ITEM 1A: RISK FACTORS 35
ITEM 1B: UNRESOLVED STAFF COMMENTS 54
ITEM 1C: CYBERSECURITY 54
ITEM 2: PROPERTIES 55
ITEM 3: LEGAL PROCEEDINGS 55
ITEM 4: MINE SAFETY DISCLOSURES 56
PART II. 57
ITEM 6: [RESERVED] 58
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 66
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 66
ITEM 9A: CONTROLS AND PROCEDURES 67
ITEM 9B: OTHER INFORMATION 68
ITEM 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 68
PART III. 68
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 68
ITEM 11: EXECUTIVE COMPENSATION 69
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES 69
PART IV.
ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES 69
SIGNATURES 77
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.
● Our product candidates may not be developed or commercialized successfully.
● 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.
● 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.
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
Annual Report on 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.
Trademarks
We have proprietary rights to
certain trademarks used in this Annual Report on Form 10-K that are important to our business, some of which are registered under applicable
intellectual property laws, including but not limited to UroShieldTM, PainShieldTM MD, PainShieldTM Plus, WoundShieldTM, UroShield®, PainShield®, PainShield Plus®, WoundShield®, UroShield® and NanoVibronix®.
Solely for convenience, trademarks
and trade names referred to in this Annual Report appear without the “®” or “TM” symbols, but such references
are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or
the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’
trademarks, trade names or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each
trademark, trade name or service mark of any other company appearing in this Annual Report on Form 10-K is the property of its respective
holder.
Overview
Our Products
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 non-invasive 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,
reduce blockage, and reduce pain related to urinary catheters as well as reducing incidence of 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.
PainShield
MD is currently cleared for marketing in the United States by the FDA. In September 2020, the FDA exercised its policy of enforcement
discretion (“Enforcement Discretion”) to allow distribution of the UroShield device in the U.S. during the COVID-19 pandemic.
While the U.S. government has declared an end to the public health emergency and had terminated Enforcement Discretion use for many medical
devices, as of the date of this filing, we have not been notified of any change in the regulatory status for the use of our UroShield
device. Both PainShield and UroShield have CE Mark approval in the European Union, which also permits sales in India and Ecuador, and
a certificate allowing us to sell PainShield and UroShield in Israel. We have consummated sales of PainShield and UroShield in the relevant
markets, and we saw sales increase in 2021 but decline slightly in 2022, and significantly increase in 2023. 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 was approved through the FDA under Enforcement Discretion initially, for the duration of the
COVID-19 pandemic and was intended to be sold directly to health care facilities and individuals. Individuals will require a
prescription, but healthcare facilities will deploy the use of Uroshield 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.
Insurance Coverage
and Reimbursement
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 and the Veterans Health Care network of facilities 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 PainShield for reimbursement for Medicare
beneficiaries on a national basis. However, PainShield was not assigned a reimbursement value from CMS. The Company was denied reimbursement
in September 2022 due to a lack of “life-cycle” testing. The Company had engaged Carmel Labs in Israel to conduct this testing
and submitted the results to CMS with our 2023 application on January 3, 2023. On August 21, 2023, CMS, denied reimbursement with respect
to PainShield due to their request for additional longevity testing. We are currently evaluating whether to resubmit another application
to CMS.
With
respect to UroShield, which may be used in a clinical and home setting, we currently have reimbursement in the United Kingdom (for
supplies only), and throughout the VA system. 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, but there is no guarantee that we will be successful in obtaining such codes
quickly, or at all. We have engaged the law firm of Brown & Fortunato, PC, as regulatory counsel, to help facilitate our applications
for reimbursement. We also engaged Idonea Solutions, Inc., an FDA consultant, to assist in our efforts to obtain clearance under the
FDA’s policy of Enforcement Discretion, and obtain 510(k) clearance which is still ongoing. During the past couple of years the
Company has entered into distribution partnerships for UroShield in the U.K., Australia, New Zealand, and Malta.
Clinical Studies
Prior to August 2023, we
had 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, and 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 facility chain being 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 UroShield device
was shown to be effective in significantly reducing the number of CFUs in patients with indwelling catheters. The study also concluded
that the UroShield 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 UroShield 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 August 2023, we announced the results of our most recent clinical study
of UroShield. 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 build-up 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 reported positive outcomes from the use of
UroShield both in laboratory setting and in patient studies. Quantitative data from the research indicated a positive effect of UroShield
on catheter-associated urinary tract infections (“CAUTI”) and catheter blockage, while qualitative data indicated favorable
opinions from the majority of the participants and certainty that the UroShield was having a positive effect. Additionally, the authors
of the study noted, “... the positive reported outcomes and the data from these preliminary studies indicate an effect on the community
structure of the microbial populations found in the urine and forming the biofilm. This indicates potential for developing a healthy urinary
microbiome by use of low frequency ultrasound, thus avoiding long-term use of antibiotics and the risks associated with such strategies.”
