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What changed in FEMASYS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FEMASYS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+467 added−473 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-30)

Top changes in FEMASYS INC's 2023 10-K

467 paragraphs added · 473 removed · 362 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

128 edited+43 added−33 removed192 unchanged
Biggest changeHealthcare Fraud Statute The federal Health Insurance Portability and Accountability Act (HIPAA) and its implementing regulations created federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items or services. 22 Table of Contents Federal Physician Payments Sunshine Act The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually with certain exceptions to CMS information related to payments or other transfers of value made to a physician or teaching hospital, or to a third party at the request of a physician or teaching hospital, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
Biggest changeHealthcare Fraud Statute The federal Health Insurance Portability and Accountability Act (HIPAA) and its implementing regulations created federal criminal statutes that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry, in connection with the delivery of or payment for healthcare benefits, items or services.
FDA viewed these unintended pregnancies as a safety concern and, as a result, in February 2019 we paused the pivotal clinical trial for FemBloc (although subjects are still followed for safety through 5 years).
The FDA viewed these unintended pregnancies as a safety concern and, as a result, in February 2019 we paused the pivotal clinical trial for FemBloc (although subjects are still followed for safety through 5 years).
Address unmet clinical needs in multiple large markets for women. Our initial focus is on critical areas of unmet need in reproductive health, which is a growing challenge for women that is not optimally addressed with existing therapies. Two ends of the spectrum (permanent birth control and infertility with artificial insemination) represent large, growing total addressable market opportunities.
Address unmet clinical needs in multiple large markets for women. Our initial focus is on critical areas of unmet need in reproductive health, which is a growing challenge for women that is not optimally addressed with existing therapies. Two ends of the spectrum (infertility with artificial insemination and permanent birth control) represent large, growing total addressable market opportunities.
We expect to seek two category I codes for the procedures and according to AMA, the CPT requirements for Category I include documenting clinical efficacy in up to five peer-reviewed publications with minimum a of one with U.S. patient populations and two with different patient populations.
We expect to seek two category I codes for the procedures and according to AMA, the CPT requirements for Category I include documenting clinical efficacy in up to five peer-reviewed publications with a minimum of one with U.S. patient populations and two with different patient populations.
A Class III device cannot be marketed in the United States unless the FDA approves the device after submission of a PMA. However, there are some Class III pre-amendment devices for which FDA has not yet called for a PMA. These devices require a PMA only after FDA publishes a regulation calling for PMA submissions.
A Class III device cannot be marketed in the United States unless the FDA approves the device after submission of a PMA. However, there are some Class III pre-amendment devices for which the FDA has not yet called for a PMA. These devices require a PMA only after the FDA publishes a regulation calling for PMA submissions.
FDA also recently established the Safety and Performance Based Pathway that is an expansion of the concept of the abbreviated 510(k) pathway for certain, well understood device types, and provides the option to use FDA-identified performance criteria to demonstrate that a device is as safe and effective as a predicate device.
The FDA also recently established the Safety and Performance Based Pathway that is an expansion of the concept of the abbreviated 510(k) pathway for certain, well understood device types, and provides the option to use FDA-identified performance criteria to demonstrate that a device is as safe and effective as a predicate device.
FDA has issued several guidance documents addressing the de novo classification process and the contents of de novo classification requests but FDA has not yet issued regulations governing the de novo classification process. On December 7, 2018, the FDA published a proposed rule to establish regulations for the de novo classification process.
The FDA has issued several guidance documents addressing the de novo classification process and the contents of de novo classification requests, but the FDA has not yet issued regulations governing the de novo classification process. On December 7, 2018, the FDA published a proposed rule to establish regulations for the de novo classification process.
Under the Food and Drug Administration Reauthorization Act (FDARA), Congress implemented user fees for de novo classification requests and FDA committed to performance goals for their review.
Under the Food and Drug Administration Reauthorization Act (FDARA), Congress implemented user fees for de novo classification requests and the FDA committed to performance goals for their review.
FDA has a performance goal of issuing a decision on original PMAs that do not require input from an advisory committee within 180 FDA Days, which excludes days during which an agency request for additional information is pending with the applicant.
The FDA has a performance goal of issuing a decision on original PMAs that do not require input from an advisory committee within 180 FDA Days, which excludes days during which an agency request for additional information is pending with the applicant.
The agency also may inspect one or more clinical sites to assure compliance with FDA’s regulations. FDA allows applicants to submit discrete sections (modules) of the PMA to FDA for review soon after completing the testing and analysis.
