UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
For the fiscal year ended December 31, 2024
or
For the transition period from to
INVO FERTILITY, INC.
(Exact name of registrant as specified in Charter)
5582 Broadcast CourtSarasota, Florida, 34240
(Address of Principal Executive Offices)
Registrant’s telephone number, including area
code: (978)878-9505
NAYA
Biosciences, Inc.
(Former
name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, $0.0001 par value per share IVF The Nasdaq Stock Market LLC
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 a 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 Act). YES ☐ NO ☒
The aggregate market value of the voting stock and
non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently
completed second fiscal quarter ended June 30, 2024 was $7,381,118 based upon the closing price of the registrant’s common stock
of $10.08 on the NASDAQ as of that date.
The number of shares outstanding of the registrant’s
common stock, $0.0001 par value, as of April 29, 2025 was 1,066,065.
DOCUMENTS INCORPORATED BY REFERENCE
None.
FORM 10-K
INVO FERTILITY, INC.
TABLE OF CONTENTS
Page
Part I
Item 1. Business 4
Item 1A. Risk Factors 16
Item 1B. Unresolved Staff Comments 70
Item 1C. Cybersecurity 70
Item 2. Properties 71
Item 3. Legal Proceedings 71
Item 4. Mine Safety Disclosures 71
Part II
Item 6. [Reserved] 72
Item 7A. Quantitative and Qualitative Disclosure About Market Risk 86
Item 8. Financial Statements and Supplementary Data 87
Item 9A. Controls and Procedures 88
Item 9B. Other Information 88
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 88
Part III
Item 10. Directors, Executive Officers and Corporate Governance 89
Item 11. Executive and Director Compensation 92
Item 14. Principal Accountant Fees and Services 102
Part IV
Item 15. Exhibits, Financial Statement Schedules 103
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements, other than purely historical information,
including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions
upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,”
“estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,”
“will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking
statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements
are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ
materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include,
but are not limited to, changes in economic conditions, legislative or regulatory changes, availability of capital, interest rates, competition,
and unforeseen events that may impair our ability to advance our clinical programs and raise additional financing. These risks and uncertainties
should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake
no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Further information concerning our business, including additional factors that could materially affect our financial results, is included
herein and in our other filings with the Securities and Exchange Commission (“SEC”).
Part I
Item 1. Business
Introduction
This Annual Report on Form 10-K should be read together
and in connection with the other reports that have been filed by us with the SEC for a comprehensive description of our financial condition
and operating results. In the interest of disclosure, we have included in this Form 10-K certain material events and developments that
have taken place through the date of filing of this Form 10-K with the SEC.
In this Annual Report on Form 10-K, INVO Fertility,
Inc., formerly known as NAYA Biosciences, Inc., (INVO Fertility, Inc., together with its subsidiaries, is referred to in this document as “we”, “us”, “INVO
Fertility”, “INVO”, or the “Company”), incorporates by reference certain information from parts of other
documents filed with the SEC. The SEC allows us to disclose important information by referring to it in that manner. Please refer to
all such information when reading this Annual Report on Form 10-K. All information is as of December 31, 2024, unless otherwise indicated.
For a description of the risk factors affecting or applicable to our business, see “Risk Factors,” below.
The Company
We are, primarily, a healthcare services company
focused on the fertility marketplace and dedicated to expanding access to assisted reproductive technology (“ART”) care to
patients in need. Our principal commercial strategy is focused on building, acquiring, and operating fertility clinics, including “INVO
Centers” dedicated primarily to offering the intravaginal culture (“IVC”) procedure enabled by our INVOcell® medical
device (“INVOcell”) and US-based, profitable in vitro fertilization (“IVF”) clinics. As of the date of this filing,
we have two operational INVO Centers and one IVF clinic in the United States. We also continue to engage in the sale and distribution
of our INVOcell technology solution into third-party owned and operated fertility clinics.
In
October 2024, we acquired a 100% interest in Naya Therapeutics, Inc. (“NAYA Therapeutics” or “NTI”), a
clinical-stage oncology and autoimmune technology company. As further described below, we recently announced our strategic decision to
separate from this wholly owned subsidiary, rather than attempt to integrate with our existing operations. With this separation, we
will return to an exclusive focus on the fertility marketplace, change our name and ticker symbol to “INVO Fertility, Inc.” and “IVF”,
respectively, and retain a minority interest in NAYA Therapeutics.
Fertility Clinics
On August 10, 2023, we consummated the first
acquisition of an existing IVF clinic, the Wisconsin Fertility Institute (“WFI”). As an established and profitable
clinic, the closing of the WFI acquisition more than tripled our annual revenue and became a major part of our clinic-based
operations. The acquisition accelerated our transformation from a medical device company to a healthcare services company and
immediately added scale and a significant source of positive cash flow to our operations. The acquisition of profitable IVF clinics
complements our efforts to build new INVO Centers, and we expect to continue this strategy to accelerate overall growth.
