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, 2022
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. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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, 2022, was approximately $17,539,360.
The
number of shares outstanding of the registrant’s Common Stock as of April 17, 2023 was 1,662,377 shares.
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 2023 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 (“FDA”). In
September 2020, the FDA exercised its Enforcement Discretion to allow distribution of the UroShield device in the U.S. during the
COVID-19 health emergency. 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. Our understanding is that this permitted use will be terminated six months after the health
emergency is officially ended. All three of our products have CE Mark approval in the European Union, and a certificate allowing us
to sell PainShield and UroShield in Israel. We are able to sell PainShield and UroShield 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, but decline
slightly in 2022. 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 require a prescription from a licensed healthcare practitioner. If FDA clearance is obtained,
we anticipate that WoundShield will require a prescription from a licensed healthcare practitioner in the United States. As stated previously,
UroShield has been approved through the FDA under Enforcement Discretion for the duration of the Covid-19 health emergency and is intended
to be sold directly to health care facilities and individuals. Individuals will require a prescription but healthcare facilities will
deploy based upon clinical need. 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 and PainShield, 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.
The company was denied reimbursement in September 2022 due to a lack of “life-cycle” testing. The company has engaged Carmel
Labs in Israel to conduct this testing. We are approximately 85% of the way through this testing, with all devices working properly.
In January 2023, we submitted another application to CMS with “life-cycle” testing pending. Along with our application, we
submitted an interim report which was positive in nature. The latest CMS application will include both PainShield and UroShield products
and supplies. 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. 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, the law firm of Brown and Fortunato as regulatory counsel,
to help facilitate our applications, potentially leading to reimbursement.
We
have completed seven separate clinical studies with UroShield that together evaluated approximately 220 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 skilled nursing facilities 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 and distributors for sales and marketing efforts in the United States. The Company
has entered into recent distribution partnerships for UroShield in the U.K., Australia, and Malta.
We
have one clinical study recently completed for our product UroShield. We announced positive interim results from an independent, real
world patient study of 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 colonization 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 reported a significant reduction in catheter blockage and a positive effect on the microbiome. Full results
of the study are expected to be published in 2023.
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 included the 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.
We
are currently in advanced negotiations with a major teaching medical university to conduct a study on UroShield, which is intended
to satisfy the FDA requirements for traditional 510k clearance. We expect that study to commence in either the third or
fourth quarter of 2023.
In
2019, the Company completed a study which was intended to assess the PainShield’s ability to effectively treat Lateral Epicondylitis
(Tennis Elbow). This was 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:
We
believe results of the Birmingham study could 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.”
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.
Recent
Developments
On
March 21, 2023 we announced that we filed a new provisional patent application with the United States Patent and Trademark Office (“USPTO”)
entitled “Multiple Frequency Surface Acoustic Waves for Internal Medical Device” (the “Patent Application”) related
to its UroShield. The Patent Application covers a recently developed enhancement to the UroShield product, UroShield “Ultra”,
which incorporates improvements to the Company’s original UroShield. The next generation UroShield Ultra includes modified housing
that is designed to improve catheter coupling and incorporates multiple actuators that work in sequence to discourage bacterial docking
by delivering SAWs at multiple frequencies directly to indwelling catheters.
On
March 15, 2023 we announced the positive evaluation results for our UroShield device, presented at a recent medical conference by clinicians
from the Royal National Orthopaedic Hospital (“RNOH”). The report concluded that our UroShield device showed a decrease in
the number of blockages and infections and an increase in catheter satisfaction in the patients studied. In addition, evaluators concluded
that the device has the potential to improve quality of life and reduce healthcare associated costs for patients with spinal cord injuries
who experience recurrent blockages or infections and who have complicated catheter issues.
In
April 2022, we announced that UroShield was approved for sale by NHS Supply Chain through a new contract. This new contract with NHS
Supply Chain provides a dedicated end-to-end supply chain service of our UroShield for every NHS healthcare organization. UroShield will
be available to all patients who need the device with full clinical support, through the NHS supply chain. On September 23, 2022, UroShield
was approved for sale by the NHS Supply Chain through a new contract. The new contract, which is designed to provide new innovative products
for healthcare providers, begins in October 2022 and will merge with the existing Urology and Stoma framework contract in February 2024
with optional extension periods.