The agency also may inspect one or more clinical sites to assure compliance with the FDA’s regulations. The FDA allows applicants to submit discrete sections (modules) of the PMA to the FDA for review soon after completing the testing and analysis.
FDA intends the modular review approach to provide a mechanism by which applicants may submit preclinical data and manufacturing information for review while still collecting, compiling, and analyzing the clinical data. Therefore, a modular PMA is a compilation of sections or “modules” submitted at different times that together become a complete application.
The FDA intends the modular review approach to provide a mechanism by which applicants may submit preclinical data and manufacturing information for review while still collecting, compiling, and analyzing the clinical data. Therefore, a modular PMA is a compilation of sections or “modules” submitted at different times that together become a complete application.
Additionally, the modular approach allows the applicant to potentially resolve any deficiencies noted by FDA earlier in the review process than would occur with a traditional PMA application.
Additionally, the modular approach allows the applicant to potentially resolve any deficiencies noted by the FDA earlier in the review process than would occur with a traditional PMA application.
If FDA issues a PMA approval, the approval may contain post approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical trial that supported a PMA or requirements to conduct additional clinical trials post-approval.
If the FDA issues a PMA approval, the approval may contain post approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical trial that supported a PMA or requirements to conduct additional clinical trials post-approval.
We make available, free of charge, through our website: our annual reports on Form 10-K; quarterly reports Form 10-Q; current reports on Form 8-K; Forms 3, 4 and 5 filed on behalf of directors and executive officers; and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
We make available, free of charge, through our website: our annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; Forms 3, 4 and 5 filed on behalf of directors and executive officers; and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
Our permanent birth control solution combines FemBloc with an ultrasound in-office diagnostic test, which uses saline and air contrast to permit the same physician to evaluate the fallopian tubes in-office to confirm the success of FemBloc approximately three months after the FemBloc procedure, rather than requiring the patient to visit another provider for a radiology-based exam, exposing the patient unnecessarily to radiation and the use of x-ray dye.
Our permanent birth control solution combines FemBloc with an ultrasound in-office diagnostic test, which uses saline and air contrast to permit the same physician to evaluate the fallopian tubes in-office to confirm the success of FemBloc approximately three months after the final FemBloc procedure, rather than requiring the patient to visit another provider for a radiology-based exam, exposing the patient unnecessarily to radiation and the use of x-ray dye.
It is estimated in the U.S. alone, approximately 800,000 women elect surgical tubal ligation (Frattarelli et al, 2007) and 500,000 men elect vasectomy (Ostrowski, et al, 2018) annually for permanent birth control. There are another 12 million women who utilize a non-permanent birth control option, many of whom we believe may prefer a permanent option if it were nonsurgical.
It is estimated in the U.S. alone, approximately 800,000 women elect surgical tubal ligation (Frattarelli et al, 2007) and 500,000 men elect vasectomy (Ostrowski, et al, 2018) annually for permanent birth control. There are another 12 million women who utilize a non-permanent birth control option, many of whom we believe may prefer a permanent option if it were non-surgical.
We ultimately plan to use our gynecologist-focused sales force for FemBloc, if approved, to introduce those doctors to FemaSeed and broaden our sales force reach for our infertility treatment beyond our initial focus on reproductive endocrinologists. If approved, we expect to recruit, hire and train sales representatives for our direct sales force in the United States for FemBloc.
We ultimately plan to use our gynecologist-focused sales force for FemBloc, if approved, to introduce those doctors to FemaSeed and broaden our sales force reach for our infertility treatment beyond our initial focus on reproductive endocrinologists. If approved, we expect to recruit, hire and train additional sales representatives for our direct sales force in the United States for FemBloc.
With respect to our tissue sampling product and product candidate, there are other procedures used in women’s health to evaluate the cervical canal, such as the Pap test, HPV test and colposcopy, which are well established and pervasive. Companies such as Dysis Medical and Guided Therapeutics are also developing cervical tissue sampling product candidates.
With respect to our tissue sampling product, there are other procedures used in women’s health to evaluate the cervical canal, such as the Pap test, HPV test and colposcopy, which are well established and pervasive. Companies such as Dysis Medical and Guided Therapeutics are also developing cervical tissue sampling product candidates.
