VIVOS INC. Except for statements of historical fact, certain information described in this Form 10-Q report contains "forward-looking statements" that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," "would" or similar words. The statements that contain these or similar words should be read carefully because these statements discuss the Company's future expectations, including its expectations of its future results of operations or financial position, or state other "forward-looking" information.Vivos Inc. believes that it is important to communicate its future expectations to its investors. However, there may be events in the future that the Company is not able to accurately predict or to control. Further, the Company urges you to be cautious of the forward-looking statements which are contained in this Form 10-Q report because they involve risks, uncertainties and other factors affecting its operations, market growth, service, products and licenses. The risk factors in the section captioned "Risk Factors" in Item 1A of the Company's previously filed Form 10-K, as well as other cautionary language in this Form 10-Q report, describe such risks, uncertainties and events that may cause the Company's actual results and achievements, whether expressed or implied, to differ materially from the expectations the Company describes in its forward-looking statements. The occurrence of any of the events described as risk factors could have a material adverse effect on the Company's business, results of operations and financial position.Vivos Inc. is a radiation oncology medical device company engaged in the development of its yttrium-90 ("Y-90 ") based brachytherapy device, RadioGel™, for the treatment of non-resectable tumors. A prominent team of radiochemists, scientists and engineers, collaborating with strategic partners, including national laboratories, universities and private corporations, lead the Company's development efforts. The Company's overall vision is to globally empower physicians, medical researchers and patients by providing them with new isotope technologies that offer safe and effective treatments for cancer. In 2013 the FDA issued the determination that RadioGel™ is a device for human therapy for non-resectable cancers in humans. This should result in a faster path than a drug for final approval. InJanuary 2018 , theCenter for Veterinary Medicine Product Classification Group ruled that RadioGelTM should be classified as a device for animal therapy of feline sarcomas and canine soft tissue sarcomas. Additionally, after a legal review, the Company believes that the device classification obtained from theFood and Drug Administration ("FDA")Center for Veterinary Medicine is not limited to canine and feline sarcomas, but rather may be extended to a much broader population of veterinary cancers, including all or most solid tumors in animals. We expect the result of such classification and label review will be that no additional regulatory approvals are necessary for the use of IsoPet® for the treatment of solid tumors in animals. The FDA does not have premarket authority over devices with a veterinary classification, and the manufacturers are responsible for assuring that the product is safe, effective, properly labeled, and otherwise in compliance with all applicable laws and regulations. 20 Based on theFDA's recommendation, RadioGelTM will be marketed as "IsoPet®" for use by veterinarians to avoid any confusion between animal and human therapy. The Company already has trademark protection for the "IsoPet®" name. IsoPet® and RadioGelTM are used synonymously throughout this document. The only distinction between IsoPet® and RadioGelTM is theFDA's recommendation that we use "IsoPet®" for veterinarian usage, and reserve "RadioGelTM" for human therapy. Based on these developments, the Company has shifted its primary focus to the development and marketing of Isopet® for animal therapy, through the Company's IsoPet® Solutions division. The Company's IsoPet Solutions division was established inMay 2016 to focus on the veterinary oncology market, namely engagement of university veterinarian hospital to develop the detailed therapy procedures to treat animal tumors and ultimately use of the technology in private clinics. The Company has worked with three different university veterinarian hospitals on IsoPet® testing and therapy.Washington State University treated five cats for feline sarcoma and served to develop the procedures which are incorporated in our label. They concluded that the product was safe and effective in killing cancer cells.Colorado State University demonstrated the CT and PET-CT imaging of IsoPet®. A contract was signed withUniversity of Missouri to treat canine sarcomas and equine sarcoids starting inNovember 2017 . The dogs were treated for canine soft tissue sarcoma. Response evaluation criteria in solid tumors ("RECIST") is a set of published rules that define when tumors in cancer patients improve (respond), stay the same (stabilize), or worsen (progress) during treatment. The criteria were published by an international collaboration including theEuropean Organisation for Research and Treatment of Cancer ("EORTC"),National Cancer Institute of the United States , and theNational Cancer Institute of Canada Clinical Trials Group . The testing at theUniversity of Missouri met its objective to demonstrate the safety of IsoPet®. Using its advanced CT and PET equipment it was able to demonstrate that the dose calculations were accurate and that the injections perfused into the cell interstices and did not stay concentrated in a bolus. This results in a more homogeneous dose distribution. There was insignificant spread ofY-90 outside the points of injection demonstrating the effectiveness of the particles and the gel to localize the radiation with no spreading to the blood or other organs nor to urine or fecal material. This confirms that IsoPet® is safe for same day therapy. The effectiveness of IsoPet® for life extension was not the prime objective, but it resulted in valuable insights. Of the cases one is still cancer-free but the others eventually recurred since there was not a strong focus on treating the margins. TheUniversity of Missouri has agreed to become a regional center to administer IsoPet® therapy and will incorporate the improvements suggested
