UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
File Number: 001-36445
NanoVibronix, Inc.
(Exact
name of registrant as specified in its charter)
525 Executive Blvd. Elmsford, New York 10523
(Address of principal executive office) (Zip Code)
Registrant’s
telephone number, including area code: (914)233-3004
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, par value $0.001 per share NOAV NASDAQ Capital Market
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The
aggregate market value of our common stock held by non-affiliates as of June 30, 2021, was approximately $9,447,579.
The
number of shares outstanding of the registrant’s Common Stock as of April 14, 2022 was 27,997,793shares.
DOCUMENTS
INCORPORATED BY REFERENCE
The
information required by Part III of this Form 10-K, to the extent not set forth herein, is incorporated by reference from the registrant’s
definitive proxy statement for its 2021 Annual Meeting of Stockholders. Such proxy statement shall be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year to which this report relates.
PART
I
ITEM
1. BUSINESS
Cautionary
Note Regarding Forward-Looking Statements; Risk Factor Summary
This
Annual Report on Form 10-K contains “forward-looking statements,” which include information relating to future events, future
financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may,”
“should,” “could,” “would,” “predicts,” “potential,” “continue,”
“expects,” “anticipates,” “future,” “intends,” “plans,” “believes,”
“estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking
statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance
or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s
good faith belief as of that time with respect to future events, and are subject to a number of risks, and uncertainties and assumptions
that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.
These risks are more fully described in the “Risk Factors” section of this Annual Report on Form 10-K. The following
is a summary of such risks:
● Our history of losses and expectation of continued losses.
● Market acceptance of existing and new products.
● Risks of product liability claims and the availability of insurance.
● Our ability to successfully develop and commercialize our products.
● Our ability to generate internal growth.
● Risks related to computer system failures and cyber-attacks.
● Our ability to obtain regulatory approval in foreign jurisdictions.
● The price of our securities is volatile with limited trading volume
● The adoption of health policy changes and health care reform.
● Lack of financial resources to adequately support our operations.
● Changes in our relationship with key collaborators.
● Our failure to comply with regulatory guidelines.
● Uncertainty in industry demand and patient wellness behavior.
● Depth of the trading market in our common stock.
The
foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or
risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements.
Please see “Item 1A. Risk Factors” for additional risks which could adversely impact our business and financial performance.
Moreover, new risks regularly emerge, and it is not possible for us to predict or articulate all risks we face, nor can we assess the
impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from
those contained in any forward-looking statements. All forward-looking statements included in this Form 10-K are based on information
available to us on the date hereof. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Unless
the context otherwise indicates or requires, the terms “we,” “our,” “us,” “NanoVibronix,”
and the “Company,” as used in this Annual Report on Form 10-K, refer to NanoVibronix, Inc. and its subsidiaries as a combined
entity, except where otherwise stated or where it is clear that the terms mean only NanoVibronix, Inc. exclusive of its subsidiaries.
*
Overview
We
were organized as a Delaware corporation in October 2003. Through our wholly-owned subsidiary, NanoVibronix Ltd., a private company incorporated
under the laws of the State of Israel, we focus on noninvasive biological response-activating devices that target biofilm prevention,
pain therapy, and wound healing and can be administered at home, without the assistance of medical professionals. Our primary products,
which are in various stages of clinical and market development, currently consist of:
Each
of our UroShield, PainShield, and WoundShield products employs a small, disposable transducer that transmits low frequency, low intensity
ultrasound acoustic waves that seek to repair and regenerate tissue, musculoskeletal and vascular structures, and decrease biofilm formation
on urinary catheters and associated urinary tract infections. Through their size, effectiveness and ease of use, these products are intended
to eliminate the need for technicians and medical personnel to manually administer ultrasound treatment through large transducers, thereby
promoting patient independence and enabling more cost-effective home-based care.
PainShieldTM,
MD is currently cleared for marketing in the United States by the U.S. Food and Drug Administration. In September 2020, the U.S. Food
and Drug Administration exercised its Enforcement Discretion to allow distribution of the UroShield device in the U.S. during the COVID-19
pandemic. . While the permitted use is currently temporary, it does permit the import of the UroShield to the U.S. during the ongoing
COVID-19 pandemic. All three of our products have CE Mark approval in the European Union, and a certificate allowing us to sell PainShield,
UroShield and WoundShield in Israel. We are able to sell PainShield, UroShield and WoundShield in India and Ecuador based on our CE Mark.
We have consummated sales of PainShield and UroShield in the relevant markets, and we saw sales increase in 2021; WoundShield has not
generated significant revenue to date. Outside of the United States we generally apply, through our distributor, for approval in a particular
country for a particular product only when we have a distributor in place with respect to such product.
In
the United States, PainShield and UroShield requires a prescription from a licensed healthcare practitioner. If U.S. Food and Drug Administration
clearance is obtained, we anticipate that WoundShield will require a prescription from a licensed healthcare practitioner in the United
States. UroShield has been approved through the U.S. Food and Drug Administration under Enforcement Discretion for the duration of the
Covid-19 health emergency and is intended to be sold directly to health care facilities and therefore will not require a prescription
for these venues. However, in other countries in which we sell PainShield, UroShield, and WoundShield, such products are eligible for
sale without a prescription.