The FDA can also impose sales, marketing or other restrictions on devices in order to assure that they are used in a safe and effective manner. 17 Table of Contents 510(k) Clearance Pathway When a 510(k) clearance is required, we must submit a pre-market notification to the FDA demonstrating that our proposed device is substantially equivalent to a predicate device, which may be a previously cleared and legally marketed 510(k) device or a device that was in commercial distribution before May 28, 1976, or a device that that was de novo classified under section 513(f)(2) of the FDCA.
The FDA can also impose sales, marketing or other restrictions on devices in order to assure that they are used in a safe and effective manner. 19 Table of Contents 510(k) Clearance Pathway When a 510(k) clearance is required, we must submit a pre-market notification to the FDA demonstrating that our proposed device is substantially equivalent to a predicate device, which may be a previously cleared and legally marketed 510(k) device or a device that was in commercial distribution before May 28, 1976, or a device that that was de novo classified under section 513(f)(2) of the FDCA.
We have studied FemBloc in three clinical trials (a pilot safety study, a pivotal trial, and a validation study) pursuant to an FDA approved investigational device exemption (IDE) for each study with evaluation of safety in a total of 228 subjects.
We have studied FemBloc in three prior clinical trials (a pilot safety study, a pivotal trial, and a validation study) pursuant to an FDA approved investigational device exemption (IDE) for each study with evaluation of safety in a total of 228 subjects.
There have been no serious safety events reported to date in any of the subjects and over 90% of the events reported that were classified as related to the device, procedure or both, were on the day of the procedure or within seven days after the procedure.
There have been no serious safety events reported to date in any of the subjects and over 90% of the events reported that were classified as related to the device, procedure or both, were on the day of the FemBloc procedure or within seven days after the procedure.
However, there are over an estimated 12 million women who remain on a nonpermanent birth control option long-term (National Center for Health Statistics, 2015), which we believe is due to there being only a surgical permanent option available to women. In addition, 500,000 men undergo a vasectomy procedure every year (Ostrowski et al, 2018).
However, there are over an estimated 12 million women who remain on a non-permanent birth control option long-term (National Center for Health Statistics, 2015), which we believe is due to there being only a surgical permanent option available to women. In addition, 500,000 men undergo a vasectomy procedure every year (Ostrowski et al, 2018).
The ACA contains a number of significant provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which will impact existing government healthcare programs and will result in the development of new programs. 23 Table of Contents Some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject to judicial and Congressional challenges.
The ACA contains a number of significant provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which will impact existing government healthcare programs and will result in the development of new programs. 26 Table of Contents Some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject to judicial and Congressional challenges.
Further, recently, under the former Trump administration, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed, and enacted federal and state legislation designed to bring transparency to product pricing and reduce the cost of products and services under government healthcare programs.
Under the former Trump administration, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed, and enacted federal and state legislation designed to bring transparency to product pricing and reduce the cost of products and services under government healthcare programs.
Failure by us or by our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or state authorities, which may include any of the following sanctions: • warning or untitled letters, fines, injunctions, consent decrees and civil penalties; customer notifications, voluntary or mandatory recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; 20 Table of Contents • delay in processing submissions or applications for new products or modifications to existing products; • withdrawing PMA approvals that have already been granted; and • criminal prosecution.
Failure by us or by our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or state authorities, which may include any of the following sanctions: • warning or untitled letters, fines, injunctions, consent decrees and civil penalties; customer notifications, voluntary or mandatory recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • delay in processing submissions or applications for new products or modifications to existing products; • withdrawing PMA approvals that have already been granted; and • criminal prosecution.
If our current contract sterilizer(s) cannot continue to perform as agreed, we may be required to identify and contract with another third-party contract sterilizer which may incur added costs and delays in identifying and qualifying any such replacement. Competition The markets in which we compete are highly competitive and are characterized by rapid and significant technological change.
If our current contract sterilizer(s) cannot continue to perform as agreed, we may be required to identify and contract with another third-party contract sterilizer which may incur added costs and delays in identifying and qualifying any such replacement. Competition The markets in which we compete are highly competitive and in limited areas are characterized by rapid and significant technological change.
Subjects are being followed for five years for safety, and for the initial 49 subject pilot study, four years of follow-up have been completed.
Subjects are being followed for five years for safety, and for the initial 49 subject pilot study, five years of follow-up have been completed.
Through a specialized and dedicated direct sales organization, we plan to target the approximately 1,300 reproductive endocrinologists at 450 practices who are trained and have experience performing infertility procedures. Specifically, we intend to initially target the approximately 50 practices that are currently customers purchasing the FemVue device.