by the testing program. The Company anticipates that future profits, if any, will be derived from direct sales of RadioGel™ (under the name IsoPet®) and related services, and from licensing to private medical and veterinary clinics in theU.S. and internationally. The Company intends to report the results from the IsoPet® Solutions division as a separate operating segment in accordance with GAAP. Commencing inJuly 2019 , the Company recognized its first commercial sale of IsoPet®. A veterinarian fromAlaska brought his cat with a re-occurrent spindle cell sarcoma tumor on his face. The cat had previously received external beam therapy, but now the tumor was growing rapidly. He was given a high dose of 400Gy with heavy therapy at the margins. This sale met the revenue recognition requirements under ASC 606 as the performance obligation was satisfied. The Company completed sales for an additional four animals that received the IsoPet® during 2019. Our plan is to incorporate the data assembled from our work with Isopet® in animal therapy to support the Company's efforts in the development of our RadioGel™ device candidate, including obtaining approval from the FDA to market and sell RadioGel™ as a Class II medical device. RadioGel™ is an injectable particle-gel for brachytherapy radiation treatment of cancerous tumors in people and animals. RadioGel™ is comprised of a hydrogel, or a substance that is liquid at room temperature and then gels when reaching body temperature after injection into a tumor. In the gel are small, less than two microns,Y-90 phosphate particles. Once injected, these inert particles are locked in place inside the tumor by the gel, delivering a very high local radiation dose. The radiation is beta, consisting of high-speed electrons. These electrons only travel a short distance so the device can deliver high radiation to the tumor with minimal dose to the surrounding tissue. Optimally, patients can go home immediately following treatment without the risk of radiation exposure to family members. SinceY-90 has a half-life of 2.7 days, the radioactivity drops to 5% of its original
value after ten days. 21 Recently, the Company modified its Indication for Use from skin cancel to cancerous tissue or solid tumors pathologically associated with locoregional papillary thyroid carcinoma and recurrent papillary thyroid carcinoma having discernable tumors associated with metastatic lymph nodes or extranodal disease in patients who are not surgical candidates or who have declined surgery, or patients who require post-surgical remnant ablation (for example, after prior incomplete radioiodine therapy). Papillary thyroid carcinoma belongs to the general class of head and neck tumors for which tumors are accessible by intraoperative direct needle injection. The Company'sMedical Advisory Board felt that demonstrating efficacy in clinical trials was much easier with this new indication. Intellectual Property Our original license withBattelle National Laboratory reached its end of life in 2022. During the past several years, in anticipation of this we have expanded our proprietary knowledge, our trademark and patent protection.
Our RadioGel trademark protection is in 17 countries. We have expanded our trademark protection from RadioGel to now include IsoPet. We obtained the International Certificate of Registration for ISOPET, which is the first step to file in several countries.
The Company received the Patent Cooperation Treaty ("PCT") International Search Report on our patent application (No.1811.191). Seven of our claims were immediately ruled as having novelty, inventive step and industrial applicability. This gives us the basis to extend for many years the patent protection for our proprietary Yttrium-90 phosphate particles utilized in Isopet® and Radiogel™.
Our patent team filed our particle patent in more than ten patent offices that collectively cover 63 countries throughout the world. We filed a continuation-in-part applications number 1774054 in theUSA to expand the claims on our particle patent. The US Patent office recently gave us the Notice of Allowance for our patent to produce our yttrium phosphate microparticles, US Patent Application Serial No: 16-459,466. We also filed an amendment to correct the wording on our claims at make them consistent with the USE claims. Ref: 4207-0005; European Patent Application NO. 20 834 229.5;VIVOS INC ; Our Ref: FS/53791. We filed a hydrogel utility patent in theUSA (16309:17/943,311) and internationally (16389:PCT/US22/4374) based on the last eighteen months of development work to optimize our hydrogel component. These include reducing the polymer production time and increasing the output by a factor of three. We have also further reduced the level of trace contaminants to be well below the FDA guidelines. We filed a provisional patent (Serial Number 63436562) to protect our innovative improvements in our shipping container, our vial shield, our syringe shield, and our Peltier chiller. Our objectives were to reduce shipping costs, decrease radiation exposure, and enhance sterility. These devices will be preferentially used atMayo Clinics for human clinical studies at and our IsoPet regional treatment centers. We anticipate that Precison Radionuclide Therapy will become increasingly important in the future and expand to other isotope and other indications for use. Therefore, we filed an alternate particle utility patent (Serial number 18/152,137).Vivos Inc will focus its near-term effort on the Yttrium-90 therapy, which we believe is the best beta emitter; however, we leveraged our hydrogel utility patent to incorporate other promising isotopes and compounds for a range of future applications. This includes gamma and alpha particle
emitters. 22IsoPet Regional Clinics
We currently have four regional therapy clinics:
?Vista Veterinary Hospital -Kennewick, WA ? University of Missouri -Columbia, MO ?Johns Hopkins University -Baltimore, MD ? New England Equine Practice -Patterson, NY Vista Veterinary Hospital ("Vista") was selected as the pilot private clinic to initiate commercial sales of IsoPet®. It is good management practice to implement and learn from a pilot program before spreading to regional clinics across the country. Vista is located in the Tri-Cities Washington area which is convenient for interactions with key personnel of the Company. The pilot is being used to
? Refine the Memorandum of Understanding to define all the germane interfaces,
roles and liabilities between
pilot responsivity to document and share the key aspects of all therapies with
the Company;
? Create and implement proprietary certification training packages;
? Amend the production center radioactive material license at IsoTherapeutics,
the Company's IsoPet® production center, to allow distribution for commercial
applications;
? Work with the pilot program to obtain a radioactive material licensing in an
NRC agreement state;
? Create equipment and supplies list;
? Create and post regulatory signage;
? Explore different IsoPet® pricing options;
? Evaluate different approaches to obtain patients;
? Optimize patient scheduling practices to reduce cost to the pet owners;? Develop communication material and a liability document for the pet owners;
and
? Further refine the therapy techniques for advanced cancers.
