Item 1. Business
Item 1. Business.
Overview
We are a clinical-stage biopharmaceutical company principally focusing on the development of innovative biological therapeutics for the treatment of degenerative diseases and regenerative medicine. The Company’s proprietary products, including Zofin™, are derived from perinatal sources and manufactured to retain the naturally occurring extracellular vesicles, proteins and cell secreted nanoparticles and Patient Pure X™ (“ PPX™ ”), an autologous biologic containing a nanoparticle fraction that is precipitated from a patient’s own peripheral blood (“ RAAM Products ”).
Our RAAM Products and related services are principally used in the health care industry administered through doctors and clinics (“ Providers ”).
ZEO operates an extracellular vesicle processing laboratory in Davie, Florida for the purpose of performing research and development and the manufacturing and processing of the anti-aging and cellular therapy derived products that we sell and distribute to our customers.
The Company has recently developed and begun to distribute additional products that incorporate its proprietary ingredients for products to be used in topical aesthetic applications and is actively exploring further development of additional products to be used in other topical aesthetic applications.
To date, the Company has obtained certain Investigational New Drug (“ IND ”), emergency IND (“ eIND ”) approvals from the FDA, including applicable Institutional Review Board (“ IRB ”) approvals which authorized the Company to commence clinical trials or treatments in connection with the use of Zofin™ and related treatment protocols. The Company is pursuing efforts to complete its already approved clinical studies as well as obtaining approval to commence additional studies for other specific indications it has identified that the use of its products will provide more favorable and desired health related benefits for patients seeking alternative treatment options than are currently available. The ability of the Company to succeed in these efforts is subject to among other things, the Company having sufficient available working capital to fund the substantial costs of completing clinical trials, which the Company currently does not have, and ultimately, obtaining approval from the FDA.
Current FDA guidance requires that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue-based products (“ HCT/Ps ”) can only be sold pursuant to an approved biologics license application (“ BLA ”).
We have not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products we currently produce would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s. However, we do not believe that our products fall within these guidelines and intend to vigorously defend against any adverse interpretation by the FDA on the classification of our products that may be deemed as falling under this defined regulation, if any. Notwithstanding the foregoing, we are undertaking efforts on an ongoing basis to mitigate any potential risks associated with an adverse ruling by the FDA and the subsequent limitations on our ability to continue to generate revenues from the sale of our products in the United States until the Company obtains the required licenses. The efforts include continuing with clinical trials, expanding sales internationally and developing new product offerings and/or designations of products that would not fall under these regulations.
In March 2003 and July 2024, the Company invested $100,000 and $45,000, respectively, in Exotropin, LLC (“ Exotropin ”) a privately held formulator of skin care products in exchange for a minority equity interest (approximately 8.9% as of October 31, 2024). During November 2024, the Company received a capital call notice from Exotropin (“ November Capital Call ”). The Company has yet committed to participating in the November Capital Call. If the Company does not elect to participate, its interest in Exotropin would be reduced to approximately 5.6% based on all other members fulling participating in the November Capital Call. The investment in Exotropin was made in an effort to accelerate the Company’s development of expertise with respect to the skincare industry and to expand the use of its proprietary products in future formulations for a variety of topical use applications. In addition, we have also entered into a sales representation agreement with Exotropin pursuant to which we will receive commissions on sales made by Exotropin to customers that were introduced by the Company to Exotropin. During November 2024, the Company announced that it was launching the first planned collaborative product with Exotropin; “ZEO HAIR GROW™ Powered By Exotropin™”
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Corporate Information
The Company was incorporated in the state of Nevada on August 9, 2011, under the name “ Bespoke Tricycles Inc. ,” changed its name to “ Biotech Products Services and Research, Inc. ” effective November 4, 2015, to “ Organicell Regenerative Medicine, Inc. ” effective June 20, 2018 and assumed its current name of “ Zeo ScientifiX, Inc. ” effective February 20, 2024.
Our executive offices are located at 3321 College Avenue, Suite 246, Davie, Florida and our telephone number is (888) 963-7881. Our corporate website is www.zeoscientifix.com . Information appearing on our website is not part of this Annual Report.
Industry Overview
The traditional health care industry in the United States is predominantly controlled by the rules of the Centers for Medicare & Medicaid Services (“ CMS ”) (www.cms.gov) and commercial health insurance companies with respect to payor coverage for medical diagnostics and therapies. This control of coverage currently limits patients’ access to alternative medical therapies, although emerging medical research demonstrates highly beneficial outcomes in the field of anti-aging and regenerative medicine. Traditional allopathic medicine of health care provided to patients in the United States relies on government and commercial health insurance for payment of the costs associated with their day-to-day health care. Because of this close relationship, physicians must follow government and commercial insurers guidelines in order to receive reimbursement for most services. In addition, physicians may be hesitant to adopt new treatments because of perceived legal ramifications and/or lack of knowledge concerning recent research supporting the use of cutting-edge anti-aging and regenerative medical treatments. In addition, many physicians provide alternative therapies that are not yet covered by payors in a “private-pay” or concierge medicine model.