Through a specialized and dedicated direct sales organization, we plan to target the approximately 1,700 reproductive endocrinologists at 450 practices who are trained and have experience performing infertility procedures. Specifically, we intend to initially target the approximately 50 practices that are currently customers purchasing the FemVue device.
Outside the United States, reimbursement levels vary significantly by country and by region, particularly based on whether the country or region at issue maintains a single-payor system; patient direct pay is also an option. Annual healthcare budgets generally determine the number of intrauterine inseminations that will be paid for by the payor in these single-payor system countries and regions.
Outside the United States, reimbursement levels vary significantly by country and by region, particularly based on whether the country or region at issue maintains a single-payor system; patient direct pay is also an option. Annual healthcare budgets generally determine the number of intrauterine insemination treatments that will be paid for by the payor in these single-payor system countries and regions.
Facilities We produce all of our products and product candidates in-house at our facility in Suwanee, Georgia which, together with our research and development, controlled environment room and office space, currently totals approximately 45,000 square feet.
Facilities We produce all of our products and product candidates in-house at our facility in Suwanee, Georgia which, together with our research and development, controlled environment room and office space, currently totals approximately 41,000 square feet.
If approved, we expect FemBloc to be the first and only non-surgical permanent birth control option, using a minimally invasive delivery system that locally instills a degradable biopolymer, which is designed to cause the fallopian tubes to close using the patient’s own scar tissue, resulting in permanent birth control for the patient without a permanent implant.
If approved, we expect FemBloc to be the first and only non-surgical permanent birth control option, using a minimally invasive delivery system that locally instills a degradable biopolymer, which is designed to cause the fallopian tubes to close using the patient’s own tissue in-growth, resulting in permanent birth control (sterilization) for the patient without a permanent implant.
The following table summarizes our current products and product candidate pipeline: 6 Table of Contents Our Team We are a woman-founded, woman-led biomedical company, with a team of experienced biotechnology and medical device developers.
The following table summarizes our current products and product candidate pipeline: 7 Table of Contents Our Team We are a woman-founded, woman-led biomedical company, with a team of experienced biotechnology and medical device developers.
The SEC maintains a website that contains annual, quarterly and current repots, proxy statements and other information that issuers (including us) file electronically with the SEC. The SEC’s website is www.sec.gov . Our website is www.femasys.com .
The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including us) file electronically with the SEC. The SEC’s website is www.sec.gov . Our website is www.femasys.com .
This is the same intended location of delivery for the FemaSeed product. There were no serious adverse events reported. We began commercializing the FemCath product in December 2022. Post-Market Information FemVue Saline - Air device, a contrast-generating product, is authorized for marketing in the United States, Canada and Japan.
This is the same intended location of delivery for the FemaSeed product. There were no serious adverse events reported. We began limited market release of the FemCath product in December 2022. Post-Market Information FemVue Saline - Air device, a contrast-generating product, is authorized for marketing in the United States, Canada and Japan.
Even if a trial is completed, the results of clinical testing may not demonstrate the safety and effectiveness of the device, may be equivocal or may otherwise not be sufficient to obtain approval or clearance of the product. 19 Table of Contents Sponsors of certain clinical trials of devices are required to register with clinicaltrials.gov, a public database of clinical trial information.
Even if a trial is completed, the results of clinical testing may not demonstrate the safety and effectiveness of the device, may be equivocal or may otherwise not be sufficient to obtain approval or clearance of the product. Sponsors of certain clinical trials of devices are required to register with clinicaltrials.gov, a public database of clinical trial information.
The market for assisted reproduction is large and growing, and we believe the market in the United States alone could exceed $2 billion with a safe and effective novel first-line approach as women move to seek care for the treatment of infertility. 9 Table of Contents Clinical Development Overview of Clinical Programs .
The market for assisted reproduction is large and growing, and we believe the market in the United States alone could exceed $2 billion with a safe and effective novel first-line approach as women move to seek care for the treatment of infertility. Clinical Development Overview of Clinical Programs .
The utility patent family includes a pending patent application, which if granted, could result in a patent expiring in 2033. Our FemEMB patent portfolio includes one patent family. The one patent family includes granted utility patents providing protection until at least 2033.
The one patent family includes granted utility patents providing protection until at least 2033. The utility patent family includes a pending patent application, which if granted, could result in a patent expiring in 2033. Our biopolymer patent portfolio includes one patent family.