In
addition to the need to obtain regulatory approvals, we anticipate that sales volumes and prices of our UroShield, PainShield, and WoundShield
products will depend in large part on the availability of insurance coverage and reimbursement from third party payers. Third party payers
include governmental programs such as Medicare and Medicaid in the United States, private insurance plans and workers’ compensation
plans. We do not currently have reimbursement codes for use of WoundShield in any of the markets in which we have regulatory authority
to sell WoundShield. Of the markets in which we have regulatory authority to sell PainShield, prior to January 2020, we only had reimbursement
codes in the United States (i.e., CPT codes) for clinical use only. Effective as of January 2020, the U.S. Centers for Medicare and Medicaid
Services (CMS) approved our PainShieldTM for reimbursement for Medicare beneficiaries on a national basis. However, the company
continues to work toward a reimbursement value from CMS. We are working with qualified legal representation toward that goal. We were
notified on March 30, 2020 that our Medicare Enrollment Application was approved, and we are now an approved Medicare Supplier for Durable
Medical Equipment, or DME, through the National Supplier Clearinghouse, Palmetto-GBA as well as Noridian Administrative Services, LLC,
the two Medicare Administrative Contractors that handle DME reimbursement nationwide. PainShield is currently available for Medicare
reimbursement on a national level under new HCPCS (Healthcare Common Procedure Coding System) code K1004. With respect to UroShield,
which may be used in a clinical and home setting, we do not currently have reimbursement codes in any of the markets in which we have
regulatory authority to sell UroShield. We are seeking reimbursement codes for use of our products in the markets in which we have regulatory
authority, including the United States, to sell such products. We have made application for a dedicated CMS reimbursement code in 2021
and are still awaiting final approval. Our current ongoing research and planned research may facilitate our ability to obtain reimbursement
codes and there is no guarantee that we will be successful in obtaining such codes quickly, or at all. We have engaged a reimbursement
expert, Redemption Revenue Cycle Solutions, LLC, and plan on using outside regulatory counsel, to help facilitate reimbursement.
We
have completed six separate clinical studies with UroShield that together evaluated approximately 194 patients with urinary catheters.
In patients where the UroShield product was used there were no serious adverse events reported, while a variety of clinical beneficial
observations were seen including: catheter biofilm reduction, reduction in catheter associated pain, reduction in urinary tract infections,
and a significant decrease in bacteriuria rates. We completed a double blind clinical trial for UroShield in the United States in October
2018. The results of the study, entitled “The Effect of Surface Acoustic Waves on Bacterial Load and Preventing Catheter-Associated
Urinary Tract Infections (CAUTI) in Long Term Indwelling Catheters,” were published in the December 2018 issue of Medical &
Surgical Urology, a peer-reviewed journal in the field of urology. In the study, 55 patients in a skilled nursing facility chain treated
with long term indwelling catheters were evaluated. There was a significant difference between the treated group and the placebo group
in the number of colony forming units (“CFU”) present upon evaluation, as well as on the number of treated urinary tract
infections (“UTI”), and the effect lasted beyond the time of active treatment. The study concluded that the UroShieldTM
device was shown to be effective in significantly reducing the number of CFUs in patients with indwelling catheters. The study also concluded
that the UroShieldTM device was shown to be effective in reducing the number of treated UTIs in this patient population, and surface
acoustic waves in the form of the UroShieldTM device is an effective tool in the prevention of catheter-associated UTI and while
further evaluation is encouraged, can be safely utilized with a high likelihood of success. In July 2017, we engaged Idonea Solutions,
Inc., an FDA consultant, to assist in our efforts to obtain clearance under the FDA’s Enforcement Discretion, and obtain 510(k)
clearance which is still ongoing. If we are successful, we intend to pursue obtaining reimbursement codes and to target completion
of partnerships with leading catheter product companies for sales and marketing efforts in the United States. The Company has entered
into recent distribution partnerships for UroShield in the United States, U.K., Switzerland, Israel, India, and New Zealand.
We
have one clinical study which is ongoing for our product UroShield. We announced positive interim results from an independent, real world
patient study of its UroShield at Southampton University Health Sciences in December 2021. The independent study, which was launched
in the first half of 2021, was devised to evaluate how UroShield helps to reduce infection by preventing bacteria colonisation and the
buildup of biofilms on long-term indwelling urinary catheters in real world patients and to better understand the patient benefits and
experiences of using UroShield. The study consists of both laboratory and patient studies and is nearing completion. At the conclusion
of the study, Southern Health will be able to purchase the UroShield devices for all patients that want to continue using the device
and for additional patients in their care who have indwelling catheters. The research team have reported strong interest from both the
clinical teams and patients who live with long term catheters. Full results of the study are expected to be published in the second quarter
of 2022.