Despite the above, anecdotal and medical literature has shown an increased demand by patients for access to alternative medical therapies and treatments. Patients are seeking these alternatives to traditional allopathic medicine, due to the adverse events associated with traditional pharmaceuticals, risks associated with surgeries, and that traditional medicine and insurers are not addressing wellness or preventive medicine sufficiently. To address a wide variety of common and debilitating conditions related to aging, the Company is developing safer alternatives to traditional therapies, leveraging the latest regenerative technologies. As described above, these alternative therapies face significant restrictions because of regulations imposed by the FDA, other regulatory bodies and insurers due to lack of a sufficient body of randomized controlled studies. Nonetheless, many published case series and some randomized trials demonstrate the safety and efficacy of regenerative therapies, and payor coverage may expand as the body of supportive research grows. Notwithstanding these current dynamics, patients and consumers are looking to safe alternatives compared to more traditional medicine, including the following:
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Cellular/ Tissue based therapies
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Adipose-derived stromal vascular fraction
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Bone marrow-derived stem cell therapies
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Peripheral blood derived therapies ( i.e., platelet rich plasma);
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Placental-based therapies
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Technology documented since 1910 for safety and efficacy, tissue processed from human amniotic membrane and fluid, donated by consenting mothers delivering a full-term healthy baby by scheduled Caesarean section, avoiding any ethical or moral concerns, proven safety record, case series documented success in a multitude of systemic and local pathologies
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Growth factor, cytokine therapies
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Anti-Aging
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Supplements
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Vitamin
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Mineral
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Medical foods
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Weight control
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Topical lotions and creams for the largest organ the skin
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Nontraditional medical alternatives
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Acupuncture
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Naturopathic
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Chiropractic
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Self-directed
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Meditation
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Yoga
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Tai Chi
Currently, patients who desire alternative treatments rely on the following options:
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Medical Tourism
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In United States
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Off-shore United States
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Central and South America
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Caribbean
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Europe
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Consulting directly with physicians knowledgeable in providing regenerative medical services
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Unlicensed life coaches
Current Business Strategy
Our current business strategy is to achieve the following goals and milestones:
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Execute on our current strategy to complete existing clinical studies and secure approval to commence larger Phase II studies for other specific indications that we identify that the use of our products will provide more favorable and desired health related benefits for patients seeking alternative treatment options than are currently available;
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Perform clinical based studies associated with the use of our products (independently and/or in conjunction with Providers, Manufacturers, Government Agencies and Educational Institutions) and seek accelerated approval where available for each product application in accordance with the 21st Century Cures Act (“ Cures Act ”) and/or through the granting of an FDA-approved biologics application (“ BLA ”) to allow products to be lawfully marketed and/or sold in the United States;
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Assure the Company maintains compliance with existing and the anticipated changes to FDA regulations, including the guidance related to the use and sale of tissue-based products (“ HCT/Ps ”) which was published in November 2017 and took effect in May 2021 (postponed from November 2020 due to the COVID-19 pandemic), as well as readiness to respond to ongoing future changes to regulations impacting our products;
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Expand our laboratory facilities to meet expected production, processing and research requirements;
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Engage high profile and industry recognized medical advisors, researchers and/or scientists to help identify and develop new and emerging technologies concerning biologics and to assure our Products remain cutting edge and competitive to products offered by other companies;
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Identify alternative products and services to (a) offset any potential decline in revenues resulting from FDA limitations on the sales and distribution of our existing products currently being sold and distributed and/or future expected FDA restrictions on RAAM products; and (b) provide our Providers with alternative product and treatment options to remain competitive with the market and our Providers to meet the needs and demands of their patients;
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Identify sources of exclusive and superior suppliers of RAAM products and/or raw materials used by us in processing our RAAM products;
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Identify strategic relationships and acquisition targets that would enhance and/or accelerate the growth of the Company with third parties such as (a) existing raw material and/or medical device suppliers or owners of IP associated with existing and/or additional desired RAAM products; (b) Providers that specialize in RAAM products; and/or (c) companies that market and distribute RAAM products;
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Develop and expand operations to provide for growth of our revenues
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Expand our sales market and network of Providers within and outside of the United States to increase revenues for RAAM related products through:
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Hiring additional in-house sales personnel;
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Selectively engaging independent distributors;
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Marketing private label products to distributors;
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Increasing market recognition for our brands from: marketing and participating in industry trade shows;
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Increase the number of RAAM product offerings for various modalities using proprietary processing, formulas and administration techniques, and
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Extend our referral network of Providers based on:
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Superior product offerings;
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Demonstrating a realistic and executable regulatory roadmap to assure Company and product compliance with current and anticipated FDA regulations; and
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Developing and providing educational support to Providers regarding our products and regulatory concerns;
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Secure additional working capital
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Fund shortfalls in working capital to fund ongoing expenses and required payments to vendors and creditors until revenues are stabilized;
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Fund ongoing costs to complete current pipeline of clinical trials as well as future clinical trials;
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Fund capital expenditures associated with maintaining compliance of our facilities and products;
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Fund our strategy to develop and expand our revenues for the sales and distribution of RAAM related products described above;
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Hire additional personnel to support our growth and planned expansion; and
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Enhance our CRM, e-commerce and ERP capabilities to facilitate marketing, sales and distribution functionality and accounting for our operations.
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Enhance Company Corporate Governance
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Continue to develop and expand the Company’s internal control policies; and
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Continue to explore previously announced plans to uplist the Company to Nasdaq for the purpose of enhancing interest and investment opportunities for the Company once the Company is able to demonstrate compliance with initial listing requirements, including minimum share price and stockholder’s equity thresholds.
Market Overview
The population of the United States and the developed world is getting older and living longer. According to a United States Consensus Bureau’s report, “ An Aging World: 2015 ,” America’s 65-and-over population is projected to nearly double over the next three decades, ballooning from 48 million to 88 million by 2050 and that worldwide, the 65-and-over population will more than double to 1.6 billion by 2050. According to the report, in 2015, 14.9% of the U.S. population was 65 or over and the United States was the 48th oldest country out of 228 countries and areas in the world in 2015. Baby boomers began reaching age 65 in 2011 and by 2050 the older share of the U.S. population will increase to 22.1%.
The world average age of death has increased by 35 years since 1970, with declines in death rates in all age groups, including those aged 60 and older (Source: Institute for Health Metrics and Evaluation, 2013; Mathers et al., 2015). The leading causes of death are shifting, in part because of increasing longevity. Between 1990 and 2013, the number of deaths from non-communicable diseases (“ NCDs ”) has increased by 42%; and the largest increases in the proportion of global deaths took place among the population aged 80 and over. An estimated 42.8% of deaths worldwide occur in the population aged 70 and over, with 22.9% in the population aged 80 and over.