On March 10 and June 28, 2021, we established
joint ventures to open INVO Centers in Birmingham, Alabama, and Atlanta, Georgia, respectively. We established these clinics to
increase use of the INVOcell, to accelerate the growth and awareness of the IVC procedure and to expand the availability of
statistical and clinical data supporting its use. These clinics also enabled us to expand our revenue per fertility cycle from
hundreds of dollars (from the sale of each INVOcell device) to thousands of dollars, and to significantly advance our path to
profitability. We believe a dedicated INVO Centers requires less investment than a traditional IVF clinic and are operationally
efficient, making them ideal for underserved secondary markets. We plan on opening additional, wholly owned INVO Centers in the
coming years.
INVOcell Device
Our proprietary technology, INVOcell®, is an innovative
medical device that allows fertilization and early embryo development to take place in vivo within the woman’s body. This treatment
solution is the world’s first intravaginal culture technique for the incubation of oocytes and sperm during fertilization and early
embryo development and provides patients with a natural, intimate, and affordable experience.
As reflected in available data, we believe the IVC procedure can deliver comparable results at a lower cost than traditional IVF and is a significantly more effective
treatment than intrauterine insemination (“IUI”).
Unlike IVF, where the oocytes and sperm develop into
embryos in an expensive laboratory incubator, the INVOcell allows fertilization and early embryo development to take place in the woman’s
body. The IVC procedure can provide many benefits, including the following:
● Provide a natural, stable incubation environment;
● Offer a more personal, intimate experience in creating a baby; and
● Reduce the risk of errors and wrong embryo transfers.
In both current utilization of the INVOcell, and in
clinical studies, the IVC procedure has demonstrated equivalent pregnancy success and live birth rates as IVF.
While INVOcell remains part of our efforts, our commercial
and corporate development strategy within the fertility market has expanded to focus more broadly on providing ART services through our
emphasis on operating clinics.
NAYA Therapeutics
On October 11, 2024, we acquired NAYA
Therapeutics with the intent to expand our business activities beyond fertility and to create a healthcare portfolio company initially focused on a
commercial-stage fertility business combined with a unique clinical-stage oncology and autoimmune technology business.
In
April 2025, not having received sufficient shareholder support for key elements of the NAYA Therapeutics transaction at a shareholder
meeting scheduled for March 10, 2025 (further detail available below under Recent Developments – 2024 Annual Meeting), upon advice of
counsel and of our proxy solicitation firm, as well general feedback from stakeholders, we elected to re-focus exclusively on our fertility
business. As such, we recently changed our name to “INVO Fertility, Inc.”, and expect to divest a majority interest in NAYA
Therapeutics and change our ticker symbol “IVF,”. This planned divestiture is subject to completing definitive transaction
documents and key closing conditions, including receipt of necessary approvals. We anticipate completing the transaction during the second
quarter of 2025.
We remain enthusiastic about its prospects and will
retain a minority stake in NAYA Therapeutics, which we hope to monetize in the future through value appreciation that could be generated
from the clinical development of its bifunctional antibodies. We intend to retain this minority stake in NTI as an asset on our balance sheet.
NAYA Therapeutics is advancing a portfolio of
highly-competitive clinical candidates including NY-303, a first-in-class GPC3 x NKp46 bifunctional antibody for the treatment of
hepatocellular carcinoma (HCC) with a unique mode of action targeting non-responders to the current immunotherapy standard of care
(approximately 70% of the current treatable market) cleared to enroll patients in a Phase i/ii a monotherapy trial in 2025, NY-500,
an AI-Optimized bifunctional antibody aiming to be the first PD1 x VEGF therapeutic to market in HCC, and NY-338, a CD38 x NKp46
bifunctional antibody for the treatment of multiple myeloma with a differentiated safety and efficacy profile.
Recent
Developments
Name
Change
On
April 14, 2025, we changed our corporate name to INVO Fertility, Inc., pursuant to an Amendment to Articles of Incorporation filed with
the Nevada Secretary of State on April 14, 2025 (the “Name Change”). Pursuant to Nevada law, a stockholder vote was not necessary
to effectuate the Name Change.
We
also announced that we intend for our common stock to cease trading under the ticker symbol “NAYA” and begin trading under
our new ticker symbol, “IVF”, on the Nasdaq Capital Market, on April 28, 2025.
Reverse Split
On March 18, 2025, we filed
a certificate of change (the “Certificate of Change”) with the Secretary of State of the State of Nevada to effectuate a
1-for-12 reverse stock split (the “Reverse Stock Split”) of our shares of common stock, par value $0.0001 per share (“Common
Stock”). The Reverse Stock Split became effective at 12:01 a.m., Eastern Time, on Tuesday, March 18, 2025, and our Common
Stock began trading on a split-adjusted basis when The Nasdaq Stock Market (“Nasdaq”) opened on March 18, 2025.
When the Reverse Stock Split
became effective, every 12 shares of Common Stock issued and outstanding were automatically reclassified and combined into one share of
Common Stock, without any change in the par value per share, and a proportionate adjustment was made to our authorized
shares of Common Stock such that the Company now has 4,166,667 shares of authorized Common Stock. In addition, a proportionate adjustment
has been made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and
warrants to purchase shares of Common Stock and the number of shares reserved for issuance pursuant to our equity incentive compensation
plans. No fractional shares of Common Stock were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have
been entitled to receive fractional shares of Common Stock had their holdings rounded up to the next whole share.