Vista Veterinary Hospital has done well on two audits by the Washington State
Department of Health . The Company is working closely with the Washington State
Department of Health to refine and improve the radioactive material license. The
Company has added several detailed procedures, which will benefit future
regional clinics. In addition, a second veterinarian has completed all the
preliminary requirements to become certified. All that remains is to demonstrate
proficiency in three therapies.
The testing at the universities and at Vista Veterinary Hospital have
demonstrated that IsoPet® is effective on killing cancer tissue near the
injections. It is most effective in early cases before the cancer has begun to
spread. Later stage cancers are more difficult to treat since the tendrils from
the primary cancer site are not well defined and therefore can lead to
recurrence.
There have been 115 expressions of interest in IsoPet® therapy from across the
United States , but only about 10% of these were treated and they were very
advanced cases. The reasons are instructive. Most of the cases were for so
advanced that the pet parents found out about IsoPet® on the Internet as a last
hope. Several others were internal cancers that could not be reached, for
example deep in the throat. Several cases were treatable, but the pets weighed
more than 20 pounds and the pet parents were not willing to fly them in the
"Safe Cargo" holds. Those patients would have been treated by regional clinics
once we implement that strategy. Several cases were mast cell cancers. The
Company is confident that those tumors could have been treated, but once killed
they release mast cells in a process called granulation. This could cause a
shock to the animal's system. The Company will focus one of our clinical studies
on the optimum approach for those therapies.
Vista Veterinary Hospital accepted advanced cancer cases and has gained
experience to extend the animal's lives. The first cat was terminally ill and
had previously had external beam, surgery and chemotherapy. The facial tumor was
treated with 400 Gy and the biopsy confirmed that the cancer was killed. In
about seven months the cancer returned in the throat and could not be treated so
the cat had to be put down. Dr. Bauder , the veterinarian pet parent, was still
elated about the life extension and is asking us to use him as a reference. The
other cases were also very advanced with multiple tumors and they recurred since
they had already spread before therapy. One animal, Yukon had a large tumor on
his leg that was recommended for amputation. The tumor size decreased 50% after
the first treatment, but then stopped decreasing. For the first time a second
therapy was administered and the tumor has continued to decrease in size.
Yukon's life was extended for more than a year until she finally succumbed to
metastatic cancer in another location.
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Since IsoPet® has shown to be effective in killing cancer at the site of
injection the current focus is in optimizing the techniques to help the pet
resorb the necrotic tissue rapidly. In addition, IsoPet® was used to treat a
mast cell tumor. When these cancers are destroyed, they release their mast cell.
The animal was treated with a steroid to counter this effect and to date is
doing well.
The Company's efforts are now to obtain more early-stage cancer patients. The
biggest obstacle is to convince the veterinarians of the pet parents to agree
with IsoPet® therapy rather than using a more traditional method such as
surgery. This is a slow process due to the conservative nature of the
veterinarian professions. This is the prime motivation to continue with
additional clinical trials and to publish the results.
The Company worked closely with FX Masse to develop nine certification training
modules for use in potential regional clinics. These modules are necessary to
satisfy the radioactive material handling licenses. This approach is very cost
effective.
Johns Hopkins University VCTN, Veterinary Clinical Trials Network, is now an
Isopet® regional clinic. Additionally, Johns Hopkins will also perform new
Isopet® animal studies on various specific cancers. They have the required
radioactive material license and have completed their training certification for
Isopet®. This important relationship will also help meet our objective of
obtaining high quality data on a range of cancers that can be published in
leading journals. These publications are the optimal way to increase awareness
of Isopet® and to gain broader acceptance from the veterinarian/oncology
community.
Our objective is to open several regional clinics by the end of 2023 and to
participate in a minimum of four conferences to spread the word about IsoPet in
the veterinarian community for treating tumors in small animals and horses. We
created a Marketing Steering Board to provide advice on obtaining new pet
patients.
Regulatory History
Human Therapy
RadioGel™ has a long regulatory history with the Food and Drug Administration
("FDA"). Initially, the Company submitted a presubmission (Q130140) to obtain
FDA feedback about the proposed product. The FDA requested that the Company file
a request for designation with the Office of Combination Products (RFD130051),
which led to the determination that RadioGel™ is a device for human therapy for
non-resectable cancers, which must be reviewed and ultimately regulated by the
Center for Devices and Radiological Health ("CDRH"). The Company then submitted
a 510(k) notice for RadioGel™ (K133368), which was found Not Substantially
Equivalent due to the lack of a suitable predicate, and RadioGel™ was assigned
to the Class III product code NAW (microspheres). Class III products or devices
are generally the highest risk devices and are therefore subject to the highest
level of regulatory review, control and oversight. Class III products or devices
must typically be approved by FDA before they are marketed. Class II devices
represent lower risk products or devices than Class III and require fewer
regulatory controls to provide reasonable assurance of the product's or device's
safety and effectiveness. In contrast, Class I products and devices are deemed
to be lower risk than Class I or II, and are therefore subject to the least
regulatory controls.