Our Permanent Birth Control Solution – FemBloc and ultrasound confirmation Preclinical Studies We completed two animal studies to support efficacy of the occlusion, or blockage, created by the biopolymer tissue adhesive, a degradable blend of cyanide derivatives of acrylates, we use in our FemBloc system.
Our Permanent Birth Control Solution – FemBloc and ultrasound confirmation 11 Table of Contents Preclinical Studies We completed two animal studies to support efficacy of the occlusion, or blockage, created by the biopolymer tissue adhesive, a degradable blend of cyanide derivatives of acrylates, we use in our FemBloc system.
Our permanent birth control solution in development includes our proprietary FemBloc system, which features dual intrauterine directional delivery targeting both fallopian tubes simultaneously with a degradable biopolymer followed by an ultrasound confirmation test to confirm procedure success.
Our permanent birth control solution in late-stage clinical development includes our proprietary FemBloc system, which features dual intrauterine directional delivery targeting both fallopian tubes simultaneously with a degradable biopolymer followed by an ultrasound confirmation test to confirm procedure success.
Reimbursement In the United States, we expect to derive nearly all of our revenue initially from the sale of our FemaSeed product to fertility practices, which typically bill the patient directly or for those that have insurance coverage, various third-party payors, including private insurance companies, health maintenance organizations and other healthcare-related organizations.
Reimbursement In the United States, we expect to derive nearly all of our revenue initially from the sale of our infertility product portfolio, including the FemaSeed and FemVue products to fertility practices, which typically bill the patient directly or for those that have insurance coverage, various third-party payors, including private insurance companies, health maintenance organizations and other healthcare-related organizations.
As part of the second clinical trial, we sponsored subjects in a control arm for surgical tubal ligation of 105 subjects for future comparison of safety events only. Subjects are being followed for five years for safety, with the first subjects enrolled approaching five-year follow-up.
As part of the second clinical trial, we sponsored subjects in a control arm for surgical tubal ligation of 105 subjects for future comparison of safety events only. Subjects are being followed for five years for safety, with the first subjects enrolled have completed five-year follow-up.
Our already commercially available FemVue device will be marketed along with the FemaSeed product to the same target physician, the reproductive endocrinologist. We intend to focus the significant majority of our sales and marketing efforts in the United States since we believe that initially nearly 90% of the potential annual global FemaSeed/FemVue sales would be generated in this market.
Our already commercially available FemVue device will be marketed along with the FemaSeed product to the same target physician, the reproductive endocrinologist. We intend to focus the significant majority of our sales and marketing efforts in North America since we believe that initially nearly 90% of the potential annual global FemaSeed/FemVue sales would be generated in this market.
We are a woman-founded and led company with an expansive, internally created intellectual property portfolio with over 150 patents globally, in-house chemistry, manufacturing, and controls (CMC) and device manufacturing capabilities and proven ability to develop and commercialize products.
We are a woman-founded and led company with an expansive, internally created intellectual property portfolio with 180 patents globally, in-house chemistry, manufacturing, and controls (CMC) and device manufacturing capabilities and proven ability to develop and commercialize products.
Our suite of products and product candidates addresses what we believe are multi-billion dollar global market segments in which there has been little advancement for many years, helping women avoid pharmaceutical solutions, implants and surgery that can be expensive and expose women to harm.
Our suite of products and product candidates addresses what we believe are multi-billion dollar global market segments in which there has been little advancement for many years, helping women avoid pharmaceutical solutions, implants and surgery that can be expensive and expose women to harm. FemaSeed – Our Artificial Insemination Solution .
We plan to submit results from a small IDE study (stage II validation study), which concluded enrollment in September 2022 to support IDE approval for a pivotal trial that we expect to serve as the clinical support for a future PMA approval for FemBloc.
We submitted results from a small IDE study (stage II validation study), which concluded enrollment in September 2022 to support IDE approval for a pivotal trial that we expect to serve as the clinical support for a future PMA approval for FemBloc.
Our FDA-cleared FemCerv product is a biopsy device for endocervical curettage that can be used to sample cervical cells and tissue circumferentially with sample containment within the device to minimize contamination.
Our FDA-cleared and Health Canada approved FemCerv product is a biopsy device for endocervical curettage that can be used to sample cervical cells and tissue circumferentially with sample containment within the device to minimize contamination.
We have studied FemBloc in three clinical trials pursuant to an FDA-approved IDE evaluating safety in 228 subjects and these subjects are continuing to be followed for safety.
We have studied FemBloc in three earlier clinical trials each pursuant to an FDA-approved IDE evaluating safety in 228 subjects in total and these subjects are continuing to be followed for safety.