2024 Annual Meeting
On February 11, 2025, we
filed a definitive proxy statement (the “February Proxy”) in connection with our annual meeting of stockholders (the “2024
ASM”). The 2024 ASM was scheduled for March 10, 2025, at 12 pm Eastern Time, and had a record date of January 24, 2025.
The February Proxy included
standard proposals (the “Standard Proposals”) for stockholders (i) to elect five new directors (the “New Board Slate”)
to our board of directors (the “Board”) and (i) to ratify the appointment of M&K CPAS, PLLC as our
independent registered public accounting firm for the fiscal year ended December 31, 2024. The Standard Proposals customarily would have
been voted on at a stockholder meeting in calendar year 2024. We opted to delay holding our 2024 annual stockholder meeting until 2025
to hold a single meeting that would cover both the Standard Proposals and a number of special proposals (the “Special Proposals”)
requesting that the stockholders approve (i) the issuance, in accordance with Nasdaq Listing Rule 5635(a), of Common Stock, upon conversion
of our outstanding Series C-1 and C-2 Non-Voting Convertible Preferred Stock, upon conversion of an outstanding 7.0% Senior
Secured Convertible Debenture in the principal balance of $3,934,146 due December 11, 2025 (the “Debenture”), and upon settlement
of restricted stock units and exercise of stock options issued in exchange for restricted stock units and stock options that were previously
granted to certain directors, employees, and consultants of the NAYA Therapeutics, (ii) an amendment to our Second Amended and Restated
2019 Stock Incentive Plan to increase the number of shares of Common Stock available for issuance thereunder to an amount of 8,200,000
(pre-reverse split), equal to approximately 15% of the total of the total issued and outstanding stock, including shares issued upon conversion
of our Series C-1 and C-2 Non-Voting Convertible Preferred Stock, and (iii) an amendment to our Amended and Restated Articles of Incorporation
to increase the number of authorized shares of Common Stock from 50,000,000 to 100,000,000 after a reverse split of our Common Stock approved
by the Board at a ratio ranging from any whole number between 1-for-2 and 1-for-20, as determined by the Board in its discretion, subject
to the Board’s authority to abandon such reverse stock split.
While Standard Proposals
received sufficient votes for approval, several Special Proposals did not garner the necessary votes required for approval. Upon advice
of counsel and our proxy solicitation firm, the Board approved the postponement of the 2024 ASM to April 9, 2025, the fixing of a new
record date on March 10, 2025, and the filing of a new definitive proxy statement (the “March Proxy”).
As a result of this postponement
and of the new record date, all votes cast by stockholders with respect to the proposals included in the February Proxy became null and
void. The March Proxy was delivered with a new proxy card pursuant to which stockholders were asked to vote again on the Standard Proposals.
The 2024 ASM was held
solely to cover the Standard Proposals and to regain compliance under Nasdaq Rules 5620(a) and 5801(s)(2)(G) that require companies
listed on Nasdaq to hold an annual meeting of stockholders within twelve months of the fiscal year’s end (the “ASM
Rule”). Pursuant to the previously disclosed notice received from the staff (the “Staff”) of The Nasdaq Stock
Market LLC, we had until February 25, 2025, to submit a plan to regain compliance under the ASM Rule. We submitted a plan to the
Staff in a timely fashion and, on February 28, 2025, the Staff notified us that we were granted an extension until June 30, 2025, to
regain compliance with the ASM Rule.
The Standard Proposals in
the March Proxy included (a) the re-election of existing directors to the Board (as would have been submitted for approval had the 2024
ASM been held in calendar year 2024, and in lieu of the New Board Slate included in the February Proxy), and (b) ratification of M&K
CPAs LLC as our independent registered public accounting firm for the fiscal year ending December 31, 2024.
At the 2024 ASM, the stockholders
approved the Standard Proposals in the March Proxy.
Nasdaq
On January 10, 2025, we
received notice (the “Notice”) from the Staff advising us that we no longer complied with the ASM Rule, as we did not
hold an annual meeting of stockholders in the fiscal year ended December 31, 2024. The Notice had no immediate effect on the listing
of our common stock.
Pursuant to the Notice,
Nasdaq gave us 45 calendar days, or until February 24, 2025, to submit a plan to regain compliance. On February 24, 2025, we wrote
to the Staff to present our plan to hold the 2024 ASM and, on February 28, 2025, we were granted our request for an extension until
June 30, 2025. Having held the 2024 ASM on April 9, 2025, we have completed the required action to regain compliance with the ASM
Rule and, on April 15, 2025, we received confirmation from the Staff that we have regained compliance under the
ASM Rule.
On September 18, 2024, we
received a letter from the Staff indicating that we failed to maintain a minimum closing bid price of $1.00 per share for the prior 34
consecutive days and, as such, no longer satisfied Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Rule”). In accordance
with Nasdaq Listing Rule 5810(c)(3)(A), we were provided a grace period of 180 calendar days, or until March 17, 2025, to regain compliance
with the Minimum Bid Rule.