Also, according to the Centers for Disease Control (the “ CDC ”), “ Medical Tourism ” (a term commonly used to describe people traveling outside their home country for medical treatment) is a worldwide, multibillion-dollar phenomenon that is expected to grow substantially in the next 5–10 years. Studies have estimated that hundreds of thousands of medical tourists travel from the United States annually and that patients pursue medical care abroad for a variety of reasons, including a desire to receive a procedure or therapy not available in their country of residence. Common categories of procedures that US travelers pursue during medical tourism trips include orthopedic surgery, cosmetic surgery, cardiology (cardiac surgery), oncologic care, and dentistry. Common destinations include Thailand, Mexico, Singapore, India, Malaysia, Cuba, Brazil, Argentina, and Costa Rica.
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According to Precedence Research, the global regenerative treatment market value, in which cell therapy operates, is expected to grow to ~$174.72 billion by 2032 with a projected growth rate of 22.8% annually (2023-2032). North America is estimated to be the largest market for Regenerative Medicine with 49.1% global market share. Although the market is highly concentrated in North America (specifically the U.S.), international demand for approved gene, cell, and RNA therapies remains sizable, with over 107 therapies now approved for clinical use globally. ZEO operates at the crossroads of the biopharmaceutical, regenerative medicine, and cell therapy sectors. This growth can be attributed to demographic factors such as increased life expectancy and an aging population. In addition, growth is expected to be supported by macroeconomic factors including (anticipated) more favorable regulatory conditions and growing investor interest in the aforementioned three subsectors.
If we are able to fully implement our intended business plan, we believe that we will be well situated to address this increased consumer demand for alternative medical treatments.
Marketing and Sales
Currently, we market our RAAM products and services to a network of Providers through in-house, contracted sales personnel and/or from independent distributors. As of the date of this Annual Report, we had two in-house salespersons who marketed our RAAM products and services. In addition, we had arrangements with several independent distributors that were marketing and distributing our products. We intend in the future to expand our in-house sales force and independent distributors as our working capital improves, our product line expands and as volumes increase. We also intend to develop and offer ongoing training seminars to provide the best possible information on the latest advances on anti-aging, and regenerative medicine to Providers.
Raw Materials and Sources of Supply
We acquire the raw materials and supplies for our RAAM research and development and the manufacturing of our RAAM placental-related products from unaffiliated third-party laboratories pursuant to supply arrangements.
In the event any one or more of our current suppliers are unwilling or unable to sell us required raw materials and/or products, for any reason, we may not be able to provide replacement products to our customers, or if other supply arrangements can be made, the replacement products and terms may not be as favorable.
Customers
Our RAAM business is not dependent on any one or more customers, especially as our customer and distribution network expands. Our customer base is increasingly broad based and throughout the United States and worldwide.
Intellectual Property
The table below sets forth a summary of our intellectual property rights.
Issued Patents:
ZEO ScientifiX™ has one issued U.S. Patent for its Organicell™ line of products and the proprietary techniques used for processing perinatal fluid.
U.S. Patent Application No. 17/990,522 ( Continuation of 17/226,587)
Titled : COMPOSITIONS COMPRISING NANOPARTICLES, METHOD OF MAKING AND USES THEREOF
Filed : November 18, 2022
Inventor : Maria Ines Mitrani
Applicant : Organicell Regenerative Medicine, Inc.
Issue Date: August 6, 2024
Patent No.: 12,053,494
Assignment : MARIA INES MITRANI (Assignor), ORGANICELL REGENERATIVE MEDICINE, INC. (Assignee)
Recorded : March 17, 2023
Reel/Frame : 063014/0851
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Patent Applications:
ZEO ScientifiX™ has one U.S. Patent Application on file for its Organicell™ line of products and the proprietary techniques used for processing perinatal fluid.
U.S. Patent Application No. 17/226,587
Titled : COMPOSITIONS COMPRISING NANOPARTICLES, METHOD OF MAKING AND USES THEREOF
Filed : April 9, 2021
Inventor : Maria Ines Mitrani
Applicant : Organicell Regenerative Medicine, Inc.
Assignment : MARIA INES MITRANI (Assignor), ORGANICELL REGENERATIVE MEDICINE, INC. (Assignee)
Recorded : April 9, 2021
Reel/Frame : 055878 / 0801 & 055878 / 0900
ZEO ScientifiX™ has eight Ex-US Patent Applications on file for its Organicell™ line of products and the proprietary techniques used for processing perinatal fluid. These Applications are national stage entries of:
International Patent Application No. PCT/IB2021/052982
Titled : COMPOSITIONS COMPRISING NANOPARTICLES, METHOD OF MAKING AND USES THEREOF
Filed : April 10, 2021
Inventor : Maria Ines Mitrani
Applicant : Organicell Regenerative Medicine, Inc.
Assignment : MARIA INES MITRANI (Assignor), ORGANICELL REGENERATIVE MEDICINE, INC. (Assignee)
Country : Australia
Application Number : 2021253889
Filing Date : April 10, 2021
Country : Canada
Application Number : 3179925
Filing Date : April 10, 2021
Country : China
Application Number : 202180041860.8
Filing Date : April 10, 2021
Country : Costa Rica
Application Number : 2022-570
Filing Date : April 10, 2021
Country : Europe
Application Number : 21784900.9
Filing Date : April 10, 2021
Country : Japan
Application Number : 2023-515253
Filing Date : April 10, 2021
Country : Mexico
Application Number : MX/a/2022/012692
Filing Date : April 10, 2021
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Country : Panama
Application Number : 94165-01
Filing Date : April 10, 2021
ZEO ScientifiX™ has a U.S. Patent Application on file for its Organicell™ PPX product and the proprietary techniques used in the administration of blood-derived exosomes to treat pain.
U.S. Patent Application No. 18/063,227
Titled : COMPOSITIONS AND METHODS FOR TREATING PAIN WITH EXTRACELLULAR VESICLES
Filed : December 8, 2022
Inventors : Maria Ines Mitrani, Michael Bellio, and Albert Mitrani
Applicant : Organicell Regenerative Medicine, Inc.