In addition, new competition and products may arise due to consolidation within the industry and other companies may develop products that could compete with our product candidates, and there may be product candidates in early stages of development of which we are not aware. 14 Table of Contents Sales & Marketing FemaSeed – Our Artificial Insemination Solution.
In addition, new competition and products may arise due to consolidation within the industry and other companies may develop products that could compete with our products or product candidates, and there may be product candidates in early stages of development of which we are not aware. Sales & Marketing FemaSeed – Our Artificial Intratubal Insemination Solution.
We sponsored a post-market study of FemCerv where subjects found the procedure to be relatively pain-free and the sample obtained was complete for analysis, which we believe may aid in reliable diagnosis. Our FemCerv product was introduced to the United States market in December 2022.
We sponsored a post-market study of FemCerv where subjects found the procedure to be relatively pain-free and the sample obtained was complete for analysis, which we believe may aid in reliable diagnosis. Our FemCerv product was introduced through a limited release to the United States market in September 2022.
As expected, biopolymer remained in many of the fallopian tubes and the inflammatory response observed appeared to generally correlate with the presence of foreign material. There were no serious adverse events reported. We have studied FemBloc in three clinical studies pursuant to FDA-approved IDEs to evaluate safety in 228 subjects.
As expected, biopolymer remained in many of the fallopian tubes and the inflammatory response observed appeared to generally correlate with the presence of foreign material. There were no serious adverse events reported. We have studied FemBloc in three earlier clinical studies each pursuant to an FDA-approved IDE to evaluate safety in 228 subjects in total.
We believe that the patents expiring in 2023 are not material to our business. 16 Table of Contents In the United States, our FemBloc patent portfolio includes two patent families. They include granted utility and design patents providing protection until at least 2025 and 2030, including any eligible patent term adjustments and extensions.
We believe that the patents expiring in 2024 are not material to our business. In the United States, our FemBloc patent portfolio includes two patent families. They include granted utility and design patents providing protection until at least 2025 and 2030, including any eligible patent term adjustments and extensions.
We will seek to recruit representatives with strong sales backgrounds and experience in gynecology product sales, and with relationships with gynecologists. We intend to focus the significant majority of our sales and marketing efforts in the United States and continue to utilize distribution partners for international markets.
We will seek to recruit representatives with strong sales backgrounds and experience in medical device sales, and preferably with relationships with gynecologists. We intend to focus the significant majority of our sales and marketing efforts in the United States and continue to utilize distribution partners for international markets.
Our artificial insemination solution combines FemaSeed with a diagnostic companion product, our FDA-cleared and marketed FemVue device, which, creates saline and air contrast to safely assess the fallopian tubes for patency prior to treatment with FemaSeed. FemVue can be used with our FDA-cleared and marketed FemCath device, which allows for selective evaluation of the fallopian tube.
Our first-line therapeutic infertility solution, FemaSeed, combines with a diagnostic companion product, our FDA-cleared and marketed FemVue device, which, creates saline and air contrast to safely assess the fallopian tubes for patency prior to treatment with FemaSeed. FemVue can be used with our FDA-cleared and marketed FemCath ® device, which allows for selective evaluation of the fallopian tube.
The third (design) patent family includes a pending patent application, which if granted, could result in a patent expiring in 2035. Our FemCerv patent portfolio includes two patent families. The two patent families include granted utility and design patents providing protection until at least 2027, 2032, and 2033.
The two patent families include granted utility and design patents providing protection until at least 2027, 2032, and 2033. The utility patent family includes a pending patent application, which if granted, could result in a patent expiring in 2033. Our FemEMB patent portfolio includes one patent family.
As intrauterine insemination has been widely used in patients for decades in the United States, reimbursement codes and payments are well-established and the procedure may be covered by private health insurance plans.
As intrauterine insemination has been widely used in patients for decades in the United States, reimbursement codes and payments are well-established and the procedure may be covered by private health insurance plans. Established reimbursement codes are available for the diagnosis of the fallopian tubes and the procedure may be covered by private health insurance plans.
The utility patent family includes a pending patent application, which if granted, could result in a patent expiring in 2025, plus any eligible patent term adjustments and extensions. Our FemVue patent portfolio includes five patent families. The five patent families include granted utility and design patents providing protection until at least 2026 and 2028.