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.
In
2021,the Company completed a study conducted by Dr. David Lemak,
MD, a leading orthopedic surgeon with Birmingham Orthopedic and Sports Specialists. The study was intended to assess the PainShield’s
ability to effectively treat Lateral Epicondylitis (Tennis Elbow). This was a double blinded, randomized control trial. Results of the
study showed seven of ten patients with tennis elbow using PainShield plus physical therapy had complete pain resolution or significant
improvement in pain.
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, 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.”
In November 2023, we announced
that we entered into a research agreement with the Regents of the University of Michigan to further advance clinical evidence of the efficacy
of UroShield through a randomized controlled trial (“RCT”). which are widely considered to be the ‘gold standard’
in clinical research.
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.
2023 Reverse Stock Split
On February 8, 2023, we effected
a reverse stock split of our common stock at a ratio of 1-for-20 (the “Reverse Stock Split”) pursuant a Certificate of Amendment
to our Amended and Restated Certificate of Incorporation. At the effective time of the Reverse Stock Split, every 20 shares of our issued
and outstanding common stock were converted automatically into one issued and outstanding share of common stock without any change in
the par value per share. Any fractional share of a stockholder resulting from the Reverse Stock Split was rounded up to the nearest whole
number of shares. Proportional adjustments were made to the number of shares of our common stock issuable upon exercise or conversion
of the Company’s equity awards, warrants and other convertible securities, as well as the applicable exercise or conversion price
thereof.
Recent
Developments
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. In September 2023, we announced that its
application for UroShield actuators to be available on NHS Prescription Services’ Drug Tariff has been approved.
The
Company also confirmed that the contract with NHS Supply Chain for the supply of UroShield through the Company’s U.K. distribution
partner, Peak Medical Limited, has been extended for up to four years.
Drug
Tariff provides for full reimbursement of UroShield actuators by the NHS. Clinicians in the U.K. will be able to prescribe products,
which are used in conjunction with the UroShield device, beginning November 1, 2023. Both hospital and community clinicians will have
the option of prescribing UroShield either through the prescription process or through the NHS contract. Importantly, wherever a patient
is treated, they can now receive the full UroShield system with the NHS covering the full cost.
In December 2023, we announced we entered into a non-binding letter of
intent (the “LOI”) with Apogepha Arzneimittel GmbH (“Apogepha”) in which both parties will analyze the potential
for Apogepha to distribute our premiere UroShield product in Germany and other European markets.
With a history that dates back over 100 years, Apogepha has established
itself as a high quality, dedicated specialist in the field of urology. Pursuant to the terms of the LOI, Apogepha will commence a comprehensive
market research study on how UroShield can fit into the pathway of care for patients with long term catheters. The goal of the LOI, and
subsequent findings, will be for both us and Apogepha to better understand the feasibility of a distribution deal between both companies.
In March 2024, we entered into a contract with Veranex, Inc., to provide
certain research and development services to assist with the development of the company’s next generation of UroShield and PainShield
products. The Agreement has a term of approximately 50 weeks, subject to adjustments or earlier termination thereof in accordance with
the terms of the Agreement, with estimated fees and expenses of up to approximately $1.1 million subject to certain adjustments, including
among other things, revising the agreement in the event of changing assumptions or facts, unforeseen development deviations, or changes
in scope. We expect engineering of the new technology to eventually allow us to find a US manufacturing partner once the development
process has been completed.
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 us, 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 securing our transducers to the skin with a separate adhesive patch, and 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. Therefore, our products (i) can be self-administered by the patient without
the need to be moved about the treated area by the patient or a clinician, (ii) can 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 after PainShield 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 1.5 cm). It is also our understanding that the FDA
has issued multiple contraindications for SAM® Sport, 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.
Conventional Ultrasound PainShield Ultrasound
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 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, increase in mean blood flow to the calf 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 flow 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 of our products were redesigned in the fourth quarter of 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 commenced producing the redesigned
products for distribution and delivered their first completed units in April 2020. We currently complete assembly in our facilities in
Israel. Even though our ability to assemble our products has not been affected by the current political environment, we cannot predict
if future events may cause delays. Our 2023 production run established an ample supply of devices and monthly disposable kits. The completed
products can be used as a platform for either PainShield or UroShield. We do not anticipate a need to manufacture additional devices through
2024. However, due to an increased demand of disposable monthly kits, we continue to produce at a high rate to meet demand.