Assignment : MARIA INES MITRANI (Assignor), MICHAEL BELLIO (Assignor), ALBERT MITRANI (Assignor), ORGANICELL REGENERATIVE MEDICINE, INC. (Assignee)
Recorded : April 19, 2023
Reel/Frame : 063370/0572
ZEO ScientifiX™ has an International Patent Application on file for its Organicell™ PPX product and the proprietary techniques used in the administration of blood-derived exosomes to treat pain
International Patent Application No. PCT/US2022/081146
Titled : COMPOSITIONS AND METHODS FOR TREATING PAIN WITH EXTRACELLULAR VESICLES
Filed : December 8, 2022
Inventors : Maria Ines Mitrani, Michael Bellio, and Albert Mitrani
Applicant : Organicell Regenerative Medicine, Inc.
Assignment : MARIA INES MITRANI (Assignor), MICHAEL BELLIO (Assignor), ALBERT MITRANI (Assignor), ORGANICELL REGENERATIVE MEDICINE, INC. (Assignee)
Trademarks:
Word Mark: ZOFIN
Goods/Services : Biologically derived products developed from perinatal tissue material in the nature of cultured biological tissue and non-cultured biological tissue, for aesthetic purposes, other than for medical or veterinary purposes (IC 001); Biologically derived products developed from perinatal tissue material for medical and medical regenerative purposes, namely, biological tissue grafts, implants comprising living tissue, surgical implants comprising living tissue, and biological implants for cushioning tissues and supporting tissue repair and homeostasis (IC 005)
Registration Number : 7,469,132
Filing Date : July 13, 2020
Owner : Organicell Regenerative Medicine, Inc.
Word Mark : ORGANICELL
Goods/Services : Biologically derived products developed from perinatal tissue material in the nature of cultured biological tissue and non-cultured biological tissue, for aesthetic purposes, other than for medical or veterinary purposes (IC 001); Biologically derived products developed from perinatal tissue material for medical and medical regenerative purposes, namely, biological tissue grafts, implants comprising living tissue, surgical implants comprising living tissue, and biological implants for cushioning tissues and supporting tissue repair and homeostasis (IC 005)
Registration Number: 6,647,223
Filing Date : May 6, 2020
Owner : Organicell Regenerative Medicine, Inc.
Word Mark : PATIENT PURE X - PPX
Goods/Services : plasma extracts for medical use, namely, plasma extract containing purified and concentrated exosomes derived from whole human blood (IC 005)
Registration Number: 6,654,296
Filing Date : January 24, 2020
Owner : Organicell Regenerative Medicine, Inc.
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Word Mark : PATIENT PURE X - PPX
Goods/Services: plasma processing services for others, namely, extracting purified and concentrated exosomes based on whole blood harvested from patients for use by hospitals, clinics, or other organizations or persons involved in delivering healthcare services to patients (IC 040)
Registration Number: 6,654,297
Filing Date : January 24, 2020
Owner : Organicell Regenerative Medicine, Inc.
Word Mark : XOTIN
Goods/Services : Biologically derived nanoparticles, namely, exosomes and extracellular vesicles, developed from perinatal tissue for medical and medical regenerative purposes, namely, biological tissue grafts, implants comprising living tissue, surgical implants comprising living tissue, and biological implants for cushioning tissues and supporting tissue repair and homeostasis (IC 005)
Registration Number : 6,815,780
Filing Date : September 9, 2020
Owner : Organicell Regenerative Medicine, Inc.
Word Mark : XOTIN
Goods/Services : Biologically derived nanoparticles, namely, exosomes and extracellular vesicles, developed from perinatal tissue material for aesthetic purposes, other than for medical or veterinary purposes (IC 001)
Registration Number : 6,847,416
Filing Date : September 9, 2020
Owner : Organicell Regenerative Medicine, Inc.
Word Mark : ZEO SCIENTIFIX
Goods/Services : Manufacturing services for others in the field of regenerative medicine (IC 040); Scientific research services for others in the field of regenerative medicine; Scientific laboratory services; Design of biotechnological products being regenerative medicine products (IC 042)
Serial Number : 98307890
Filing Date : December 11, 2023
Owner : Organicell Regenerative Medicine, Inc.
Status : Non-Final Action Issued November 18, 2024
Composite Mark : ZEO SCIENTIFIX (Stylized/Design)
Goods/Services : Manufacturing services for others in the field of regenerative medicine (IC 040); Scientific research services for others in the field of regenerative medicine; Scientific laboratory services; Design of biotechnological products being regenerative medicine products (IC 042)
Serial Number : 98307906
Filing Date : December 11, 2023
Owner : Organicell Regenerative Medicine, Inc.
Status : Non-Final Action Issued November 18, 2024
Word Mark : PPX
Goods/Services : Biotechnological products, namely, blood-derived biologics being plasma extract containing concentrated nanoparticles derived from whole human blood (IC 005)
Serial Number : 98341677
Filing Date : January 4, 2024
Owner : Organicell Regenerative Medicine, Inc.
Status : Published for Opposition December 10, 2024
Word Mark : ZEO GROWX
Goods/Services : Hair growth serum
Serial Number : 98883075
Filing Date : December 3, 2024
Owner : Zeo ScientifiX, Inc.
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Word Mark : ZEO HAIR GROW
Goods/Services : Hair growth serum
Serial Number : 98884330
Filing Date : December 4, 2024
Owner : Zeo ScientifiX, Inc.
Word Mark : ZEO GROW BOOST
Goods/Services : Hair growth serum
Serial Number : 98884343
Filing Date : December 4, 2024
Owner : Zeo ScientifiX, Inc.