A pre-submission meeting (Q140496) was held with the FDA on June 17, 2014 ,
during which the FDA maintained that RadioGel™ should be considered a Class III
device and therefore subject to pre-market approval. On December 29, 2014 , the
Company submitted a de novo petition for RadioGel™ (DEN140043). The de novo
petition was denied by the FDA on June 1, 2015 , with the FDA providing numerous
comments and questions. On September 29, 2015 , the Company submitted a follow-up
pre-submission informational meeting request with the FDA (Q151569). This
meeting took place on November 9, 2015 , at which time the FDA indicated
acceptance of the Company's applied dosimetry methods and clarified the FDA's
outstanding questions regarding RadioGel™. Following the November 2015
pre-submission meeting, the Company prepared a new pre-submission package to
obtain FDA feedback on the proposed testing methods, intended to address the
concerns raised by the FDA staff and to address the suitability of RadioGel™ for
de novo reclassification. This pre-submission package was presented to the FDA
in a meeting on August 29, 2017 . During the August 2017 meeting, the FDA
clarified their position on the remaining pre-clinical testing needed for
RadioGel™. Specifically, the FDA addressed proposed dosimetry calculating
techniques, dosimetry distribution between injections, hydrogel viscoelastic
properties, and the details of the Company's proposed animal testing.
24
The Company believes that its submissions to the FDA to date have addressed all the FDA staff's feedback over the past four years. Of particular importance, the Company has provided corresponding supporting data for proposed future testing of RadioGel™ to address any remaining questions raised by the FDA. We believe, although no assurances can be given, that the clinical testing modifications presented to the FDA inAugust 2017 will result in a de novo reclassification for RadioGel™ by the FDA. In addition, in previous FDA submittals, the Company proposed applying RadioGel™ for a very broad range of cancer therapies, referred to as Indication for Use. The FDA requested that the Company reduce its Indications for Use. To comply with that request, the Company expanded itsMedical Advisory Board ("MAB") and engaged doctors from respected hospitals who have evaluated the candidate cancer therapies based on three criteria: (1) potential for FDA approval and successful therapy? (2) notable advantage over current therapies? and (3) probability of wide-spread acceptance by the medical community.
InNovember 2020 the Company submitted a request for a Breakthrough Device Designation. Ultimately, this was denied, but the FDA acknowledged, "The FDA does believe that RadioGel™ meets criterion #2a: Device represents breakthrough technology. Your device does meet this criterion because it is a novel application of a brachytherapy device outside of the liver." More importantly the process resulted in a rapid review of our existing data and approach. It led to a redirection of our efforts on writing the IDE and saved the Company much time in the review of that future application. Based on advice from the FDA the Company has scheduled a Pre-Submission meeting onNovember 30, 2021 to discuss a draft of an Investigational Device Exemptions (IDEs) for Early Feasibility Medical Device Clinical Studies, Including Certain First in Human (FIH) Studies. Using this process results in more rapid feedback to prepare the final IDE. The FDA was very supportive and had suggested this Q-Submission path for rapid turnaround and dialog. TheMayo Clinic physicians did an excellent job presenting the need for Radiogel™ to treat recurrent thyroid cancer and to answer a range of questions from the new FDA review team. The FDA provided many helpful suggestions on a range of subjects from labeling to dosimetry to the Mayo protocol for clinical testing, and the need for some additional specific testing. They suggested having another Q-Sub Review and conference call dedicated to the details of the dosimetry calculations. In May of 2022 the Company held another Pre-Sub meeting with the FDA. They concurred with our dosimetry techniques and requested one more animal test to confirm that theY-90 stays at the injection site. We will be proposed a Pre-Sub meeting to discuss this new animal test of VX-2 tumors in rabbits atJohns Hopkins University . We have a meeting scheduled with the FDA in October to obtain their feedback on our new animal test plan. In the meantime, the Company is working to complete all the other required pre-clinical testing, such as biocompatibility since they are required for the submittal of the IDE.
We held another Pre-Sub meeting with the FDA on
In parallel the Company is working with the
The MAB selected eighteen applications for RadioGel™, each of which meet the criteria described above. This large number confirms the wide applicability of the device and defines the path for future business growth. The Company's application establishes a single Indication for Use - treatment of cancerous tissue or solid tumors pathologically associated with locoregional papillary thyroid carcinoma and recurrent papillary thyroid carcinoma. We anticipate that this initial application will facilitate each subsequent application for additional s Indications for Use. After the second indication for use we intend to applied for a broad indication for use, which would target to obtain approval to treat all solid tumors. 25 Financing and Strategy The Company's stock offering under Regulation A+ was qualified by theSecurities and Exchange Commission ("SEC") onJune 3, 2020 . A second Regulation A+ was qualified by theSEC onSeptember 15, 2021 to raise capital for 50,000,000 shares at a price of$0.10 for a maximum of$5,000,000 . The Company amended this and was able to raise$1,200,000 inJuly 2022 at$0.08 per share (15,000,0000 shares) and sold 20,000,000 warrants for$20,000 . An amended Regulation A+ was filed inOctober 2022 to raise the remaining$3,800,000 of the$5,000,000 . InApril 2023 ,$640,000 was raised in the issuance of 8,000,000 common shares, 2,665,000 Series A warrants and 8,000,000 Series B warrants.
The Company's Regulation A+'s raised approximately
For the animal therapy market:
? Fund the effort to communicate the benefits of IsoPet® to the veterinary
community and the pet parents.
? Conduct additional clinical studies to generate more data for the veterinary
community
? Subsidize some IsoPet® therapies, if necessary, to ensure that all viable
candidates are treated.
? Assist a new regional clinic with their license and certification training.
For the human market:
? Enhance the pedigree of the Quality Management System.