In
addition, we continue to expand our clinical development and marketing efforts in North America with respect to PainShield. In February
2018, we completed a clinical trial to evaluate the effect of PainShield in patients with trigeminal neuralgia. The double blinded, crossover
trial was conducted across the United States and included 59 patients with a diagnosis of unilateral trigeminal neuralgia. Among the
59 patients, 30 were in the active treatment group and 29 were in the control group. The values which were assessed include Visual Analog
Scale (“VAS”) pain score, both baseline prior to trial and VAS pain score at the end of the study. The study also assessed
breakthrough medications per week at the start of the trial and breakthrough medications per week at the end of the trial, with a particular
focus on the use of opioids. Breakthrough medications are used for chronic pain directly related to the pre-existing trigeminal neuralgia
condition. There was a significant difference in the outcomes of the two groups relative to pain, quality of life, and breakthrough medications
taken, which was directly correlated to pain experienced during treatment. Specifically, the control group saw an improvement in baseline
scores of 2.3% versus the treatment group, which saw a 55.2% improvement in baseline scores. Additionally, the control group saw a reduction
in breakthrough pain medication of 1.5% versus the treatment group, which saw a 46.4% reduction in breakthrough pain medication.
In
2019, the Company has completed a study which was intended to assess the PainShield’s ability to effectively treat Lateral Epicondylitis
(Tennis Elbow). This is a double blinded, randomized control trial. The study has been completed and we are contemplating submission
to an appropriate journal. The interim results were reported as follows:
91%
of the patients in the PainShield treatment group had complete or partial resolution of symptoms. Patients used PainShield in conjunction
with over-the-counter medication, as needed, but without the benefit of opioid-based prescription medication.
Results
of the Birmingham study further reinforce that PainShield is safe, easy-to-use and highly effective in treating soft tissue pain. Patients
in the study who wore our device reported marked reduction in pain and when combined with over-the-counter, anti-inflammatory medications,
those same patients reported a complete resolution of symptoms within 10 days.
Dr.
David Lemak, MD, Lead Investigator of the Birmingham Study, added, “Patient outcomes were markedly improved with the use of PainShield
and importantly, no patients returned with signs or symptoms of an exacerbation. Most encouraging are the results we were able to achieve
for our patients without the use of prescription opioid medications, which can often lead to prolonged use and addiction.”
The
Company has entered into distribution partnerships for PainShield in the United States, Israel, India, Malta, Australia, and New Zealand.
We also sell direct to consumer worldwide.
WoundShield
has been evaluated in two published clinical studies done to-date that suggest improved localized blood flow and oxygenation, and improved
topical oxygen saturation (Morykwas M, “Oxygen Therapy with Surface Acoustic Waveform Sonication,” European Wound Management
Association 2011; Covington S, “Ultrasound-Mediated Oxygen Delivery to Lower Extremity Wounds,” Wounds 2012; 24(8)). We supplied
devices for these studies but had no further involvement with them. We are pursuing licensing opportunities to develop commercial markets
for the WoundShield product.
Recent
Developments
In
April 2021, the U.S. Centers for Medicare and Medicaid Services (CMS) expanded its reimbursement approval of the company’s PainShieldTM
product by adding the device to its Durable Medical Equipment (DME) schedule.
In
August 2021, the Therapeutic Goods Administration (TGA), the Australian Regulatory body for Therapeutic
Devices, granted approval for the Company’s PainShield for use by patients in Australia. We since have sold product through our
Australian distributor.
In
addition, August 2021, we announced our intention to enter the Over-the-Counter (OTC) pain treatment
market with the introduction of PainShield ReliefTM, a non-prescription ultrasound therapy device that delivers fast pain relief
for nerve and soft tissue damage. Submission to the FDA had been delayed, but is now anticipated to be filed in the second quarter of
2022.
In
September 2021, we announced that we were contemplating launching a new, transdermal gel containing Nano-Cannabidiol (CBD) for the treatment
of joint pain and reducing inflammation. An ongoing impact analysis is being conducted internally. The adoption of the CBD technology
is currently be re-evaluated due to regulatory constraints and regulations.
In
September 2021, we announced that we entered into a Provider Participation Agreement with Orchid Medical, a national
provider of integrated ancillary and surgical cost containment solutions specifically for the workers’ compensation industry.
The agreement facilitates the reimbursement of the company’s PainShieldTM product for eligible patients receiving benefits
under a worker’s compensation plan making it easier for plan beneficiaries to obtain the product for the treatment of pain. We
continue to focus on this market, and we hope to add additional agreements with other providers for the workers’ compensation market.
In
October 2021, we received positive results from a randomized, double-blind study conducted at Birmingham Orthopedic and Sports Specialists
in Birmingham, Alabama for our PainshieldTM product.
In
December 2021, we signed an agreement with Applied Medical Solutions, LLC (“AMS”) for
the sale and distribution of its PainShield products to Veterans facilities located throughout the United States.
Additionally,
in December 2021 we received positive interim results from an independent, real world patient study of its UroShield at Southampton University
Health Sciences.
Additionally,
in December 2021 we filed three U.S. patent applications with the U.S. Patent & Trademark Office
related to its SAW technology and indwelling medical devices to protect targeted new product launches and improvements to existing medical
devices.
On
February 26, 2021, Protrade Systems, Inc. (“Protrade”) filed a Request for Arbitration (the “Request”) with the
International Court of Arbitration (the “ICA”) of the International Chamber of Commerce alleging the Company is in breach
of an Exclusive Distribution Agreement dated March 7, 2019 (the “Agreement”) between Protrade and the Company. Protrade alleges,
in part, that the Company has breached the Agreement by discontinuing the manufacture of the DV0057 Painshield MD device in favor of
an updated 10-100-001 Painshield MD device. Protrade claims damages estimated at $3 million.