Pursuant to our employment agreements with our executives, all work product that is created, prepared, produced, authored, edited, amended, conceived or reduced to practice by each executive individually or jointly with others during the period of their employment by the Company and relating in any way to the business or contemplated business, research or development of the Company (regardless of when or where the Work Product is prepared or whose equipment or other resources is used in preparing the same), as well as any and all rights in and to copyrights, trade secrets, trademarks (and related goodwill), patents and other intellectual property rights therein arising in any jurisdiction throughout the world and all related rights of priority under international conventions with respect thereto, including all pending and future applications and registrations thereof, and continuations, divisions, continuations-in-part, reissues, extensions and renewals thereof (collectively, “ Intellectual Property Rights ”), the sole and exclusive property of the Company. All of the Work Product consisting of copyrightable subject matter shall be deemed “ work made for hire ” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company or if not applicable, deemed to be irrevocably assigned to the Company, for no additional consideration. The Intellectual Property Rights in any “ Pre-existing Materials ” included contained in the Work Product shall be retained by the executive but the executive shall be deemed to have granted to the Company an irrevocable, worldwide, unlimited, royalty-free license to use, publish, reproduce, display, distribute copies of, and prepare derivative works based upon, such Pre-Existing Materials and derivative works thereof. The Company may not assign, transfer and sublicense such rights to others without executive’s consent, other than to a wholly owned subsidiary of the Company. The executive shall provide written notice to the Company’s Chief Executive Officer therein notifying the Company new intellectual property including the Pre-Existing Materials.
Competition
The regenerative medicine field is highly competitive and subject to rapid technological change and regulation. Companies compete on the basis of regulatory compliance, product efficacy, pricing, and ease of handling/logistics. A critically important factor for growth in the US market is third-party reimbursement, which is difficult to obtain, and the process can be time-consuming and expensive. We expect that it will take some time before RAAM products will be widely accepted under health insurance coverage. In addition, growth of this industry is expected to expand as additional research and development into the benefits of regenerative products and specific products becomes more widely accepted as a result of FDA mandated or optional clinical trials are performed by industry stakeholders.
As stated previously, companies competing in the industry must now meet the new and more stringent regulatory deadlines imposed by the FDA in connection with regulation of RAAM products that went into effect in May 2021. As a result of these concerns, the Company and our competitors are expected to need to pursue research and development efforts, submit IND applications for FDA approval to commence clinical trials for RAAM products and ultimately obtaining a biologic license for their products to be sold, to assure that their respective operations and products remain compliant with FDA regulations and there is no adverse impact to future operations.
We have not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products we currently produce would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s. However, we do not believe that our products fall within these guidelines and intend to vigorously defend against any adverse interpretation by the FDA on the classification of our products that may be deemed as falling under this defined regulation, if any. Notwithstanding the foregoing, we are undertaking efforts on an ongoing basis to mitigate any potential risks associated with an adverse ruling by the FDA and the subsequent limitations on our ability to continue to generate revenues from the sale of our products in the United States until the Company obtains the required licenses. The efforts include continuing with clinical trials both domestically and internationally, expanding sales internationally and developing new product offerings and/or designations of products that would not fall under these regulations, including the Company’s recent launching of PPX™ and the recent development and distribution of additional products that incorporate its proprietary ingredients for products to be used in topical aesthetic applications.
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We intend to perform clinical trials for our RAAM Products for the purpose of obtaining biologics license status from the FDA to provide us with advantages over our competitors, including acceleration for acceptance of our products in traditional insurance plans, compliance with FDA regulations and/or to provide our customers with superior education and support of the benefits of our products. Initially we are positioning ourselves as a cash-based health care alternative for consumers that can provide higher levels of improvement, that is not available from traditional allopathic medicine at this time.
The Company competes in multiple areas of clinical treatment where regenerative biomaterials may be employed to modulate inflammation, enhance healing and reduce scar tissue formation: advanced wound care treatment, including spine, orthopedic, sports medicine, and surgical as well as regenerative and aesthetics applications.
The primary competitive products in this space and which are now subject to being classified as an HCT/P product that must meet current regulatory guidelines and require IND approvals, clinical trials, and ultimately biologic license are allogenic products derived from perinatal sources or blood/bone sources including placental powders, placental frozen tissues or liquids, cord blood derived products, and Wharton’s jelly derived products. These products vary significantly in terms of pricing, cellular counts, and biological components, including exosomes, extracellular vesicles, micro vesicles, nanoparticles, and bioactive proteins. As a result of the increased regulatory oversight of HCT/P’s, competitors have begun shifting their product portfolios to autologous solutions including serums derived from blood, bone marrow, and adipose tissue. These products are the fastest growing sector of regenerative medicine due to their compliant regulatory position with the FDA. In addition, many companies have emerged with products that are being targeted for aesthetic and/or topical use, which in some instances have less regulatory restrictions for the use of the products.
Allogenic competitors are primarily producer-distributor companies which historically included Kimera Labs, Frontier Biologics, Benev Company Inc., Exocel Bio, Re-gen Active Lab, Neobiosis, MiMedix Group, Inc., Invitrx Therapeutics, Liveyon Labs, DermaSciences, Signature Biologics, Direct Biologics and Vitti Labs LLC, as well as a number of distributors who sell white-labeled products from those producer-distributor entities. Additionally, there are a variety of accredited blood, bone, and soft tissue banks that we historically competed against. Currently one of the largest companies in the autologous segment is Regenexx.
In connection with the new FDA regulations that went into effect in May 2021 described above, the Company believes that several perinatal product manufacturers in the United States have closed their operations and that hundreds of other manufacturers and clinics have already received warning letters of violations of the new FDA regulations. To date, the Company has not received any warning letters or correspondence from the FDA indicating that our products were not in compliance with the current FDA regulations.
The aesthetic market consists of numerous products aimed at skin rejuvenation, anti-aging, and overall dermatologic health. These include advanced serums, creams, and other over-the-counter formulations that incorporate cutting-edge ingredients like peptides, growth factors, and nanoparticles. While these products are generally marketed as non-invasive and appeal directly to consumers and are often sold as “topical” and/or “cosmetics”, they compete indirectly with medical aesthetic procedures by offering lower-cost alternatives for achieving similar cosmetic improvements. This segment consists of many competitors, many of which have significantly greater resources than the Company to develop, research and market their products.
As stated previously, the demand for RAAM products is very high and expected to grow with the growing baby boomer generation getting older, the increase in patients desiring to seek health care options outside of traditional therapies, the growing trend in the desire of individuals to remain active longer in life and the ongoing rise in health care costs which RAAM products may provide a more efficient and economical alternative for certain conditions.