Our FemChec patent portfolio includes five patent families. The five patent families include granted utility and design patents providing protection until at least 2026, 2028, 2029 2032, and 2046. The utility patent family includes a pending patent application, which if granted, could result in a patent expiring in 2028, plus any eligible patent term adjustments and extensions.
There were no serious adverse events (SAE) reported for FemBloc. 10 Table of Contents Majority Adverse Events Were Mild and Occurred at Time of Procedure 11 Table of Contents Most Common Adverse Events Reported (>1%) We have observed that the patients found the procedures in both studies to be highly tolerable, with pain scores similar to placement of other intrauterine devices, such as IUDs.
There were no serious adverse events (SAE) reported for FemBloc. 12 Table of Contents Majority Adverse Events Were Mild and Occurred at Time of Procedure We have observed that the patients found the procedures in earlier studies to be highly tolerable, with pain scores similar to placement of other intrauterine devices, such as IUDs.
We intend to focus the significant majority of our sales and marketing efforts in the United States and continue to utilize distribution partners for international markets.
We intend to focus the significant majority of our sales and marketing efforts in North America and continue to utilize distribution partners for international markets.
Federal Healthcare Anti-Kickback Statute The federal healthcare Anti-Kickback Statute prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good or service for which payment may be made, in whole or in part, by federal healthcare programs, such as the Medicare and Medicaid programs.
Descriptions of some of the U.S. laws and regulations that may affect our ability to operate follows. 24 Table of Contents Federal Healthcare Anti-Kickback Statute The federal healthcare Anti-Kickback Statute prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good or service for which payment may be made, in whole or in part, by federal healthcare programs, such as the Medicare and Medicaid programs.
Fallopian tube patency is necessary for successful fertilization, and we believe FemVue offers significant advantages over other existing procedures, including being able to provide ultrasound evaluation of a woman’s fallopian tubes as part of a diagnostic infertility assessment.
At least one open fallopian tube is necessary for successful fertilization, and we believe FemVue offers significant advantages over other existing approaches, including being able to provide ultrasound evaluation of a woman’s fallopian tubes as part of an existing diagnostic infertility assessment.
Products can also be marketed in other countries that have minimal requirements for medical devices. 21 Table of Contents Fraud and Abuse and Other Healthcare Regulations Federal and state governmental agencies and equivalent foreign authorities subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts.
The regulatory requirements, and the review time, vary significantly from country to country. Products can also be marketed in other countries that have minimal requirements for medical devices. Fraud and Abuse and Other Healthcare Regulations Federal and state governmental agencies and equivalent foreign authorities subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts.
We sponsored a post-market study for FemCerv in 112 patients undergoing further evaluation of an abnormal cervical tissue result. It was observed that FemCerv provided samples were reported as adequate when evaluated histologically in 94% of the patients.
Post-Market Information FemCerv, a biopsy device for cervical cancer, is authorized for marketing in North America. We sponsored a post-market study for FemCerv in 112 patients undergoing further evaluation of an abnormal cervical tissue result. It was observed that FemCerv provided samples were reported as adequate when evaluated histologically in 94% of the patients.
Physicians reported that 95% of the patients experienced mild or no discomfort during the FemCerv procedure and 92% of the physicians reported the FemCerv device as easy to insert. There were no adverse events reported. We began commercializing the FemCerv product in September 2022.
Physicians reported that 95% of the patients experienced mild or no discomfort during the FemCerv procedure and 92% of the physicians reported the FemCerv device as easy to insert. There were no adverse events reported.
Employees and Human Capital Resources As of December 31, 2022, we employed 34 full-time employees and two part-time employees. None of our employees are represented by a collective bargaining agreement and we have never experienced a work stoppage. We believe our employee relations are good.
Employees and Human Capital Resources As of December 31, 2023, we employed 32 full-time employees and two part-time employees. None of our employees are represented by a collective bargaining agreement and we have never experienced a work stoppage.
As of December 31, 2022, we owned 40 issued U.S. patents and 122 issued foreign patents, 13 pending U.S. patent applications and 17 pending foreign patent applications. These issued patents, and any patents granted from such applications, are expected to expire between 2023 and 2046, without taking potential patent term extensions or adjustments into account.
As of December 31, 2023, we owned 48 issued U.S. patents and 132 issued foreign patents, 14 pending U.S. patent applications and 25 pending foreign patent applications. These issued patents, and any patents granted from such applications, are expected to expire between 2024 and 2046, without taking potential patent term extensions or adjustments into account.