PainShield
was granted a dedicated reimbursement code (K1004) by CMS in 2021, which was an initial step towards paving the way for many millions
of beneficiaries enrolled in Medicare to have access to our product. In addition, CMS expanded its reimbursement approval of the company’s
PainShieldTM product by adding the device to its Durable Medical Equipment (DME) schedule. ricing was not established at that time,
and our efforts to obtain favorable pricing resulted in a denial, pending further testing of the device’s life expectancy. Testing
to gather life expectancy data began in October 2022, and we are preparing to demonstrate the life expectancy in the next few months.
We are hopeful of a positive outcome that will allow us to secure pricing and remove the barriers for distribution to beneficiaries under
Medicare.
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. The Company vigorously defended the claims
asserted by Protrade.
On
March 15, 2022, the arbitrator issued a final award, which, although denied all Protrade’s claims, nevertheless awarded Protrade
about $1.5 million, on the grounds that the Company allegedly failed to fulfill an order for reusable hydrogel patches placed after the
Agreement was terminated. The arbitrator based her decision on the basis of testimony of Protrade’s president who asserted that
a patient would use in excess of 33 reusable patches per each device, which the Company believes is a grossly inflated number.
On
April 5, 2022, Protrade filed a Petition with the Supreme Court of New York Nassau County seeking to confirm the Award. On April 13,
2022, the Company submitted an application to the ICA seeking to correct an error in the award based on the evidence that the Company
only sold 2-3 reusable patches per device contrary to the 33 reusable patches claimed by Protrade. The same arbitrator who issued the
award, denied the application.
On
July 22, 2022, the Company filed a cross-motion seeking to vacate the arbitration award on the grounds that the arbitrator exceeded
her authority, that the award was procured by fraud, and that the arbitrator failed to follow procedures established by New York
law. In particular, the Company averred in its motion that Protrade’s witness made false statements in arbitration, and that
the arbitrator resolved a claim that was never raised by Protrade and that has no factual basis.
On
October 3, 2022, the court issued a decision granting Protrade its petition to confirm the Award and denying the cross-motion.
On
November 9, 2022, the Company filed a motion to re-argue and renew its cross-motion to vacate the arbitration decision based on newel
information that was not available during the initial hearing. On the same day, the Company also filed a notice of appeal with the Appellate
Division, Second Department. On March 21, 2023, the Court denied the motion to re-argue and renew. The Company intends to file a notice
of appeal with the Appellate Division, Second Department and to continue to vigorously pursue its opposition to the award in all appropriate
fora. As of December 31, 2022, the Company accrued the amount of the award to Protrade amounting to $1,846,794 with $1,500,250 as part
of “General and administrative expenses” and $346,544 as part of “Interest expense”, and the full amount included
in “Other accounts payable and accrued expenses”.
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 three years, while the UroShield 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 directly by the company, independent distributors, and 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 are in the process of adding additional
distributors to our network, and continue our efforts to identify market leaders in various segments to private label both PainShield
and UroShield.
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 have seen an increase in demand as a direct result of an expanded social media and on-line advertising
presence.
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 PainShield 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 pain 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 may provide a competitive
advantage over other existing therapies marketed for similar intended use(s) (e.g., to treat pain associated with muscle, tendon,
and contractures), as our technology is positioned to directly target the affected areas of the body within the scope of the
applicable FDA clearance.
While
there are currently a number of products on the market that treat pain through ultrasound therapy, we believe that our products may be preferable in certain instances 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 excessive 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® Sport family of products, which received FDA 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 FDA 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 soft tissue
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.
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.
The
PainShield Plus was introduced in March 2022. The new product design provides the same therapy as PainShield MD, but through two transducers
which alternate in its duty cycle. This dual transducer design provides for a broader treatment are with three hours of therapy.
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
In
a 2007 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).
Relative
to soft tissue repair, 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. 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 manufacturing in
China, Singapore, and Israel 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. Use of the device is contraindicated for use while there is an active Urinary Tract Infection. 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 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
Clinical
studies of the UroShield system have supported 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.