On
March 15, 2022, the arbitrator issued a final award, which, although
finding that Protrade’s claims failed as a matter of law or were unsupported by the evidence, nevertheless awarded Protrade $1,500,250,
which consists of $1,432,000 for “lost profits” and $68,250 as reimbursement of arbitration costs, on the grounds
that the Company allegedly failed to supply Protrade with “requested patches.” We continue
to dispute the claims asserted by Protrade and intend to pursue the available options to vacate or seek correction of the award to Protrade.
As of December 31, 2021, the Company accrued the amount of the award to Protrade
amounting to $1,500,250 as part of “General and administrative expenses” and “Other accounts payable and accrued expenses”.
In March 2022, we announced
that PainGuard and UroGuard were approved by Health Canada / Santé Canada as licensed medical devices.
Business
Model
All
of our products consist of a reusable controller device and a disposable component, which includes a transducer, and in the case of PainShield,
a 30 day supply of adhering patches. The controllers have a life expectancy of up to three years, while the disposable transducer has
a life expectancy of up to a month and must be replaced to provide the intended therapy. The components are purchased by either the distributor
or end user for use in any of the intended applications. Once the controller is purchased by the end user, recurring revenue will be
realized by purchases of replacement disposables to the extent that the end user continues treatment with our product.
Our
products are intended to be distributed both by independent distributors as well as by potential licensees. Distributor cost is discounted
to account for their intended margins, based upon purchase volumes and/or periodic purchase commitments, with the disposable transducer
sold and distributed in the same fashion. We currently have an established distributor network and are implementing certain criteria
within such network to ensure the appropriate assignment of a distributor or licensee. We also intend to add additional distributors
to our network.
We
also have a direct sales component, where we sell directly to consumers, in order to satisfy customer demand generated through on-line
advertising and social media. We expect that demand to increase once we are able to start marketing our PainShield Relief assuming it
receives FDA clearance
In
August 2019, we established our first license agreement with Medisana, Inc. (“Medisana”) with a total of 1,500 devices that
was shipped to Medisana directly from China, in April 2020. The devices were designed to carry the product labeling specific to the Medisana
brand, with the product name of PT100. The product labeling includes the words, “PAINSHIELD Ultrasonic therapy, Medisana”.
All instructions for use and packaging are specific to Medisana.
Our
business plan continues to focus on these types of transactions/agreements. We continue to focus on the foundational aspects of each
respective product, including the design and performance of each, the reimbursement, regulatory status, and quality control, in order
to strengthen our position with prospective partners.
Ultrasound
Technology and Our Products
As
noted above, our primary products are based on the use of low frequency ultrasound, which delivers energy through mechanical vibrations
in the form of sound waves. Ultrasound has long been used in physical therapy, physical medicine, rehabilitation and sports medicine.
Our
proprietary technology consists of a small, thin (1 millimeter) transducer that is capable of transmitting ultrasonic acoustic waves
onto treatment surfaces with a radius of up to 10 centimeters beyond the transducer. This technology allows us to treat wounds by implanting
our transducers into a small, portable self-adhering acoustic patch, thereby eliminating the need for technicians and medical personnel
to manually administer ultrasound therapy, which should reduce the cost of therapy. Moreover, we believe that, based upon the body of
evidence, the delivery of ultrasound through our portable devices is equal to or more effective than existing competitive products, as
our technology is better positioned to target the affected areas of the body.
While there are currently
a number of products on the market that treat pain through ultrasound therapy, we believe that our products differentiate themselves
because they are portable, without the requirement to be plugged into an outlet and they have a frequency of 100kHz (in contrast to other
devices, which have a frequency of closer to 1MHz and above), which means our products, when functioning as intended
and in accordance with applicable design specifications, should not produce heat that can damage tissue. Our products can therefore
(i) be self-administered by the patient without the need to be moved about the treated area by the patient or a clinician, (ii) be applied
for a significantly longer period without the risk of tissue damage and (iii) do not require the use of gel. We
are also aware of one product, the SAM® Sport4, which has recently received U.S. Food and Drug Administration approval and has CE
Mark approval, marketed by ZetrOZ, Inc., that we understand may eliminate certain of these requirements and limitations, namely the requirement
to be plugged in, the need for movement around the treated area and the relatively short safe treatment period. However, we understand
that this product does not generate surface acoustic waves as our products do, which means that the treatment area is generally limited
to that under the transducer, that the use of transmission gel is still required, and that the transducer thickness is significantly
greater than ours (approximately 1.5cm). It is also our understanding that the U.S. Food and Drug Administration has issued contraindications
which do not apply to the PainShield product.
There
has been an article published in 2019 on SAM® Sport4 regarding clinical evidence demonstrating that ultrasound dose timing (i.e.
daily treatment) and duration significantly impact benefits and treatment results, we are aware of a prospective randomized, double-blinded,
placebo-controlled study on the effects of the long-duration low-intensity ultrasound treatment using SAM® Sport4 suggesting that
ultrasound may be used as a conservative non-pharmaceutical and non-invasive treatment option for patients with knee osteoarthritis.