On March 18, 2025, we effected
a 1-for-12 reverse stock split (the “March 2025 Reverse Split”) in an effort to evidence compliance with the Minimum Bid Rule.
To regain compliance with the Minimum Bid Rule, an issuer must evidence a closing bid price of at least $1.00 per share for a minimum
of 10, but generally not more than 20, consecutive trading days.
On March 25, 2025, we were
notified by the Staff that because we did not evidence compliance with the Minimum Bid Rule by March 17, 2025, the Staff determined that
our securities should be delisted from Nasdaq.
As of the close of business
on March 31, 2025, we evidenced a closing bid price of at least $1.00 per share for 10 consecutive business days and, on March 31, 2025,
the Staff determined that we had regained compliance with the Minimum Bid Rule. Accordingly, our securities are no longer subject to delisting
under the Minimum Bid Rule and the matter has been closed.
On April 16, 2025, we, received a letter from the
Staff indicating that we failed to file our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Filing”),
on a timely basis and, as such, no longer satisfy Nasdaq Listing Rule 5250(c)(1) (the “Timely Filing Rule”).
The letter had no immediate effect on the listing
of our common stock.
The letter also stated that, in accordance with Nasdaq rules, we have 60
calendar days from the date of the letter to submit a plan to regain compliance with the Timely Filing Rule. Should the Staff accept such
plan, it could grant an exception of up to 180 calendar days from the Filing’s due date, or until October 13, 2025, to regain compliance.
Public Offering
On January 14, 2025, we
consummated a public offering (the “January 2025 Offering”) of 1,134,598 units (“Units”), each consisting of
either one share of Common Stock, or one pre-funded warrant to purchase one share of Common Stock (the “January 2025
PFWs”) in lieu thereof, and one warrant to purchase one share of Common Stock at an offering price of $8.40 per Unit (the “January 2025 Warrants”). The
January 2025 Warrants are exercisable from and after the date of their issuance and expire on the five-year anniversary of such date, at an
exercise price of $8.40 per share of Common Stock. Each January 2025 PFW is immediately exercisable at an exercise price of
$0.0012 per share and may be exercised at any time until all of the January 2025 PFWs are exercised in full. In connection with
the January 2025 Offering, we entered into a securities purchase agreement (the “January 2025 SPA”) with certain
institutional investors who purchased Units in this January 2025 Offering.
The securities issued in
the January 2025 Offering were offered pursuant to our registration statement on Form S-1, as amended (File No. 333-283872) (the “January
2025 S-1”), initially filed by us with the Securities and Exchange Commission (the “SEC”) under the Securities Act of
1933, as amended (the “Securities Act”), on December 17, 2024 and declared effective on January 13, 2025.
We closed the January 2025
Offering on January 14, 2015, raising gross proceeds of approximately $9.5 million before deducting placement agent fees and other offering
expenses payable.
The stated intention for
net proceed utilization included (i) up to $2,500,000 to fund the second installment of the purchase price for WFI; (ii) $4,000,000 to redeem 4,000 shares of our Series C-2 preferred stock with a stated value of $4,000,000; (iii) up to $1,950,000
towards outstanding debt obligations that were payable prior to or upon completion of the January 2025 Offering and that we did not otherwise
restructure or refinance, and (iv) the balance for clinical trials, product development, marketing, strengthening the corporate management
team, working capital, and general corporate purposes.
Also in connection with the
January 2025 Offering, on January 13, 2025, we entered into a placement agency agreement (the “January 2025 PAA”) with Maxim
Group LLC (“Maxim”), pursuant to which (i) Maxim agreed to act as lead placement agent on a “best efforts”
basis in connection with the January 2025 Offering, and (ii) we agreed to pay Maxim an aggregate fee equal to 6.5% of the gross proceeds
raised in the January 2025 Offering (or 5.0% in the case of certain investors) and warrants to purchase up to 62,197 shares of Common
Stock at an exercise price of $10.50 per share (the “Maxim January 2025 Warrants”). The Maxim January 2025 Warrants are exercisable
at any time after the six-month anniversary of the closing date, from time to time, in whole or in part, until five (5) years from the
commencement of sales of the securities in the January 2025 Offering. Additionally, we reimbursed Maxim for certain expenses and legal
fees up to $90,000.
The January 2025 PAA and
the January 2025 SPA contain customary representations, warranties and agreements made by us, customary conditions to closing, indemnification
obligations by us, Maxim or the investors, as the case may be and other obligations of the parties.
Pursuant to the terms of
the January 2025 SPAs and January 2025 PAA, we agreed that for a period of up to ninety (90) days from the closing of the January 2025
Offering, that neither we nor any subsidiary may (i) issue, enter into any agreement to issue or announce the issuance or proposed issuance
of any shares of Common Stock or Common Stock equivalents or (ii) file any registration statement or prospectus, or any amendment or
supplement thereto, in each case, subject to certain exceptions. We also agreed not to effect or enter into an agreement to effect any
issuance of Common Stock or Common Stock equivalents involving a Variable Rate Transaction, as defined in the January 2025 SPA, for a
period of up to twelve (12) months following the closing of the January 2025 Offering, subject to certain exceptions.