? Complete the previously defined pre-clinical testing and additional testing on
an animal model closely aligned with our revised indication for use. Report
the results to the FDA in a pre-submission meeting.
? Use the feedback from that meeting to write the IDE (Investigational Device
Exemption), which is required to initiate clinical trials.
Research and development of the Company's brachytherapy product line has been
funded with proceeds from the sale of equity and debt securities. The Company
may require additional funding of approximately $2 million annually to maintain
current operating activities. Over the next 12 to 24 months, the Company
believes it will cost approximately $9 million to: (1) fund the FDA approval
process to conduct human clinical trials, (2) conduct Phase I, pilot, clinical
trials, (3) activate several regional clinics to administer IsoPet® across the
county, (4) create an independent production center within the current
production site to create a template for future international manufacturing, and
(5) initiate regulatory approval processes outside of the United States . The
proceeds to be raised from the recent qualified Regulation A+ will be used to
continue to fund this development.
The continued deployment of the brachytherapy products and a worldwide
regulatory approval effort will require additional resources and personnel. The
principal variables in the timing and amount of spending for the brachytherapy
products in the next 12 to 24 months will be the FDA's classification of the
Company's brachytherapy products as Class II or Class III devices (or otherwise)
and any requirements for additional studies which may possibly include clinical
studies. Thereafter, the principal variables in the amount of the Company's
spending and its financing requirements would be the timing of any approvals and
the nature of the Company's arrangements with third parties for manufacturing,
sales, distribution and licensing of those products and the products' success in
the U.S. and elsewhere. The Company intends to fund its activities through
strategic transactions such as licensing and partnership agreements or from
proceeds to be raised from the recent qualified Regulation A+.
Following receipt of required regulatory approvals and financing, in the U.S. ,
the Company intends to outsource material aspects of manufacturing,
distribution, sales and marketing. Outside of the U.S. , the Company intends to
pursue licensing arrangements and/or partnerships to facilitate its global
commercialization strategy.
In the longer-term, subject to the Company receiving adequate funding,
regulatory approval for RadioGel™ and other brachytherapy products, and
thereafter being able to successfully commercialize its brachytherapy products,
the Company intends to consider resuming research efforts with respect to other
products and technologies intended to help improve the diagnosis and treatment
of cancer and other illnesses.
Based on the Company's financial history since inception, the Company's
independent registered public accounting firm has expressed substantial doubt as
to the Company's ability to continue as a going concern. The Company has limited
revenue, nominal cash, and has accumulated deficits since inception. If the
Company cannot obtain sufficient additional capital, the Company will be
required to delay the implementation of its business strategy and may not be
able to continue operations.
26
The Company has been impacted from the effects of COVID-19. The Company's
headquarters are in
As of
There is no guarantee that the Company will be able to raise additional funds or to do so at an advantageous price.
Product Features
The Company's RadioGel™ device has the following product features:
? Beta particles only travel a short distance so the device can deliver high
radiation to the tumor with minimal dose to the nearby normal tissues. In
medical terms
? Benefitting from the short penetration distance, the patient can go home
immediately with no fear of exposure to family members, and there is a greatly
reduced radiation risk to the doctor. A simple plastic tube around the
syringe, gloves and safety glasses are all that is required. Other gamma
emitting products require much more protection;
? A 2.7-day half-life means that only 5% of the radiation remains after ten
days. This is in contrast to the industry-standard gamma irradiation product,
which has a half-life of 17 days;
? The short half-life also means that any medical waste can be stored for thirty
days then disposed as normal hospital waste;
? RadioGel™ can be administered with small diameter needles (27-gauge) so there
is minimal damage to the normal tissue. This is in contrast to the injection
of metal seeds, which does considerable damage; and
? After about 120 days the gel resorbs by a normal biological cycle, called the
Krebs Cycle. The only remaining evidence of the treatment are phosphate
particles so small in diameter that it requires a high-resolution microscope
to find them. This is in contrast to permanent presence of metal seeds.
Steps from Production to Therapy
Device Production
During the next two years, the Company intends to outsource material aspects of
manufacturing and distribution. As future product volume increases, the Company
will reassess its make-buy decision on manufacturing and will analyze the
cost/benefit of a centrally located facility.
Production of the Hydrogel
RadioGel™ is manufactured with a proprietary process under ventilated sterile
hood by following strict Good Laboratory Practices ("GLP") procedures. It is
made in large batches that are frozen for up to three months. When the product
is ready to ship, a small quantity of the gel is dissolved in a sterile saline
solution. It is then passed through an ultra-fine filter to ensure sterility.
27
Production of the Yttrium-90 Phosphate Particles
TheY-90 particles are produced with simple ingredients via a proprietary process, again following strict GLP procedures. They are then mixed into a phosphate-buffered saline solution. They can be produced in large batches for several shipments. The number of particles per shipment is determined by the dose prescribed by the doctor.
Pre-Mixing - RTU, Ready to Use
Vivos Inc now pre-mixes the particle solution and the hydrogel and places the RTU IsoPet in standard size vials. This innovation is cost effective and reduces the probability of any accidental spills or biological contamination at the therapy sites. It also simplified the certification training for new regional clinics. Shipment
The vials are shipped via FedEx or
At the User
The quantities and activities are in the information on the product label.
The specific injection technique depends on the Indication for Use. For small tumors, one centimeter in diameter or less, the cancer is treated with a single injection. For larger tumors, the cancer is treated with a series of small injections from the same syringe or multiple syringes. Principal Markets
The Company is currently pursuing two synergistic business sectors, medical and veterinary, each of which are summarized below.