In
general, ultrasound offers the benefits by increasing local blood circulation, increasing vascular wall permeability, promoting protein
secretion, promoting enzymatic reactions, accelerating nitric oxide production, promoting angiogenesis (the formation of new blood vessels
from pre-existing vessels) and promoting fibroblast proliferation (fibroblasts are a type of cell that play a critical role in wound
healing). We believe that the body of evidence, and the positive therapeutic effect that ultrasound has for various indications, potentially
provides for future product development opportunities for us.
Our
proprietary technology consists of a small, thin (1 millimeter) transducer that is capable of transmitting ultrasonic acoustic waves
onto treatment surfaces with a radius of up to 10 centimeters beyond the transducer. This technology allows us to treat wounds by implanting
our transducers into a small, portable self-adhering acoustic patch, thereby eliminating the need for technicians and medical personnel
to manually administer ultrasound therapy, which should reduce the cost of therapy. Moreover, we believe that, based upon the body of
evidence, the delivery of ultrasound through our portable devices is equal to or more effective than existing competitive products, as
our technology is better positioned to target the affected areas of the body.
Traditional
ultrasound device and our portable ultrasound patch-based device and a comparison of their energy distribution, where the X-axis represents
treatment surface, and the Y-axis represents ultrasound energy penetration depth within tissue.
In
a comparison of a traditional ultrasound device and our portable ultrasound patch-based device, the bulk wave conventional ultrasound
machines with handheld transducers distribute the energy deeply into the body, as shown above in diagram (A) on the left. In comparison,
our device distributes the energy on the surface, as shown in diagram (B), thereby meaningfully increasing the treatment area. Our transducers
may also be incorporated into treatment patches, including patches that are designed to deliver medicine and other compounds through
the skin. The generation and delivery of low frequency ultrasound over a period of time to a specific area has been termed “targeted
slow-release ultrasound”. We believe that this delivery method of ultrasound may be comparable to that of slow release medication
in the pharmaceutical industry. This “targeted slow-release” capability is intended to allow for more frequent targeting
of the intended treatment area and thus may result in a more effective therapeutic response.
Micro
Vibrations Technology and Our Products
It
is well established that increasing blood flow to the wound and peri-wound area helps accelerate the healing of ischemic wounds. Micro-vibrations
applied on the skin tissue increase local blood flow and oxygen delivery to the wound area and stimulate angiogenesis and growth factors
that are helpful for the wound healing process. Vibration therapy has been found to stimulate blood flow due to mechanical stresses of
endothelial cells resulting in increased production of nitric oxide and vasodilation, as well as increase soft tissue and skin circulation.
(Maloney-Hinds et al., “The Role of Nitric Oxide in Skin Blood Flow Increases due to vibration in healthy adults and adults with
type 2 diabetes,” School of Medicine, Loma Linda University. Ca. Diabetes Technology & Therapeutics, 2009 p. 39-43). In addition,
micro vibrations induce skin surface nerve axon reflex and type IIa muscle fibers contraction rates, resulting in vasodilation (Nakagami
et al., “Effect of vibration on skin blood flow in an in vivo microcirculatory model”, The University of Tokyo, Bio-Science
Trends 2007; 1 (3): 161-166). Ten minutes of vibration therapy with laser doppler revealed a consistent increase in water content of
the upper dermis (TJ Ryan et al., “The effect of mechanical forces (vibration or external compression) on the dermal water content
of the upper dermis and epidermis, assessed by high frequency ultrasound”, Oxford Wound Healing Institute, Journal of Tissue Viability,
2001. In another study, mean blood flow increase was higher in the vibration group than the placebo group. Improvements in local blood
flow may be beneficial in the therapeutic alleviation of pain or other symptoms resulting from acute or chronic injuries (C. Button et
al., “The effect of multidirectional mechanical vibration on peripheral circulation of humans”, University of Otago New Zealand,
Clinical Physiology and functional Imaging, 2007 27, p211-216). A study on the effect of whole body vibration on lower extremity skin
blood flow suggests, that short duration vibration alone significantly increases lower extremity skin blood flow, doubling skin blood
for a minimum of 10 minutes following treatment (Lohman et al., “The effect of whole body vibration on lower extremity skin blood
flow in normal subjects”, Department of Physical Therapy, Loma Linda university, USA, Med Sci Monit, 2007; 13(2) 71-76). Vibration
has also been shown to stimulate angiogenesis and growth factors such as vascular endothelial growth factor (Suhr F et al., “Effects
of short-term vibration and hypoxia during high intensity cycling exercise on circulating level of angiogenic regulators in humans”,
J Appl Physiol, 2007, 103:474-483, Yue Z. et al., “On the cardiovascular effects of whole-body vibration I. Longitudinal effects:
hydrodynamic analysis”, Studies Appl Math, 2007, 119:95-109). Of import with respect to diabetic wounds, in which a prolonged inflammatory
phase occurs, vibration vasodilation has generated an indirect anti-inflammatory action, mainly by suppression of nuclear factor-kβ,
the key gene for inflammatory mediators (Sackner, M.A., “Nitric Oxide is released into circulation with whole-body, periodic acceleration”,
Chest 2005;127;30-39).
Urinary
catheter usage is associated with pain and discomfort caused by the friction between the catheter surface and the urethral tissue. Generally,
this friction is treated by applying lubricating gels and low friction catheter coatings. These methods are effective for a short term
during the catheter insertion as the lubricating gel is quickly absorbed into the surrounding tissue and loses its effect and the catheter
coatings lose their lubricity within a few days, as the coating is covered by a thin film of mucous.