Government Regulation
General
The Company’s operations are subject to FDA regulations in connection with the sales and distribution of its RAAM products. In addition, the Company relies on supply agreements with birth tissue recovery companies, supply manufacturers and/or third party distributors for the supply of RAAM products and/or the Company’s intended objectives to conduct research and development and clinical trials of RAAM products, all of whom are required to comply with FDA regulations. We anticipate these regulations will be heavily enforced and subject to more restrictive regulations by the FDA in the future. A summary of the current FDA regulations is set forth below.
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FDA Premarket Clearance and Approval Requirements
Tissue Products
Currently the products that are sold by the Company are derived from human tissue that is purchased by the Company and processed directly in the Company’s laboratory facilities. As discussed below, some tissue-based products are regulated solely under Section 361 of the Public Health Service Act as human cells, tissues and cellular and tissue-based products, or HCT/Ps, which do not require premarket clearance or approval by the FDA. Other tissue products are regulated as biologics and, in order to be lawfully marketed in the United States, require an FDA-approved BLA.
The Company’s leading product, Zofin™ (also known as Organicell™ Flow), is an acellular, biologic therapeutic derived from perinatal sources and is manufactured to retain naturally occurring microRNAs, without the addition or combination of any other substance or diluent.
The Company’s recently launched autologous product called Patient Pure X™ (PPX™). PPX™ is a non-manipulated biologic containing the nanoparticle fraction from a patient’s own peripheral blood.
The Company also supplies products to third party manufacturers that are used as ingredients in formulations or use in conjunction with topical products or topical procedures.
The FDA is continually changing and formulating new guidelines for this industry.
Products Regulated as HCT/Ps
The FDA has specific regulations governing human cells, tissues and cellular and tissue-based products, or HCT/Ps. An HCT/P is a product containing or consisting of human cells or tissue intended for transplantation into a human patient. HCT/Ps that meet the criteria for regulation solely under Section 361 of the Public Health Service Act (so-called “ 361 HCT/Ps ”) are not subject to approval requirements and they are subject to post-market regulatory requirements.
To be a 361 HCT/P, a product generally should meet following criteria:
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Be minimally manipulated, no structural change, or be mixed with anything;
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Be intended for homologous use, essentially used for the same purpose that it was used in the donor;
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Its manufacture must not involve combination with another article, except for water, crystalloids or a sterilizing, preserving or storage agent; and
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It must not be dependent upon the metabolic activity of living cells for its primary function.
Products Regulated as Biologics- The BLA Pathway
The typical steps for obtaining FDA approval of a BLA to market a biologic product in the U.S. include:
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Completion of preclinical laboratory tests, animal studies and formulations studies under the FDA’s good laboratory practices regulations;
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Submission to the FDA of an Investigational New Drug Application (“ IND ”) for human clinical testing, which must become effective before human clinical trials may begin and which must include independent Institutional Review Board (“ IRB ”) approval at each clinical site before the trials may be initiated;
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Performance of adequate and well-controlled clinical trials in accordance with Good Clinical Practices to establish the safety and efficacy of the product for each indication;
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Submission to the FDA of a Biologics License Application for marketing the product, which includes, among other things, reports of the outcomes and full data sets of the clinical trials, and proposed labeling and packaging for the product;
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Satisfactory completion of an FDA Advisory Committee review; and
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Satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with Current Good Manufacturing Practices (“cGMP”) regulations.
Generally, clinical trials are conducted in three phases:
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Phase I trials typically involve a small number of healthy volunteers and are designed to provide information about the product safety.
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Phase II trials are conducted in a larger but limited group of patients afflicted with a specific diagnosis in order to determine preliminary efficacy, and to identify possible adverse effects.
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Dosage studies are designated as Phase IIA and efficacy studies are designated as Phase IIB.
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Phase III clinical trials are generally large-scale, multi-center, comparative trials conducted with patients who have a specific condition in order to provide statistically valid proof of efficacy, as well as safety and potency.
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In some cases, the FDA will require Phase IV , or post-marketing trials, to collect additional data after a product is on the market.
The process of obtaining an approved BLA requires the expenditure of substantial time, effort and financial resources and may take years to complete.
FDA Post-Market Regulation
Tissue processors are required to register as an establishment with the FDA. We intend on becoming a registered establishment, accredited by the American Association of Tissue Banks (“ AATB ”) for the storage and distribution of tissue products that we purchase directly or indirectly from third party manufacturers. Once we are registered, we will be required to comply with regulations, including those regulations regarding storage, controls, access, labeling, record keeping, security, processes, compliance with established Good Tissue Practices, and documentation associated with the sale of our products by our customers to their patients. Our facilities will be subject to periodic inspections to assess our records and determination of our compliance with the regulations.
Products covered by a BLA, 510(k) clearance, or a PMA are subject to numerous additional regulatory requirements, which include, among others, compliance with cGMP, which imposes certain procedural, substantive and record keeping requirements, labeling regulations, the FDA’s general prohibition against promoting products for unapproved or “off-label” uses, and additional adverse event reporting.
Other Regulation Specific to Tissue Products
The AATB, has issued operating standards for tissue banking, whether manufacturing and/or storing products as a distributor of manufactured products by third parties. Compliance with these standards is a requirement in order to become a licensed tissue bank.
21st Century Cures Act
In December 2016, President Obama signed the 21st Century Cures Act (the “ Cures Act ”) into law. The Cures Act includes many provisions that aim to speed up the process of bringing new drugs and devices to market. One of the Cures Act’s most significant amendments to the Federal Food, Drug and Cosmetic Act allows the FDA to grant accelerated approval to regenerative medicine products, while also providing the agency with wide discretion on creating new approaches to regenerative medicine. This legislative development is the result of increased pressure from patients and other stakeholders to move regenerative medicine advancements more quickly from the lab into the clinic.