On January 14, 2025, we entered into a warrant agency agreement (the “January 2025 WAA”), with Transfer Online, Inc. appointing Transfer
Online, Inc. as warrant agent for the January 2025 Warrants.
In connection with the January
2025 Offering, on January 13, 2025, we entered into a Class C-2 Preferred Stock Redemption Agreement (the “FNL C-2 Redemption Agreement”)
with Five Narrow Lane, LP (“FNL”), pursuant to which we agreed to purchase and acquire from FNL 4,000 shares of our Series
C-2 Convertible Preferred Stock (the “C-2 Preferred Stock”) for $4,000,000. Accrued dividends of $104,444.44, plus any other
accrued payments under the Certificate of Designations for the C-2 Preferred Stock, remain outstanding.
Operations
Our critical management and leadership functions
are carried out by our management team. In the Fertility Clinic segment, each clinic is separately staffed with employees necessary
to manage daily activities, while most administrative tasks are centralized and handled by the INVO corporate staff. With respect to
the INVOcell Device segment, we have contracted out the manufacturing, assembly, packaging, and labeling to a medical manufacturing
company, sterilization of the device to a sterilization specialist, and storage and shipping to a third part logistics company. In
the Therapeutics Segment, we have a separate staff dedicated to the development of our intellectual property.
Wisconsin Fertility Institute
On August 10, 2023, we consummated the first
acquisition of an existing IVF clinic, WFI. As an established and profitable clinic, WFI has a full staff, including a reproductive
and endocrinology and infertility medical doctor (“REI”), an OBGYN trained to provide fertility treatment and a full
complement of medical, laboratory and administration staff. In June 2024, we replaced WFI’s REI with an REI that had
previously worked at the clinic and was well acquainted with its staff and procedures. WFI’s staff manages most day-to-day
activities, which, except for medical matters, is overseen by our VP operations. Upon closing the acquisition, our corporate staff
assumed finance, accounting, tax and other overhead responsibilities.
Alabama JV
On March 10, 2021, our wholly owned subsidiary, INVO
Centers, LLC (“INVO CTR”) formed a joint venture with HRCFG, LLC (“HRCFG”) to establish an INVO Center in Birmingham,
Alabama. The name of the joint venture is HRCFG INVO, LLC (the “Alabama JV”). The responsibilities of HRCFG’s principals
include providing clinical practice expertise, performing recruitment functions, providing all necessary training, and providing day-to-day
management of the INVO Center. Our responsibilities include providing funding to the Alabama JV and being the exclusive provider of the
INVOcell. We also perform all required, industry-specific compliance and accreditation functions, and product documentation for product
registration. The Birmingham INVO Center opened to patients on August 9, 2021.
Georgia JV
On June 28, 2021, INVO CTR formed a joint venture
with Bloom Fertility, LLC (“Bloom”) to establish an INVO Center in Atlanta, Georgia. The name of the joint venture is Bloom
INVO LLC (the “Georgia JV”). The responsibilities of Bloom include providing all medical services required for the operation
of the INVO Center. Our responsibilities include providing funding to the Georgia JV, lab services, quality management, and being the
exclusive provider of the INVOcell. We also perform all required, industry specific compliance and accreditation functions, and product
documentation for product registration. The Atlanta INVO Center opened to patients on September 7, 2021.
INVOcell
To date, we have completed a series of important steps
in the successful development and manufacturing of the INVOcell:
NAYA Therapeutics
On October 11, 2024, we acquired NAYA Therapeutics,
which has its own staff of experts, advisors, and management with a long history in the development of biotechnology assets. The operational
approach is based on a diversified intellectual property portfolio that is managed through early stages of development before partnering
with large pharmaceutical companies for clinical trial completion and commercialization.
Employees
As of December 31, 2024, INVO employed 8 full time
employees. The clinics employed an additional 20 full time and 4 part time employees. NAYA Therapeutics had 5 full time employees. We
also engage consultants to further support our operations.
Market Opportunity
Fertility Clinics and INVOcell Device
The global ART marketplace is a large and
growing, multi-billion-dollar industry across the world as increased infertility rates, greater patient awareness and improving
financial incentives, such as insurance and governmental assistance, continue to drive demand. According to the European Society for
Human Reproduction’s 2024 ART Fact Sheet, one in six couples worldwide experience fertility challenges. Additionally, the
worldwide market remains vastly underserved as a high percentage of patients in need of care continue to go untreated each year for
many reasons, but key among them are capacity constraints and cost barriers. There have been large increases in the use of IVF, with
current estimates of approximately 4 million ART cycles performed globally each year, producing around 1 million babies.
Regrettably, this only amounts to less than 5% of the infertile couples worldwide being treated and less than 2% of such couples
having a child though IVF. The industry remains capacity constrained which creates challenges in providing access to care for the
volume of patients in need. A survey by “Resolve: The National Infertility Association,” indicates the two main reasons
couples do not use IVF is cost and geographical availability (and/or capacity).