Our
UroShield product provides vibrations along the surface of the urinary catheter that is in contact with urethral tissue. We believe that
these vibrations create a continuous acoustic lubrication effect along the surface of the indwelling catheter that is in contact with
the surrounding tissue, thus reducing catheter-tissue contact time, which may lessen trauma from urethra abrasion and adhesion. We have
also shown in animals and in humans that the micro-vibration technology can reduce the level of biofilm formation on urinary catheters.
Our
Products
Product
Design, Packaging, Identity
All
products were redesigned in the fourth quarter 2019, with an updated look and improved performance. These new designs were coupled with
new branding, packaging, instructional manuals, and marketing materials. Beginning in the fourth quarter of 2019, our manufacturers in
China have commenced producing the redesigned products for distribution and delivered their first completed units in April 2020.
UroShield
UroShield
is intended to prevent bacterial colonization and biofilm formation, increase antibiotic efficacy in the catheter lumen and decrease
pain and discomfort associated with urinary catheter use. It is designed to be used with any type of indwelling urinary catheter regardless
of the material or coating. We believe that UroShield may be the first medical device on the market that attempts to simultaneously address
all of the aforementioned catheter-related issues. UroShield is similar in design to WoundShield and PainShield, in that it uses a driver
unit that produces low frequency, low intensity ultrasound. The driver unit connects to a disposable transducer that is clipped onto
the external portion of the catheter to deliver ultrasound therapy to all catheter surfaces as well as the tissue surrounding the catheter.
Picture
of UroShield with actuator
We
believe the UroShield system has the following advantageous effects:
UroShield
has undergone a number of clinical trials. The Heidelberg 1 trial, conducted in 2005-2006, which we sponsored, was a 22 patient randomized,
double blind, sham-controlled, independent trial that tested UroShield’s safety and ability to prevent biofilm in patients with
an indwelling Foley catheter. The trial demonstrated that UroShield prevented biofilm in all patients with the active device as compared
to biofilm being found in seven of eleven of the control patients. In addition, there was a marked decrease in pain, discomfort and spasm
in the active UroShield patients, as evidenced by a statistically significant decrease in the requirement for the medications required
to treat urinary catheter associated pain and discomfort (Ikinger U, “Biofilm Prevention by Surface Acoustic Nanowaves: A New Approach
to Urinary Tract Infections?,” 25th World Congress of Endourology and SWL, Cancun, Mexico, October 2007).
In
a subsequent physician-sponsored trial, known as Heidelberg 2, conducted in 2007, 40 patients who underwent radical prostatectomies were
divided into two groups, with the active group receiving one intra-operative dose of antibiotics and UroShield and the control group
receiving one intra-operative dose of antibiotics and then five subsequent doses over three days. At the end of the trial, the control
group had four cases of bacteriuria, as compared to one in the active group. In a third trial, a physician-sponsored open label trial,
10 patients who received emergency placement of a urinary catheter due to acute obstruction were given a UroShield device and followed
with regard to their pain, discomfort, spasm and overall well-being. Within 24 hours, all patients showed improvement and increased toleration
of the catheter (Zillich S., Ikinger U, “Biofilmprävention durch akustische Nanowellen: Ein neuer Aspekt bei katheterassoziierten
Harnwegsinfektionen?,” Gesellschaft für Urologie, Heilbronn, Germany, May 2008). We supplied devices for this trial, but had
no further involvement with it.
As
recently announced, the Company submitted to The National Institute for Health and Care Excellence, for review, the findings from an
independent evaluation of its UroShield® device on patients who had used the device for up to two years. Clinical data from the study
conducted by Coventry University’s Assistant Professor, Ksenija Maravic da Silva, during 2020 reported statistically significant
outcomes for the device including a reduced number of urinary tract infections (UTIs), reduced instances of prescribed antibiotics, reduced
catheter blockages, reduced the need for unplanned catheter changes and reduced pain reported as a result of catheter associated complications.
The study also provided important insights into the lives of those using the device including improvement of overall well-being, relating
specifically to decreased levels of worry and increased ability to socialize. In addition, patient feedback on product improvements was
addressed and has been incorporated in the present commercially available device.
Market
for UroShield
According
to the Centers for Disease Control and Prevention, urinary tract infection (UTI) is an infection involving any part of the urinary system,
including urethra, bladder, ureters, and kidney. UTIs are the most common type of healthcare-associated infection reported to the National
Healthcare Safety Network (NHSN). Among UTIs acquired in the hospital, approximately 75% are associated with a urinary catheter, which
is a tube inserted into the bladder through the urethra to drain urine. Between 15-25% of hospitalized patients receive urinary catheters
during their hospital stay. The most important risk factor for developing a catheter-acquired urinary tract infection (CAUTI) is prolonged
use of the urinary catheter.
This
study was written up in the December 2018 issue of “Medical & Surgical Urology”, a leading peer-reviewed journal in the
field of urology.
Approximately
15-25% of patients who are admitted to a hospital will have an indwelling catheter at some point during their stay and 7% of nursing
home residents are managed by long term catheterization.