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Specifically, the new accelerated approval pathway authorized by the Cures Act allows certain regenerative medicine products to be designated as “regenerative advanced therapy” and become eligible for priority review by FDA. To qualify for this pathway, the product must be aimed at a serious disease and have the potential to deal with currently unmet medical needs. It must also meet the Cures Act’s new definition of a regenerative advanced therapy, which is defined as “cell therapy, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, except for those regulated solely under section 361 of the Public Health Service Act.” This broad definition would seem to encompass the majority of regenerative medicine products known to be currently in the development stages.
As with the existing accelerated approval pathway for drugs and biologics, this new regulatory pathway would allow a regenerative medicine product to be approved for marketing based on surrogate or intermediate clinical trial endpoints rather than longer term clinical outcomes. The use of such endpoints can decrease the number, duration, and complexity of clinical trials that are needed to prove a longer-term outcome. Subsequently, a sponsor would have to conduct confirmatory clinical trials to ensure that the surrogate or intermediate endpoint was in fact predictive of patients’ clinical response to the product, otherwise the accelerated approval could be withdrawn.
The Cures Act also requires the FDA to work with the National Institute of Standards and Technology (“ NIST ”) and other stakeholders to develop standards and consensus definitions for regenerative medicine products. Such standards are expected to play a large role in advancing this nascent industry by allowing companies to rely on FDA-recognized standards, rather than creating and validating their own as is the case today.
The Cures Act attempts to create a research network and a public-private partnership to assist developers in generating definitive evidence about whether their proposed therapies indeed provide clinical benefits that are hoped for. The Cures Act also requires the FDA to track and report the number and type of applications filed for regenerative medicine products, including the number of products approved through the new accelerated approval pathway. The law also includes provisions that require the FDA to publish guidance on how it will design and implement an approval process for regenerative medicine devices.
Guidance Documents
In November 2017, the FDA released two final guidance documents in an effort to implement a “comprehensive policy framework” for existing laws and regulations governing regenerative medicine products, including human cells, tissues, and cellular and tissue-based products (“ HCT/Ps ”). These guidance documents build upon the previous regulatory framework for these products, which was completed in 2005. A guidance document cannot alter a regulation, but can clarify how the FDA intends to enforce the regulation.
The two guidance documents below clarify the FDA’s interpretation of the risk-based criteria manufacturers use to determine whether a product is subject to the FDA’s premarket review.
The first guidance provides greater clarity around when cell and tissue-based products would be exempted from the established regulations if they are removed from and implanted into the same individual within the same surgical procedure and remain in their original form. The second final guidance helps stakeholders better understand how existing regulatory criteria apply to their products by clarifying how the agency interprets the existing regulatory definitions “minimal manipulation” and “homologous use.” As this field advances, the FDA has noted that there are a growing number of regenerative medicine products subject to FDA premarket authorization. These guidance documents will help explain how the FDA will provide a risk-based framework for its oversight. The policy framework defines how the FDA intends to take action against unsafe products while facilitating continued innovation of promising technologies.
To accomplish this goal, the guidance document has clarified the FDA’s view of “ minimal manipulation ” and “ homologous use .” These are two concepts that are defined in current regulation to establish the legal threshold for when a product is subject to the FDA’s premarket approval requirements. By further clarifying these terms in the final guidance, the FDA is applying a modern framework for its oversight.
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FDA regulations at 21 C.F.R. Part 1271, previous draft guidance documents, and untitled letters establish the agency’s approach to regulating HCT/Ps. Some HCT/Ps are exempt from premarket approval and are subject to regulation solely under section 361 of the Public Health Service Act (“ PHS Act ”) (so-called “ 361 HCT/Ps ”) whereas others require premarket approval (i.e., as a drug, device, or biologic) (so-called “ 351 HCT/Ps ”). Both 361 HCT/Ps and 351 HCT/Ps are subject to FDA requirements (at Part 1271) for registration and listing, donor-eligibility, current good tissue practices, and other requirements intended to prevent transmission of communicable diseases. Those that are the subject of the “ same surgical procedure ” exception – are exempt from both premarket approval requirements and the requirements of Part 1271. This regime is outlined in a flow chart, which is one of the few new features of the final guidance documents and is presented below:
Enforcement Discretion
In order to allow manufacturers of products time to comply with the requirements, the FDA announced that it intended (originally through November 2020 and extended to May 2021 because of the COVID-19 pandemic) to exercise enforcement discretion for certain products that are subject to the FDA’s premarket review under the existing regulations, but are not currently meeting these requirements. The FDA does not intend to exercise such enforcement discretion for those products that pose a potential significant safety concern. Going forward, the FDA will apply a risk-based approach to enforcement, taking into account how products are being manufactured, marketed and administered as well as the diseases and conditions for which they are being used. This risk-based approach allows product manufacturers time to engage with the FDA, as to determine if they need to submit a marketing authorization application and, if so, submit their application to the FDA for approval.
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The FDA’s enforcement discretion policy for IND and premarket approval requirements does not apply to products that have been associated with reported safety concerns or have the potential to cause significant safety concerns to patients. The FDA has stepped up its oversight of cellular and related products in recent years and has issued compliance actions, including numerous warning and untitled letters, and pursued litigation for serious violations of the law, including some involving patient harm.
The FDA has indicated it intends to focus enforcement actions on “ products with higher risk ,” taking into account factors such as non-autologous (allogeneic) use, the route of administration, the site of administration, and whether the product is intended for homologous or non-homologous use. For example, HCT/Ps administered via intravenous injection or infusion, aerosol inhalation, intraocular injection, or injection or infusion into the central nervous system, will be prioritized over HCT/Ps administered by intradermal, subcutaneous, or intra-articular injection. Similarly, HCT/Ps intended for non-homologous use, particularly those intended to treat serious or life-threatening conditions, “are more likely to raise significant safety concerns than HCT/Ps intended for homologous use.”
The Company believes that the new regulatory restrictions being implemented by the FDA are intended to assure that all parties involved in the chain of gathering, processing, distributing and/or administrating RAAM related products have met the required standards to assure that the manufacturing, marketing the administration of the RAAM regulated products are not misleading and are performed in a safe and ethical manner and in accordance with the “ objective intent ” of the manufacturer.