Medical Sector
RadioGel™ is currently fully developed, requiring only FDA approval before commercialization.
Building on theFDA's ruling of RadioGel™ as a device, the Company incorporated the FDA suggestions and has invested in the pre-clinical testing required for IDE submittal. This included two years of effort on biocompatibility testing. The last remaining animal test has been designed and has begun the initial scoping phase. RadioGel™ is currently fully developed, requiring only FDA approval before commercialization. The Company has been seeking FDA approval of RadioGel™ for almost five years. Recent progress has been delayed due to a lack of adequate funding. The principal issue preventing approval is that the Company attempted to obtain regulatory approval for a broad range of Indications for Use, including all non-resectable cancers, without sufficient supporting data. Veterinary Sector
There are approximately 150 million pet dogs and cats inthe United States . Nearly one-half of dogs and one-third of cats are diagnosed with cancer at some point in their lifetime. The Veterinary Oncology & Hematology Center inNorwalk, Connecticut , reports that cancer is the number one natural cause of death in older cats and dogs, accounting for nearly 50 percent of pet deaths each year.The American Veterinary Medical Association reports that half of the dogs ten years or older will die because of cancer. TheNational Cancer Institute reports that about six million dogs are diagnosed with cancer each year, translating to more than 16,000 a day. The Company's IsoPet® operating division focuses on the veterinary oncology market. Dr.Alice Villalobos , a founding member of theVeterinary Cancer Society and the Chair of ourVeterinary Medicine Advisory Board , has been providing guidance to management regarding this market.The Veterinary Medicine Advisory Board gives us recommendations regarding the overall strategy for our animal business sector. Specially, they recommended the university veterinary hospitals for demonstration therapies, the specific cancers to be treated, and have provided business contact information to the private clinics. 28
Development of the product and application techniques and animal testing is allowed under FDA regulation. Commercial sales of RadioGelTM for animals requires confirmation by theFDA Center for Veterinary Medicine ("CVM"). InJanuary 2018 , theCenter for Veterinary Medicine Product Classification Group , the entity within the CVM that is responsible for determining the classification of a product, ruled that RadioGelTM should be classified as a device for animal therapy of feline sarcomas and canine soft tissue sarcomas. Additionally, after a legal review, the Company believes that the device classification obtained from theFDA Center for Veterinary Medicine is not limited to canine and feline sarcomas, but rather may be extended to a much broader population of veterinary cancers, including all or most all solid tumors in animals. We expect the result of such classification and label approval will be that no additional regulatory approvals are necessary for the use of RadioGelTM for the treatment of solid tumors in animals. The FDA does not have premarket authority over devices with a veterinary classification, and the manufacturers are responsible for assuring that the product is safe, effective, properly labeled, and otherwise in compliance with all applicable laws and regulations. The Company currently intends to utilize university veterinary hospitals for therapy development, given that veterinary hospitals offer superior and plentiful veterinarians and students, a large number of animal patients, radioactive material handling licenses, and are respected by private veterinary centers and hospitals. Competitors
The Company competes in a market characterized by technological innovation, extensive research efforts, and significant competition.
The pharmaceutical and biotechnology industries are intensely competitive and subject to rapid and significant technological changes. A number of companies are pursuing the development of pharmaceuticals and products that target the same diseases and conditions that our products target. We cannot predict with accuracy the timing or impact of the introduction of potentially competitive products or their possible effect on our sales. Certain potentially competitive products to our products may be in various stages of development. Also, there may be many ongoing studies with currently marketed products and other developmental products, which may yield new data that could adversely impact the use of our products in their current and potential future Indications for Use. The introduction of competitive products could significantly reduce our sales, which, in turn would adversely impact our financial and operating results. There are a wide variety of cancer treatments approved and marketed in theU.S. and globally. General categories of treatment include surgery, chemotherapy, radiation therapy and immunotherapy. These products have a diverse set of success rates and side effects. The Company's products, including RadioGel™, fall into the brachytherapy treatment category. There are a number of brachytherapy devices currently marketed in theU.S. and globally. The traditional iodine-125 (I-125 ) and palladium-103 (Pd-103) technologies for brachytherapy are well entrenched with powerful market players controlling the market. The industry-standardI-125 -based therapy was developed by Oncura, which is a unit of General Electric Company. Additionally, C.R. Bard, a major industry player competes in theI-125 brachytherapy marketplace. These market competitors are also involved in the distribution of Pd-103 based products. Cs-131 brachytherapy products are sold by IsoRay. SeveralY-90 therapies have been FDA approved including SIR-Spheres by Sirtex, TheraSphere byBiocompatibles UK and Zevalin by Spectrum Pharmaceuticals. 29 Raw Materials The Company currently subcontracts the manufacturing of RadioGelTM at IsoTherapeutics. Prior to 2021, Eckert and Ziegler was the only supplier ofY-90 inthe United States , and was the sole supplier of theY-90 used by IsoTherapeutics to manufacture the Company's RadioGel™. The Company obtains supplies, hardware, handling equipment and packaging from several different
U.S. suppliers. During 2021, the Company engagedAkina, Inc. as an alternate supplier of its hydrogel polymer component. We have now expanded to include SciPoly as another alternate polymer supplier.
In the future we will be looking to qualify an alternative particle supplier.