CAUTI
is the most common nosocomial infection in hospitals and nursing homes, representing over 40% of all hospital-acquired infections (HAIs)
and 20% of intensive care unit HAIs (Maki, P and Tambyah, D. Engineering Out the Risk for Infection with Urinary Catheters., Emerging
Infectious Diseases., Vol. 7, No. 2, March–April 2001). In addition, CAUTIs are the source for approximately 20% of healthcare
acquired bacteremia in acute care and 50% in long-term care facilities (Nicolle, Lindsay E. “Catheter Associated Urinary Tract
Infections.” Antimicrobial Resistance and Infection Control 3 (2014). The risk of acquiring CAUTI depends on the method and duration
of catheterization and patient susceptibility. Patients requiring a urinary catheter have a daily risk of approximately five percent
of developing bacteriuria and approximately 25% of patients develop nosocomial bacteriuria or candiduria over one week (Maki, P and Tambyah,
D. Engineering Out the Risk for Infection with Urinary Catheters., Emerging Infectious Diseases., Vol. 7, No. 2, March–April 2001).
Virtually all patients requiring indwelling urinary catheters for longer than a month become bacteriuric.
CAUTI
occurs because urethral catheters inoculate organisms into the bladder and promote colonization by providing a surface for bacterial
adhesion and causing mucosal irritation. The presence of a urinary catheter is the most important risk factor for bacteriuria. Once a
catheter is placed, the daily incidence of bacteriuria is 3-10%. Between 10% and 30% of patients who undergo short-term catheterization
(i.e., 2-4 days) develop bacteriuria and are asymptomatic. Between 90% and 100% of patients who undergo long-term catheterization develop
bacteriuria. About 80% of nosocomial UTIs are related to urethral catheterization; only 5-10% are related to genitourinary manipulation.
(John L. Brusch, Catheter-Related Urinary Tract Infection, Medscape, August 18, 2015).
The
global catheter market size was valued at USD 37.3 billion in 2018 and is expected to witness a CAGR of 9.7% through 2026. Rising prevalence
of chronic disorders leading to hospitalization has fueled the growth of this market. Presence of multi-national manufacturers, improving
medical facilities, supportive insurance policies are also some of the key factors propelling the market growth. North America is the
largest regional market due to the presence of multi-national manufacturers and sophisticated healthcare infrastructure along with high
product awareness levels. Asia Pacific is projected to expand at the maximum CAGR of 10.4%, over the study period. According to a Grandview
research report published 2018, there are 25 million Foley catheters sold annually in the United States and 75 million catheters sold
elsewhere yielding a total global Foley catheter market of 100 million units worldwide. The cost to treat a simple CAUTI has been estimated
at $13,793 per case (AHRQ), and the cost of treating bacteremia has been estimated at $8,355 (NIH) per case, yielding a total healthcare
burden of $830 million per year. While there are currently both antibiotic and silver coated catheters in the market, they often sell
for approximately $10 above the non-antimicrobial equivalent.
In
addition, as of October 1, 2008, Medicare stopped authorizing its payment to hospitals in which patients have developed a catheter-associated
urinary tract infection that was not present on admission. This provides hospitals in the United States with a substantial financial
incentive to reduce the occurrence of such infections through the use of products such as UroShield, which help prevent infections hospitals
would otherwise have to treat without reimbursement. In addition, it has been noted that the Centers for Medicare & Medicaid Services
may fine hospitals in the future when their patients develop CAUTI, which will likely increase the incentive of hospitals to invest in
technologies that may prevent this complication (Brown J, et al. “Never Events: Not Every Hospital-Acquired Infection Is Preventable,
Clinical Infectious Diseases, 2009, 49 (5)).
Competition
for UroShield
Several
types of products have been introduced to address the growing problem of catheter-acquired infection and biofilm formation on catheter
surfaces. Manufacturers offer antibiotic-coated and antiseptic-impregnated catheters. In addition, manufacturers have produced silver-coated
catheters, which have been shown in small studies to delay bacteriuria for about two to four days. However, larger studies did not corroborate
this result; on the contrary, silver hydrogel was associated with overgrowth of gram positive bacteria in the urine (Riley DK, Classen
DC, “A large randomized clinical trial of a silver-impregnated urinary catheter: lack of efficacy and staphylococcal superinfection,”
Am. J. Med. 1995 April; 98(4):349-56).
UroShield
has been designed to be added to any type of catheter, including Foley catheters and silver-coated catheters, to improve a catheter’s
infection prevention performance. UroShield is not intended to replace any existing products or technologies, but instead is intended
to assist these existing products or technologies in preventing catheter-acquired urinary injury and catheter associated complications.
While UroShield has been approved by the U.S. Food and Drug Administration (“FDA”) under Enforcement Discretion during the
COVID-19 health emergency, if we do not obtain permanent clearance from the FDA, UroShield may be unable to successfully compete in this
market due to an inability to obtain such permanent clearance from the FDA and failure to be adopted by health care practitioners and
facilities.
Regulatory
Strategy
UroShield
received CE Mark approval in September 2007 and was also approved for sale by the Israeli Ministry of Health in 2008. We are able to
sell UroShield in India and Ecuador based on our CE Mark. UroShield was granted a Canadian medical device license in September 2016,
although, due to a modification of regulatory standards in Canada, we have lost our Canadian license. We are working toward reinstatement
of our Canadian license. To that extent, we passed an audit in November 2020 with a notified body and we are waiting on a certificate.