In the United States, infertility affects an estimated
10%-15% of the couples of childbearing-age, according to the American Society of Reproductive Medicine (2017). According to the Centers
for Disease Control (“CDC”), there are approximately 6.7 million women with impaired fertility. Based on 2022 data from the
CDC’s National ART Surveillance System, approximately 435,000 IVF cycles were performed across ~500 IVF centers, leaving the U.S.
with a large, underserved patient population, similar to most markets around the world.
Our corporate development strategy is aimed at taking
advantage of the fertility market’s imbalance between supply and demand. We have identified a number of locations in the United
States with attractive demographics and fertility service levels that would be ideal for the opening of new INVO Centers. Similarly, we
have identified several profitable US-based IVF practices suitable for acquisition.
NAYA Therapeutics
According to international market research firm, Research
and Markets, the global bispecific antibodies market is projected to witness over 40% compound annual growth rate and reach over $80 billion
by 2030.
The development of bispecific antibodies began when
scientists recognized the potential of monoclonal antibodies. This marked the start of a new era in therapeutics in the late 1990s. Bispecific
antibodies offer multiple benefits, including dual targeting of different antigens, improved specificity, enhanced targeting ability,
reduced dose-limiting toxicities, and the potential for drug-drug or drug-to-protein conjugates. These antibodies provide diversity by
targeting two different tumor and/or immune cell antigens or epitopes simultaneously.
NAYA Therapeutics’ addressable market is significant.
According to a Delveinsight July 2023 report on the multiple myeloma, the global market size in 2022 for multiple myeloma treatments was
$20 billion and is expected to continue to grow significantly with the introduction of new products. The current market leader, CD38 targeting
monoclonal antibody, Darzalex (daratumumab) reached $8 billion in global sales in 2022.
Market growth is supported by the FDA’s
recent approvals for bispecific antibodies, including BCMA targeting CARVYKTITM, TECVAYLITM in 2022 and GPRC5D targeting
Talvey in 2023 from Johnson & Johnson. The new BCMA targeting bispecific antibody from Pfizer, Elrexfio, was approved in August
2023. Additional bispecific antibodies from Abbvie, Regeneron and Roche are in early stage of clinical development. There also are
several other GPC3-targeting antibodies or cell therapies being developed by AstraZeneca, Takeda, Legend Biotech, and Adicet Bio in
collaboration with Regeneron.
According to Polaris Market Research, the market
size for liver cancer treatment was $2.44 billion in 2022 and is expected to grow a compounded annual growth rate of 20% to reach
$10.48 billion in 2030. Market growth is supported by increased incidence and the 2022 approval of a new standard of care,
Merck’s Keytruda and a combination of two biological drugs commercialized by Genentech Roche, Telecentriq and Avastatin.
Competitive Advantages
INVOcell Device and INVO Centers
Over the past several years, the principal focus
of our commercial efforts has shifted from the distribution of our INVOcell device to the provision of fertility clinic services through
our INVO Centers and IVF clinic acquisition. For the most part, our clinical activities have been focused on secondary markets where
there is a greater imbalance between the need for ART treatment and the number of cycles available. Combined with our ability to offer
a wider range of advanced fertility care, including IVC, IVF and IUI, at multiple price points, our clinics have the opportunity
for differentiation from our competitors. As with our INVOcell technology, we continuously look for new solutions that can create greater
efficiency and effectiveness in the provision of fertility cycles and support our efforts to democratize fertility care.
While a smaller part of our current business, we continue
to believe that our INVOcell device, and the IVC procedure it enables, can play a key role in making advanced fertility care more affordable
and accessible. We continue to engage with sympathetic third-party clinics that share our same vision and that use our one-of-a-kind INVOcell
device.
Unlike IVF, where the oocytes and sperm develop into
embryos in a laboratory incubator, the INVOcell allows fertilization and early embryo development to take place in the woman’s body.
We believe that the IVC procedure can provide the following benefits:
● A natural and stable incubation environment;
● A more personal, intimate experience in creating a baby; and
● A reduced risk of errors and wrong embryo transfers.
In both current utilization of the INVOcell, and in
clinical studies, the IVC procedure has demonstrated equivalent pregnancy success and live birth rates as IVF and generally may be offered
at a significant discount to IVF cycles.
NAYA Therapeutics
Given the rapid growth of the bispecific antibody
market, the competition has increased significantly. There are many companies developing bispecific antibodies including Amgen, AstraZeneca,
Johnson & Johnson, Merus, Pfizer, Sanofi, Xencor, Zymeworks. We believe that NAYA is uniquely positioned to capitalize on the growing
demand for multifunctional antibodies as the current and next generation of therapies demonstrate increased efficacy and safety over
the legacy monoclonal antibodies, which are currently dominating the oncology and auto-immune disease market. NAYA Therapeutics’
NY-338, is, to the best of our knowledge, the first CD38-targeting NK engager to enter clinical trials, and the first bispecific antibody
to target both NKp46 to redirect NK cells and CD38, with the potential to demonstrate both efficacy and safety advantages. We aim to
differentiate ourselves from the companies and products as the first company to enter clinic trials with a GPC3 targeting NK engager
bispecific antibody.