Customers The Company anticipates that potential customers for our potential brachytherapy products likely would include those institutions and individuals that currently purchase brachytherapy products or other oncology treatment products. Government Regulation The Company's present and future intended activities in the development, manufacturing and sale of cancer therapy products, including RadioGel™, are subject to extensive laws, regulations, regulatory approvals and guidelines. Withinthe United States , the Company's therapeutic radiological devices must comply with theU.S. Federal Food, Drug and Cosmetic Act, which is enforced by FDA. The Company is also required to adhere to applicable FDA Quality System Regulations, also known as the Good Manufacturing Practices, which include extensive record keeping and periodic inspections of manufacturing facilities. Inthe United States , the FDA regulates, among other things, new product clearances and approvals to establish the safety and efficacy of these products. We are also subject to other federal and state laws and regulations, including the Occupational Safety and Health Act and the Environmental Protection Act. The Federal Food, Drug, and Cosmetic Act and other federal statutes and regulations govern or influence the research, testing, manufacture, safety, labeling, storage, record keeping, approval, distribution, use, reporting, advertising and promotion of such products. Noncompliance with applicable requirements can result in civil penalties, recall, injunction or seizure of products, refusal of the government to approve or clear product approval applications, disqualification from sponsoring or conducting clinical investigations, preventing us from entering into government supply contracts, withdrawal of previously approved applications, and criminal prosecution. Inthe United States , medical devices are classified into three different categories over which the FDA applies increasing levels of regulation: Class I, Class II, and Class III. Most Class I devices are exempt from premarket notification 510(k); most Class II devices require premarket notification 510(k); and most Class III devices require premarket approval. RadioGel™ is currently classified as a Class III device. Approval of new Class III medical devices is a lengthy procedure and can take a number of years and require the expenditure of significant resources. There is a shorter FDA review and clearance process for Class II medical devices, the premarket notification or 510(k) process, whereby a company can market certain Class II medical devices that can be shown to be substantially equivalent to other legally marketed devices. The Company intends to apply for a de novo with an anticipated expenditure of$10.0 million over the next four years. This expenditure estimate includes anticipated costs associated with in vitro and in vivo pre-clinical testing, our application for an Investigational Device Exemption, Phase I and Phase II clinical trials and our application for a de novo. As a registered medical device manufacturer with the FDA, we are subject to inspection to ensure compliance withFDA's current Good Manufacturing Practices, or cGMP. These regulations require that we and any of our contract manufacturers design, manufacture and service products, and maintain documents in a prescribed manner with respect to manufacturing, testing, distribution, storage, design control, and service activities. Modifications or enhancements that could significantly affect the safety or effectiveness of a device or that constitute a major change to the intended use of the device require a new 510(k) premarket notification for any significant product modification. 30 The Medical Device Reporting regulation requires that we provide information to the FDA on deaths or serious injuries alleged to be associated with the use of our devices, as well as product malfunctions that are likely to cause or contribute to death or serious injury if the malfunction were to recur. Labeling and promotional activities are regulated by the FDA and, in some circumstances, by theFederal Trade Commission . As a medical device manufacturer, we are also subject to laws and regulations administered by governmental entities at the federal, state and local levels. For example, our facility is licensed as a medical device manufacturing facility in theState of Washington and is subject to periodic state regulatory inspections. Our customers are also subject to a wide variety of laws and regulations that could affect the nature and scope of their relationships with us. Inthe United States , as a manufacturer of medical devices and devices utilizing radioactive byproduct material, we are subject to extensive regulation by not only federal governmental authorities, such as the FDA and FAA, but also by state and local governmental authorities, such as theWashington State Department of Health , to ensure such devices are safe and effective. InWashington State , theDepartment of Health , by agreement with the federalNuclear Regulatory Commission ("NRC"), regulates the possession, use, and disposal of radioactive byproduct material as well as the manufacture of radioactive sealed sources to ensure compliance with state and federal laws and regulations. RadioGel™ constitutes both medical devices and radioactive sealed sources and are subject to these regulations. Moreover, our use, management, and disposal of certain radioactive substances and wastes are subject to regulation by several federal and state agencies depending on the nature of the substance or waste material. We believe that we are in compliance with all federal and state regulations for this purpose.
