharmaceutical product development, requiring only a single
clinical trial and, following a limited NDA pathway, undergoing an expedited review by the FDA.
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.
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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.
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 the demonstration of safety and efficacy
for authorization 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.
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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.
Intellectual Property
The AVERSA abuse deterrent technology utilized
in our AVERSA products is covered by an international intellectual property portfolio with patents issued in 46 countries including the
United States, Europe, Japan, Korea, Russia, Mexico, Canada, Australia, and China including the special administrative regions Hong Kong
and Macao. 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 filed an
intent to use Trademark application for AVERSA. The USPTO will require us to show the mark used in commerce prior to fully registering
the trademark.
Scientific Publications
On March 8, 2024, Nutriband presented data on
the incidence of transdermal patch abuse and accidental pediatric exposure as a scientific poster at the 2024 American Academy of Pain
Medicine (AAPM) Annual Meeting 2 . The American Academy of Pain Medicine (AAPM) is dedicated to advancing multidisciplinary
pain care, education, advocacy, and research.
The company engaged Rocky Mountain Poison &
Drug Safety (RMPDS), a division of Denver Health and Hospital Authority, Denver, Colorado, to determine the incidence of abuse and accidental
pediatric exposure of transdermal patches containing drugs of abuse (fentanyl, buprenorphine, and methylphenidate) in the United States
based on poison center data for the surveillance period 2018-2022. RMPDS utilized the Researched Abuse, Diversion and Addiction-Related
Surveillance (RADARS®) System, a surveillance system that collects real-world safety and effectiveness data about prescription drugs
(https://www.radars.org/).
2 Olsen, H, Mogusu, E, Black, JC, Sumbundu, K, Dart, RC. Poison
center exposure calls involving fentanyl, buprenorphine, and methylphenidate transdermal patches in the United States. Poster presented
at the 40th Annual Meeting of the American Academy of Pain Medicine; 2024 Mar 7-10; Scottsdale, Arizona. https://www.radars.org/system/publications/39.%20Olsen.pdf
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The data indicate that transdermal patch abuse
and accidental pediatric exposures to patches continues to be a serious problem resulting in major medical outcomes and death, suggesting
an unmet need for safer abuse-deterrent versions of transdermal patches containing drugs with a risk of abuse, misuse or accidental exposure.
Key findings from the study showed that major medical outcome or death resulted from a notable proportion of fentanyl and buprenorphine
patch intentional and accidental pediatric exposures with two deaths reported due to abuse of fentanyl transdermal patches. The oral route
accounted for the majority of fentanyl patch abuse with 62.5% of all intentional abuse/misuse event reports for fentanyl patches (85.3%
of non-dermal routes of abuse). Furthermore, there was a notable proportion of accidental pediatric exposures to transdermal formulations
that resulted in major medical outcomes (fentanyl patches: 10.1%, buprenorphine patches: 16.7%). Abuse and overdose are a real problem
with transdermal fentanyl as well as other transdermal opioid and stimulant products. In addition, there continues to be an alarming amount
of accidental pediatric exposures, resulting in major negative health outcomes. We believe our AVERSA abuse-deterrent technology will
have a substantial impact on both of these unfortunate and preventable situations and will help reduce the risk of harm from opioid and
stimulant patches by providing taste aversion agents in every patch.
Market Assessment
The company engaged leading healthcare consulting
company Health Advances to assess the market opportunity and commercial strategy for AVERSA™ Fentanyl and AVERSA™ Buprenorphine.
AVERSA Fentanyl is the lead AVERSA product under
development and has the potential to be the world’s first fentanyl transdermal system with abuse deterrent properties. Once approved
by the United States FDA, Aversa Fentanyl will be priced competitively with the non-abuse deterrent patches currently on the market and
has the potential to reach peak annual US sales of $80-200 million according to the assessment performed by Health Advances in January
2022. This assessment did not include the impact of the revised CDC Opioid Prescribing Guidelines which were published in November 2022
that encouraged prescribers to implement comprehensive and holistic pain management including responsible opioid use particularly for
patients with moderate to severe chronic pain. Health Advances was able to confirm the significant unmet patient need for AVERSA Fentanyl
based on rigorous primary and secondary market research accompanied with deep experience in the abuse deterrence pain space. Nutriband
is also considering developing the product for strategic international markets as protected by its global abuse deterrent patent portfolio.
AVERSA Buprenorphine is the second AVERSA product
under development and has the potential to be the world’s first buprenorphine transdermal system with abuse deterrent properties.
Once approved by the United States FDA, Aversa Buprenorphine will be priced competitively with non-abuse deterrent options and has the
potential to reach peak annual US sales of $70-130 million according to the assessment performed by Health Advances in October 2023. Health
Advances was able to confirm the significant unmet patient need for Aversa Buprenorphine based on rigorous primary and secondary market
research accompanied with deep experience in the abuse deterrence pain space. Nutriband is also considering developing the product for
strategic international markets as protected by its global abuse deterrent patent portfolio.
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. It is important that pharmaceutical companies engaged in the distribution and sale of opioids, in particular for the
treatment of chronic pain, promote 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
abuse deterrent 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 being developed that do not contain opioids or 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.
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