In
September 2022, UroShield was approved for sale by the U.K.’s National Health System’s (NHS) internal supply
organization, NHS Supply Chain, through a new contract.
This
new contract with NHS Supply Chain provides dedicated end-to-end supply chain service of our UroShield for every NHS healthcare organization.
UroShield will be available to all patients who the need the device with full clinical support, through the NHS supply chain. It represents
a significant opportunity for us to expand distribution of UroShield as it will now be made available to all clinicians and their patients
through the NHS organization’s own supply channel. NHS Supply Chain manages the sourcing, delivery and supply of healthcare products
and services for NHS trusts and healthcare organizations across England and Wales. The organization processes more than eight million
orders per year across 94,000 order points and 17,465 locations serving as an integral part of the national healthcare system in the
U.K. We are ramping up production to meet an increase in demand that we anticipate as a result of this exciting development.
The
new contract, which is designed to provide new innovative products for healthcare providers, begins in October 2022 and will merge with
the existing Urology and Stoma framework contract in February 2024 with optional extension periods.
Under
the contract, NHS Supply Chain describes UroShield as a disposable ultrasound device designed to reduce the risk of catheter-associated
urinary tract infection (CAUTI) by reducing bacterial colonization and biofilm formation on indwelling urinary catheters. This ultimately
translates into improved outcomes for patients and care provides, reduces the need for antibiotics, catheter changes and washouts and
incidence of hospital visits, thereby reducing nursing time, bed days and ambulance transfers.
On
March 1, 2023 the Company launched its month-to-month rental program for UroShield.
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. However, in the United States, we do not have the requisite regulatory authorization to market UroShield for such use, as
we have not yet obtained FDA clearance or approval for UroShield, and the FDA’s temporary, COVID-19-related policy of Enforcement
Discretion under which we have been marketing UroShield since September 2020 expressly excludes use with a coated catheter. 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 was temporarily authorized for
use in the United States per FDA’s Enforcement Discretion during the COVID-19 health emergency, the public health emergency has
since-been terminated, and the applicable FDA policy under which we have been marketing UroShield will similarly terminate before the
end of 2023. In particular, recent FDA guidance confirmed that its medical-device enforcement policies issued during the COVID-19 pandemic
will officially expire on November 7, 2023. The guidance outlines a three-phase plan for ensuring that any devices marketed under a specifically
listed enforcement policy will be able to be marketed lawfully after the termination of those enforcement policies. During the 180-day
period between the termination of the public health emergency and the expiration of FDA’s relevant enforcement policies, manufacturers,
like us, who desire to continue marketing their respective devices must submit an appropriate premarket submission, such as a 510(k)
application or de novo reclassification request, and bring the device into compliance with applicable FDA regulations. If we do
not obtain permanent clearance from the FDA by November 7, 2023, we will have to discontinue distribution of UroShield in the United
States until the necessary FDA clearance or approval is granted. We cannot guarantee that FDA will clear or approve UroShield for continued
marketing in the United States in a timely manner or at all.
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 or around October 2022.
In
the European Union, UroShield has been marketed for the prevention of CAUTI and biofilm formation, 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 temporarily cleared 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, which will officially end in November 2023. The device is designed to aid in the prevention of CAUTI
incidence in patients requiring long-term indwelling catheterization, defined as 14 days or greater.
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. We believe 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.
We intend to seek long-term marketing
authorization from the FDA through the de novo classification process for UroShield, which is a premarket pathway intended for
devices that cannot pursue 510(k) clearance because there is no substantially equivalent predicate device but which the applicant believes
are sufficiently low-risk that they need not undergo the rigorous premarket approval pathway to be deemed safe and effective for the applicable
indications for use. We are currently seeking advice from the FDA prior to submission. We also intend to seek advice and validation of
supporting studies we intend to undertake in advance of a De Novo application.
The
FDA has made it clear that we will need to generate more clinical study data in order to achieve) de novo reclassification. 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. We currently are in the early stages of putting together a team and plan
to start this process.
Studies
completed to assess the 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 marketing authorization from the FDA, is recognized as effective
and becomes widely adopted for use on catheters, none of which can be guaranteed. 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 the Benion group to identify distributor
opportunities outside of the United States.
We