Sales and Marketing
Fertility Clinics
Our two INVO Centers and our Wisconsin IVF clinic
employ various strategies to build awareness for their services and/or to maintain and grow patient flow and fertility cycle volume.
The principal source of patient flow comes through OBGYN referrals and patient word of mouth. Our clinical staff maintain relationships
with the local OBGYN community and organize virtual and in person events to showcase our centers’ services, fertility treatment
effectiveness statistics and quality of our clinical personnel. We also conduct regular social and other media campaigns to attract new
patients and to build awareness.
At the corporate level, we seek to build general awareness
for our clinical activities and IVC procedure results with a view to drive patients to our centers and to grow demand for our INVOcell
device. These efforts also support our ongoing work to open new INVO Centers and to acquire additional IVF clinics.
The acquisition of existing IVF clinics requires less
sales and marketing effort compared to opening new INVO Centers, as they have established patient flows that can be built upon. When entering
a new market with an INVO Center, we leverage the experience developed in establishing our Alabama and Georgia joint ventures. We employ
fine-tuned strategies to secure patient flow levels that can enable new INVO Centers to become profitable and contribute economically
to our overall business as soon as possible. Primarily, our INVO Centers seek to employ local, reputable physicians with strong ties to
the OBGYN community.
INVOcell Device
Historically, our approach to marketing INVOcell was
focused on identifying partners within targeted geographic regions that we believe could best support our efforts to expand access to
advanced fertility treatment using the INVOcell and IVC procedure for the large number of underserved infertile people around the world.
Those efforts resulted in the execution of a series of distribution agreements with partners across the globe. More recently, as we shifted
our focus to opening INVO Centers and acquiring IVF clinics, which activities have been centered in the US, and as a result of the limited
traction experienced in international markets, proactive marketing efforts for the INVOcell have been limited to the United States. In
our domestic market, we distribute the INVOcell directly to a number of third-party IVF clinics and we remain open to pursuing foreign
markets that present a realistic opportunity for incremental revenue on a profitable basis.
NAYA Therapeutics
Given the early stage of development for NAYA Therapeutics’
technologies, our focus is entirely on clinical activities. Our strategy is to partner with large pharmaceutical companies for the commercialization
of FDA-approved solutions.
Competition
Fertility Clinics and INVOcell Device
Our fertility clinics, within their own local markets,
compete with other local fertility clinics largely on the basis of reputation, quality of patient care, and general pricing. Our INVO
Centers (in Alabama and Georgia) as well as our newly acquired IVF clinic in Wisconsin, have at least 1 or more competing fertility clinics
within a 25-mile radius. We believe each of our existing centers compete effectively on price and quality of care in their respective
markets.
The fertility treatment regimens with whom the
INVOcell and IVC procedure compete when infertile people, in conjunction with their physician, are choosing the treatment method
include drug-only stimulation, IUI, and conventional IVF. The fertility industry is highly competitive and characterized by
long-standing well-entrenched procedures. Our INVOcell device enables the first new advanced treatment incubation alternative in
over forty years. We face competition from all ART practitioners and device manufacturers. To date, most advancements in the ART
market have been limited to incremental improvements to the various products designed to simply support conventional IVF.
The only ART medical device competitor for INVOcell
that we are aware of was an intrauterine device called AneVivoTM, developed by Anecova, a Swiss life sciences company. The principal
difference between the INVOcell and AneVivoTM is the latter’s placement inside the woman’s uterus for early embryo development. We believe
that placing the device in the uterus may be more invasive and thus may increase the risk to patients compared to the INVOcell, which
is placed in the vaginal cavity. It appears that Anecova is no longer active.
NAYA Therapeutics
There are several other GPC3-targeting antibodies
or cell therapies being developed by AstraZeneca, Takeda, Legend Biotech, and Adicet Bio in collaboration with Regeneron.
The principal competitors for liver cancer treatment
include Merck’s KeytrudaTM as well as a combination of two biological drugs commercialized by Genentech Roche, TecentriqTM
and AvastinTM.
The current market leader for multiple myeloma, CD38
targeting monoclonal antibody, is Johnson & Johnson’s Darzalex TM (daratumumab).
For bi-specific antibodies, competitors include BCMA
targeting TecvalyTM in and GPRC5D targeting talquetamab (Talvey TM, J&J) from Johnson & Johnson, as well as ElrexfioTM
from Pfizer. Additional bispecific antibodies from Abbvie, Regeneron, and Roche are in early stage of clinical development.
For additional information about competition, see
Risk Factors in Item 1A of this Annual Report on Form 10-K.
Government Regulation
With respect to our Clinic Segment, all our clinics
are subject to standard governmental and oversight regulations and must meet certain standards to be certified and operational. With
respect to our NAYA Therapeutics segment, our activities are at an embryonic stage and pursued in accordance with FDA regulations.
With respect to our INVOcell segment, in November
2015, the FDA granted our petition for de novo classification of the INVOcell. Special controls include clinical and non-clinical performance
testing, biocompatibility, sterility and shelf-life testing, and labeling. These special controls also apply to competing products that
seek 510(k) clearance under the classification regulation for IVC systems, including our own 510(k) effort to expand the labeling on
INVOcell from a 3-day incubation period to up to a 5-day incubation period. In June 2023, we received FDA 510(k) clearance to expand
the labeling on the INVOcell device and its indication for use to provide for a 5-day incubation period.