In
the European Union, UroShield has been marketed for the prevention of biofilm, decreased pain and discomfort associated with urinary
catheters and increased antibiotic efficacy.
In
September 2020, the FDA exercised its Enforcement Discretion to allow distribution of the UroShield device in the United States. According
to the FDA, “UroShield® device can use Intended Use Code (IUC) 081.006: Enforcement discretion per final guidance, and FDA
product code QMK (extracorporeal acoustic wave generating accessory to urological indwelling catheter for use during the COVID-19 pandemic)”.
Accordingly,
the FDA’s Enforcement Discretion clears the way for import of UroShield to the U.S. during the Covid-19 pandemic, immensely expanding
the company’s addressable market for the device during this time period. The device is designed to aid in the prevention of CAUTI
incidence in patients requiring long-term indwelling catheterization.
After
reviewing the body of scientific evidence that we presented, the FDA took decisive action to clear the way for patient access to UroShield
for the duration of the Covid-19 pandemic. The evidence presented to the FDA on UroShield demonstrated decreases in the risk of catheter-associated
urinary tract infections and related complications in patients using UroShield who required long-term indwelling catheterization. Importantly,
we are unaware of any other commercially available device that can prevent catheter-associated urinary tract infection incidence and
achieve results comparable to UroShield.
We
intend to seek 510(k) clearance from the U.S. Food and Drug Administration through the de novo classification process for UroShield.
We are currently seeking advice from the FDA prior to submission.
The
FDA has made it clear that we will need to generate more clinical study data in order to achieve 510(k) clearance. Our intent
is to conduct a community based PRO study (Patient Reported Outcomes) measuring the impact UroShield will have on prevention of CAUTI,
Prevention of Blockage, and prevention of Pain.
Studies
completed to establish safety of UroShield for human use:
Sales
and Marketing
Since
the FDA exercised its Enforcement Discretion to allow the distribution of the UroShield device in the United States, we have been actively
seeking partnerships for marketing our product in the United States. We believe the business opportunity for UroShield is in the hundreds
of millions in U.S. dollars to the extent that UroShield obtains permanent 510(k) clearance from the FDA, is recognized as effective
and becomes widely adopted for use on catheters. To that end, we are seeking a strategic partnership with various companies which have
an existing “footprint” in the Urology market. Those discussions and negotiations are ongoing at this time. We have appointed
distributors for UroShield in the United Kingdom. Malta, and Australia. We recently appointed Med Tech Solutions Group (MTSG) to assist
in our sales and marketing efforts in countries we are not represented. MTSG is based in San Antonio Texas and has sales representation
around the globe.
We
announced in May 2020, that we had expanded our license agreement with Ideal Medical International Limited to include exclusive rights
to distribute the Company’s UroShield® and PainShield® technologies in Canada and Turkey.
From
time to time we have had interest from strategic companies in the catheter market to partner, license or acquire the UroShield technology.
These strategic partners are active in the urology market and may be interested in integrating UroShield as an accessory, into its range
of products. Discussions with these partners are ongoing. There has also been interest from other companies with various invasive line
applications.
Clinical
Trials
To
date, we have conducted the clinical trials set forth below:
Purpose Doctor/Location Time, subjects Objectives Results
Purpose Doctor/Location Time, subjects Objectives Results
Purpose Doctor/Location Time, subjects Objectives Results
Purpose Doctor/Location Time, subjects Objectives Results
Recently
Completed, Current, Ongoing and Planned Clinical Trial
If
we are able to locate a strategic partner or otherwise obtain sufficient funding, we anticipate conducting the following clinical trial:
Trial Place Start Date/Timing Objectives
PainShield®
PainShield
is an ultrasound device, consisting of a reusable driver unit and a disposable patch, which contains our proprietary therapeutic transducer.
It delivers a localized ultrasound effect to treat pain and induce soft tissue healing in a targeted area, while keeping the level of
ultrasound energy at a safe and consistent level of 0.4 watts. We believe that PainShield is the smallest and most portable therapeutic
ultrasound device on the market and the only product in which the ultrasound transducer is integrated in a therapeutic disposable application
patch.
The
existing ultrasound therapy devices being used for pain reduction are primarily large devices used exclusively by clinicians in medical
settings. PainShield is able to deliver ultrasound therapy without being located in a health care facility or clinic because it is portable,
due to it being lightweight and battery operated. Because it is patch based and easy to apply, PainShield does not require medical personnel
to apply ultrasound therapy to the patient. The patient benefits include ease of application and use, faster recovery time, high compliance,
and increased safety and efficacy over existing devices that rely on higher-frequency ultrasound (Adahan M, et al, “A Sound Solution
to Tendonitis: Healing Tendon Tears With a Novel Low-Intensity, Low-Frequency Surface Acoustic Ultrasound Patch,” American Academy
of Physical Medicine and Rehabilitation Vol. 2, 685-687, July 2010). PainShield can be used by patients at home or work or in a clinical
setting and can be used even while the patient is sleeping. Its range of applications includes acute and chronic pain reduction and anti-inflammatory
treatment.
Picture
of PainShield with Patch
In