Environmental Regulation Our business does not require us to comply with any extraordinary environmental regulations. Our RadioGel™ product is manufactured in an independently owned and operated facility. Any environmental effects or contamination event that could result would be from the shipping company during shipment and misuse by the treatment facility upon arrival. Human Capital
As of
Results of Operations
Comparison of the Three Months Ended
The following table sets forth information from our statements of operations for
the three months ended
Three Months Ended Three Months Ended
March 31, 2023 March 31, 2022
Revenues $ 6,000 $ 13,000
Cost of goods sold (7,536 ) (3,000 )
Gross (loss) profit (1,536 ) 10,000
Operating expenses (246,782 ) (757,493 )
Operating loss (248,318 ) (747,493 )
Non-operating income (expense) - 47,588
Net loss $ (248,318 ) $ (699,905 )
31
Revenues and Cost of Goods Sold
Revenue was$6,000 and$13,000 for the three months endedMarch 31, 2023 and 2022, respectively. All revenue recognized in the three months endedMarch 31, 2023 and 2022 relate to consulting income with respect to the IsoPet® therapies. Management does not anticipate that the Company will generate sufficient revenue to sustain operations until such time as the Company secures multiple revenue-generating arrangements with respect to RadioGel™ and/or any of our other brachytherapy technologies. Operating Expenses
Operating expenses for the three months ended
Three months ended Three months ended
March 31, 2023 March 31, 2022
Professional fees, including stock-based compensation $ 84,216 $ 577,037
Payroll expenses 72,508 70,787
Research and development 46,375 72,569
General and administrative expenses 43,683 37,100
Total operating expenses $ 246,782 $ 757,493
Operating expenses for the three months ended March 31, 2023 and 2022 was
$246,782 and $757,493 , respectively. The decrease in operating expenses from
2022 to 2023 can be attributed to the decrease in professional fees ($577,037
for the three months ended March 31, 2022 versus $84,216 for the three months
ended March 31, 2023 ) related to the patent and trademark protection the Company
undertook in mid 2022 offset by the reduction in stock based compensation
related to the RSUs in 2022; the increase in general and administrative expense
($37,100 for the three months ended March 31, 2022 versus $43,683 for the three
months ended March 31, 2023 ); the decrease in research and development ($72,569
for the three months ended March 31, 2022 versus $46,375 for the three months
ended March 31, 2023 ) as the Company ramped up the development of their products
in 2022 to include studies that are required to continue to have their products
accepted by the FDA, and an increase in payroll expenses ($70,787 for the three
months ended March 31, 2022 versus $72,508 for the three months ended March 31,
2023 ) related to the CEOs employment contract and bonus.
Non-Operating Income (Expense)
Non-operating income (expense) for the three months ended
Three months ended Three months ended
March 31, 2023 March 31, 2022
Gain on debt extinguishment $ - $ 47,588
Non-operating income (expense) $ - $ 47,588
Non-operating income (expense) for the three months ended
32 Net Loss
Our net loss for the three months ended
Liquidity and Capital Resources
AtMarch 31, 2023 , the Company had working capital of$1,412,726 , as compared to working capital of$1,661,044 atDecember 31, 2022 . During the three months endedMarch 31, 2023 and 2022, the Company experienced negative cash flow from operations of$293,625 and$384,298 and had no cash from investing or financing activities in either period. As ofMarch 31, 2023 , the Company did not have any commitments for capital expenditures. Cash used in operating activities decreased from$384,298 for the three months endedMarch 31, 2022 to$293,625 for the three months endedMarch 31, 2023 . Cash used in operating activities was primarily a result of the Company's non-cash items, such as loss from operations, stock based compensation, loss conversion of debt as well as forgiveness of debt as well as the changes in prepaid expenses and accounts payable in 2022 compared to only having net changes from current assets and liabilities in 2023. The Company has generated material operating losses since inception. The Company had a net loss of$248,318 for the three months endedMarch 31, 2023 , and a net loss of$699,905 for the three months endedMarch 31, 2022 . The Company expects to continue to experience net operating losses for the foreseeable future. Historically, the Company has relied upon investor funds to maintain its operations and develop the Company's business. The Company anticipates raising additional capital within the next twelve months for working capital as well as business expansion, although the Company can provide no assurance that additional capital will be available on terms acceptable to the Company, if at all. If the Company is unable to obtain additional financing to meet its working capital requirements, it may have to curtail its business or cease all operations. The Company requires funding of at least$5 million per year to maintain current operating activities. Over the next 24 months, the Company believes it will cost approximately$9 million to fund: (1) fund the FDA approval process to conduct human clinical trials, (2) conduct Phase I, pilot, clinical trials, (3) activate several regional clinics to administer IsoPet® across the county, (4) create an independent production center within the current production site to create a template for future international manufacturing, and (5) initiate regulatory approval processes outside ofthe United States . InApril 2023 ,$640,000 was raised in the issuance of 8,000,000 common shares, 2,665,000 Series A warrants and 8,000,000 Series B warrants. The principal variables in the timing and amount of spending for the brachytherapy products in the next 12 to 24 months will be theFDA's classification of the Company's brachytherapy products as Class II or Class III devices (or otherwise) and any requirements for additional studies, which may possibly include clinical studies. Thereafter, the principal variables in the amount of the Company's spending and its financing requirements would be the timing of any approvals and the nature of the Company's arrangements with third parties for manufacturing, sales, distribution and licensing of those products and the products' success in theU.S. and elsewhere. The Company intends to fund its activities through strategic transactions such as licensing and partnership agreements or additional capital raises. Although the Company is seeking to raise additional capital and has engaged in numerous discussions with investment bankers and investors, to date, the Company has not received firm commitments for the required funding. Based upon its discussions, the Company anticipates that if the Company is able to obtain the funding required to retire outstanding debt, pay past due payables and maintain its current operating activities, that the terms associated with such funding will result in material dilution to existing shareholders. Recent geopolitical events, including the inherent instability and volatility in global capital markets, as well as the lack of liquidity in the capital markets, could impact the Company's ability to obtain financing and its ability to execute its business plan. Our Chief Executive Officer currently works from his home office in virtual communication with key personnel.Cadwell Laboratories , which is controlled byCarl Cadwell , a director of the Company, provides office space to management on an as-needed basis until such time as the Company leases permanent office space. 33
Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted inthe United States of America requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. During the period endedMarch 31, 2023 , we believe there have been no significant changes to the items disclosed as significant accounting policies in management's notes to the financial statements in our annual report on Form 10-K for the year endedDecember 31, 2022 , filed onMarch 1, 2023 .
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on the Company's financial condition, revenues, results of operations, liquidity or capital expenditures.
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