We have not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products we currently produce would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s. However, we do not believe that our products fall within these guidelines and intend to vigorously defend against any adverse interpretation by the FDA on the classification of our products that may be deemed as falling under this defined regulation, if any. Notwithstanding the foregoing, we are undertaking efforts on an ongoing basis to mitigate any potential risks associated with an adverse ruling by the FDA and the subsequent limitations on our ability to continue to generate revenues from the sale of our products in the United States until the Company obtains the required licenses. The efforts include continuing with clinical trials, expanding sales internationally and developing new product offerings and/or designations of products that would not fall under these regulations.
Fraud, Abuse and False Claims
We are directly and indirectly subject to various federal and state laws governing relationships with healthcare providers and pertaining to healthcare fraud and abuse, including anti-kickback laws. In particular, the federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging for or recommending a good or service for which payment may be made in whole or part under federal healthcare programs, such as the Medicare and Medicaid programs. (See 42 U.S.C. § 1320a-7b). Penalties for violations include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. The Anti-Kickback Statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. In implementing the statute, the Office of Inspector General of the U.S. Department of Health and Human Services (“ OIG ”) has issued a series of regulations, known as the “ safe harbors .” These safe harbors set forth provisions that, if all their applicable requirements are met, will assure healthcare providers and other parties that they will not be prosecuted under the Anti-Kickback Statute.
AdvaMed has established guidelines and protocols for medical device manufacturers in their relationships with healthcare professionals on matters including research and development, product training and education, grants and charitable contributions, support of third-party educational conferences, and consulting arrangements. Adoption of the AdvaMed Code by a medical device manufacturer is voluntary, and while the OIG and other federal and state healthcare regulatory agencies encourage its adoption and may look to the AdvaMed Code, they do not view adoption of the AdvaMed Code as proof of compliance with applicable laws. We have incorporated the principles of the AdvaMed Code in our standard operating procedures, sales force training programs, and relationships with health care professionals.
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Manufacturing (Processing)
We intend on becoming a registered establishment, accredited by the American Association of Tissue Banks (“ AATB ”) for the storage and distribution of tissue products that we purchase directly or indirectly from third party manufacturers.
Our laboratory and distribution facilities are subject to periodic unannounced inspections by regulatory authorities based on the activities in which we may be engaged, and may undergo compliance inspections conducted by the FDA and corresponding state and foreign agencies based on our operations. We intend to seek American Association Blood Banks (“ AABB ”) or AATB accreditation in connection with the storage of products we intend to distribute.
FDA Compliance Steps
The Company’s leading product, Zofin™ (also known as Organicell™ Flow), is an acellular, biologic therapeutic derived from perinatal sources and is manufactured to retain naturally occurring microRNAs, without the addition or combination of any other substance or diluent. The Company’s recently launched a service platform for its first autologous product called Patient Pure X™ (PPX™). PPX™ is a non-manipulated biologic containing the nanoparticle fraction from a patient’s own peripheral blood.
Current FDA guidance requires that the sale of products that fall under Section 351 of the Public Health Services Act pertaining to marketing traditional biologics and human cells, tissues and cellular and tissue-based products (“ HCT/Ps ”) can only be sold pursuant to an approved biologics license application (“ BLA ”).
To date, the Company has obtained certain Investigational New Drug (“ IND ”), and 18 emergency IND (“ eIND ”) approvals from the FDA, including applicable Institutional Review Board (“ IRB ”) approvals which authorized the Company to commence clinical trials or treatments in connection with the use of Zofin™ and related treatment protocols. In connection with the studies described above, there were no reported therapy-related safety events or significant adverse events.
Based on the results from the clinical trials or treatments in connection with the use of Zofin™ and PPX™ and related treatment protocols performed to date, the Company has determined that there was sufficient Phase I safety data obtained from the existing enrolled patients using Zofin™ and/or PPX™ and accordingly there was no longer any benefit from continued enrollment to obtain additional patient Phase 1 safety related data among the above studies. As a result, the studies and the related sites where the studies were performed have been closed.
In addition, the Company is reviewing the benefit from continued efforts to commence and/or complete additional Phase I safety related trials as well as which indications should be pursued for Phase II efficacy related research and whether any of the existing approved and open IND’s should be modified, terminated and/or replaced.
The ability for the Company to initiate any future Phase II studies are subject to many uncertainties, including FDA approval of the respective IND applications and the Company having sufficient working capital to finance the ongoing costs of the trial, as to all of which no assurance can be given.
We have not obtained any opinion or ruling regarding the Company’s operations and whether the processing, sales and distribution of the products we currently produce would be subject to the FDA’s previously announced intended enforcement policies regarding HCT/P’s. However, we do not believe that our products fall within these guidelines and intend to vigorously defend against any adverse interpretation by the FDA on the classification of our products that may be deemed as falling under this defined regulation, if any. Notwithstanding the foregoing, we are undertaking efforts on an ongoing basis to mitigate any potential risks associated with an adverse ruling by the FDA and the subsequent limitations on our ability to continue to generate revenues from the sale of our products in the United States until the Company obtains the required licenses. The efforts include continuing with clinical trials, expanding sales internationally and developing new product offerings and/or designations of products that would not fall under these regulations.
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Environmental Laws
Our laboratory facilities process or directly handled biomedical materials whereby we receive and/or generate wastes that are required to be disposed. We contract with third parties for the transport, treatment, and disposal of the waste that we obtain and at all times plan on being compliant with applicable laws and regulations promulgated by the Resource Conservation and Recovery Act, the U.S. Environmental Protection Agency and similar state agencies.
Employees
As of October 31, 2024, we had 20 full-time employees and no part-time employees. We also engaged 2 other consultants that assisted with various regulatory, marketing, administrative activities and distribution services. From time to time, the Company engages independent contractors for sales and administration activities. There are no collective bargaining agreements.
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