We are not actively targeting international
markets for INVOcell, although we are willing to engage with potential foreign partners that seek us out and demonstrate a
commitment to apply sufficient resources to develop their specific market. Every country has its own, often different regulatory and registration requirements for medical devices, and our decision to support a potential partner
will also be based on those requirements.
In general, we may be subject to healthcare fraud,
waste, and abuse regulation and enforcement by the federal government and the governments in the states and foreign countries in which
we might conduct our business. The federal laws and many state laws generally apply only to entities or individuals that provide items
or services for which payment may be made under a government healthcare program. These include laws that prohibit the following:
These laws are subject to extensive and increasing
enforcement by numerous federal, state, and local government agencies including the Office of Inspector General, the Department of Justice,
the Centers for Medicare & Medicaid Services, and various state authorities. At present, our products and services
are not reimbursable under any government healthcare program. If, however, that changes in the future and it were determined that we were not in compliance with these federal fraud, waste, and abuse laws, we would be subject to liability.
We are subject to the requirements of the Health Insurance
Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH
Act”), and related implementing regulations (together, “HIPAA”). Under HIPAA, we must have in place administrative,
physical, and technical standards to guard against the misuse of individually identifiable health information. In the ordinary course
of our business as a Business Associate, and with INVO Centers, as a Covered Entity, we may use, collect, and store sensitive data, including
protected health information (“PHI”). We face risks relative to protecting this critical information, including loss of access
risk, inappropriate disclosure risk, inappropriate modification risk, and the risk of being unable to adequately monitor our controls.
Our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance,
or other disruptions. Failure to comply with HIPAA, including through a breach of PHI, could result in penalties and sanctions, and materially
harm our business.
For additional information about government regulation
applicable to our business, see Risk Factors in Item 1A.
Intellectual Property
Fertility Clinics and INVOcell
We rely on a combination of copyright and
trademark laws in the United States and other countries to obtain and maintain our intellectual property. In the past, we protected
our intellectual property by, among other methods, filing patent applications with the U.S. Patent and Trademark Office (the
“USPTO”) and its foreign counterparts on inventions related to the development of our business. Our recent attempt to
redesign the INVOcell device, including process improvements on the IVC procedure, in support of a new patent application were not
successful as the USPTO’s preliminary findings opined that the new application was not sufficiently different from our expired
patents. Given our limited resources and, pursuant to advice of counsel and the expected difficulty in reversing the USPTO’s
initial finding, we decided to abandon the application.
Our portfolio of U.S. registered trademarks includes
the following:
● Registration No. 4009828 for INVO BIOSCIENCE
We also have pending U.S. applications to register
the trademark Life Begins Within (App. No. 90803801).
NAYA Therapeutics Segment
NAYA Therapeutics owns a total of twenty-two (22)
pending patent applications in two families. Each family includes one (1) US and one (1) European patent application, and nine (9) patent
applications in other foreign jurisdictions. One family is based on WO 2022/216744 and covers NY-303, while the other family is based
on WO 2022/216723 and covers NY-338.
The Kadouche/CNRS multispecific antibody license with
NAYA for NY-303 and NY-338 includes thirteen (13) patents and patent applications, including two (2) granted US patents, two (2) pending
US patent applications, two (2) granted European patents, and one (1) pending European patent application, as well as six (6) granted
patents in other foreign jurisdictions.
NAYA licenses from Yissum ten (10) pending patent
applications for NY-303 and NY-338, which include one (1) US and one (1) European patent application and eight (8) patent applications
in other foreign jurisdictions. NAYA licenses from INSERM five (5) pending patent applications for NY-338, which includes one (1) US and
one (1) European patent application and three (3) patent applications in other foreign jurisdictions.
NAYA entered into a direct licensing agreement for
the use of NY-303 and the necessary intellectual property rights Bispecific antibody technology from Dr. Jean Kadouche and CNRS (The French
Center for National Scientific Research) fully paid through by Cytovia Therapeutics. Additionally, NAYA entered into a direct licensing
agreement to utilize the product-specific NKp46 license from Yissum, the Technology Transfer Company of the Hebrew University of Jerusalem.
For additional information about our intellectual
property, see Risk Factors in Item 1A of this Annual Report on Form 10-K.
Available Information
We maintain several internet websites, including
www.invobio.com, www.nayabiosciences.com, and www.invocell.com. We make available, free of charge through our website,
our annual report on Form 10-K, current reports on Form 8-K, quarterly reports on Form 10-Q and each amendment to these reports. Each
such report is posted on our website as soon as reasonably practicable after such report is filed with the SEC via the EDGAR system.
The information on our website is not incorporated
by reference into this Annual Report on Form 10-K and should not be considered a part of this Annual Report. Our website address is included
in this Annual Report as an inactive textual reference only.
Item 1A. Risk Factors
You should carefully consider the following risk factors,
in addition to the other information in this report on Form 10-K, including the section of this report titled “Management’s