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 UTI. 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.
In 2022, 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 during 2020 by Coventry University’s Assistant Professor, Ksenija Maravic
da Silva, reported statistically significant outcomes for the device including a reduced number of UTIs, reduced instances of prescribed
antibiotics, reduced catheter blockages, reduced 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 NHS internal supply organization, NHS Supply Chain.
This
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 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 increase in demand that we anticipate as a result of this exciting development.
The
original contract, which is designed to provide new innovative products for healthcare providers, began in October 2022, and the
recent extension signed in the fall of 2023, 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 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, 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. 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. The most important risk factor for developing a catheter-acquired urinary tract infection (CAUTI) is prolonged use
of the urinary catheter.
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 fuelled the growth of this market. The 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 had 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.
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 have maintained
our CE mark approval until now and expect that to continue going forward. 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 could 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. As of the date of this report, we
have not been notified of any change in our Enforcement Discretion status and we will continue to operate under Enforcement Discretion
guidelines, or until we are notified of a change in status by a qualified regulatory body. 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.
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.
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 their respective 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.
We
believe 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. Some patient benefits reported in prior studies included ease of application
and use, relatively quick recovery time, high patient compliance, and potentially increased safety and efficacy over certain other 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
other countries outside the United States where the product is approved for such use, PainShield is used to treat tendon disease and
trigeminal neuralgia (a chronic pain condition that affects the trigeminal or 5th cranial nerve, one of the most widely distributed nerves
in the head); previously, the therapeutic options for these disorders have been very limited. In the United States, PainShield is only
cleared to treat pain, muscle spasms, and joint contractures associated with or caused by various conditions or diseases. It has also
been used to treat pelvic and abdominal pain. To date, to the best of our knowledge, the primary treatment options for several of these
conditions are pain medication and surgery. Several additional causes of pain, and the treatment of that pain with the PainShield product,
can be explored through clinical trials.
On
March 1, 2023 the Company launched its month-to-month rental program for Painshield.
Market
for PainShield
Pain-related
complaints are one of the most common reasons patients seek treatment from physicians (Prince V, “Pain Management in Patients with
Substance-Use Disorders,” Pain Management, PSAP-VII, Chronic Illnesses). According to Landro L, “New Ways to Treat Pain:
Tricking the Brain, Blocking the Nerves in Patients When all Else Has Failed,” Wall Street Journal, May 11, 2010, approximately
26% of adult Americans, or approximately 76.5 million people, suffer from chronic pain. The National Center for Health Statistics has
estimated that approximately 54% of the adult population experiences musculoskeletal pain. Studies have shown that low-frequency ultrasound
treatment has yielded positive results for a variety of indications, including tendon injuries and short-term pain relief (Warden SJ,
“A new direction for ultrasound therapy in sports medicine,” Sports Med. 2003; 33 (2):95-107), chronic low back pain (Ansari
NN, Ebadi S, Talebian S, Naghdi S, Mazaheri H, Olyaei G, Jalaie SA, “Randomized, Single Blind Placebo Controlled Clinical Trial
on the Effect of Continuous Ultrasound on Low Back Pain,” Electromyogr Clin Neurophysiol. 2006 Nov; 46(6):329-36) and sinusitis
(Ansari NN, Naghdi S, Farhadi M, Jalaie S, “A Preliminary Study Into the Effect of Low-Intensity Pulsed Ultrasound on Chronic Maxillary
and Frontal Sinusitis,” Physiother Theory Pract. 2007 Jul-Aug; 23(4):211-8). We believe that PainShield’s technology, portability
and ease of use may result in it becoming an attractive product in the pain management and therapy field.
Competition for PainShield
There
are numerous products and approaches currently utilized to treat chronic pain. The pharmacological approach, which may be the most common,
focuses on drug-related treatments with the over-the-counter internal analgesic market estimated at $19 billion in 2019. Alternatively,
there are a large number of non-pharmacological pain treatment options available, such as ultrasound, transcutaneous electrical nerve
stimulation, or TENS, laser therapy and pulsed electromagnetic treatment. In addition, there are some technologies and devices in the
market that utilize low frequency ultrasound or patch technology. Many patients are initially prescribed anti-pain medication; however,
ongoing use of drugs may cause substantial side effects and lead to addiction. Therefore, patients and clinicians have shown increased
interest in alternative pain therapy using medical devices that do not carry these side effects.
The
currently available ultrasound treatments for chronic pain have generally been accepted by the medical community as standard treatment
for pain management. However, the traditional ultrasound treatments, such as those manufactured or distributed by Mettler Electronics
Corp, Metron USA and Zimmer MedizinSysteme, are stationary devices found only in clinics and other health care facilities that need to