As of December 31, 2022, we owned 40 issued U.S. patents and 122 issued foreign patents, 13 pending U.S. patent applications and 17 pending foreign patent applications. These issued patents, and any patents granted from such applications, are expected to expire between 2023 and 2046, without taking potential patent term extensions or adjustments into account.
As of December 31, 2023, we owned 48 issued U.S. patents and 132 issued foreign patents, 14 pending U.S. patent applications and 25 pending foreign patent applications. These issued patents, and any patents granted from such applications, are expected to expire between 2024 and 2046, without taking potential patent term extensions or adjustments into account.
These include: • establishment registration and device listing; • the Quality System Regulation, or QSR, which requires manufacturers, including third-party contract manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process; • labeling regulations and the FDA prohibitions against the promotion of products for uncleared or unapproved uses (“off-label” uses) and other requirements related to promotional activities, including the advertising of restricted devices; • medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury, or if their device malfunctioned and the device or a similar device marketed by the manufacturer would be likely to cause or contribute to a death or serious injury if the malfunction were to recur; • corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections or removals if undertaken to reduce a risk to health posed by a device or to remedy a violation of the FDCA that may present a risk to health; and • post market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and efficacy data for the device.
These include: • establishment registration and device listing; • the Quality System Regulation, or QSR, which requires manufacturers, including third-party contract manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the manufacturing process; • labeling regulations and the FDA prohibitions against the promotion of products for uncleared or unapproved uses (“off-label” uses) and other requirements related to promotional activities, including the advertising of restricted devices; • medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury, or if their device malfunctioned and the device or a similar device marketed by the manufacturer would be likely to cause or contribute to a death or serious injury if the malfunction were to recur; • corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections or removals if undertaken to reduce a risk to health posed by a device or to remedy a violation of the FDCA that may present a risk to health; and • post market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and efficacy data for the device. 22 Table of Contents After a device receives 510(k) clearance or is de novo classified, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, will require a new clearance or possibly even a new de novo classification or PMA supplement.
Manufacturing We have developed and implemented the infrastructure required to manufacture and distribute finished medical devices, including a robust medical device quality management system which meets the requirements of the FDA Quality System Regulation, and is certified to Medical Device Single Audit Program (MDSAP) and International Organization for Standardization (ISO) 13485:2016.
We began limited market release in the U.S. in September 2022. 14 Table of Contents Manufacturing We have developed and implemented the infrastructure required to manufacture and distribute finished medical devices, including a robust medical device quality management system which meets the requirements of the FDA Quality System Regulation, and is certified to Medical Device Single Audit Program (MDSAP) and International Organization for Standardization (ISO) 13485:2016.
Additionally, there are many women that wish to become pregnant that are unable to do so. According to a Centers for Disease Control and Prevention (CDC) report, the ability to plan when to be pregnant and how many pregnancies to initiate has been called one of the ten great public health achievements in the twentieth century.
According to a Centers for Disease Control and Prevention (CDC) report, the ability to plan when to be pregnant and how many pregnancies to initiate has been called one of the ten great public health achievements in the twentieth century.
In April 2021 we received an IDE approval from FDA that allowed us to initiate the pivotal trial for the FemaSeed device, with the first patient treated in July 2021. In October 2022, we announced an updated study design for the pivotal trial, which will now focus on couples experiencing male factor infertility.
In April 2021 we received an IDE approval from the FDA that allowed us to initiate a pivotal trial for the FemaSeed device. The first subject was enrolled in July 2021. In October 2022, we announced an updated study design for the pivotal trial to focus on couples experiencing male factor infertility, an underserved patient segment.
The two utility patent families include pending patent applications, which if granted, could result in patents expiring in 2028, plus any eligible patent term adjustments and extensions. Our FemChec patent portfolio includes five patent families. The five patent families include granted utility and design patents providing protection until at least 2026, 2028, 2029 and 2032.
The five patent families include granted utility and design patents providing protection until at least 2026 and 2028, with one Chinese design patent expiring in 2024. The two utility patent families include pending patent applications, which if granted, could result in patents expiring in 2028, plus any eligible patent term adjustments and extensions.
While we have received regulatory clearance and marketing authorization in United States, Europe, Canada, and Japan for the FemVue device, our main commercial priority is the United States where we expect to begin to commercialize and market our FemaSeed product and generate revenue from product sales if and when our request for de novo classification of the FemaSeed product is granted by the FDA.
While we have received regulatory clearance and marketing authorization in United States, Europe, Canada, and Japan for the FemVue device, our main commercial priority is North America where we expect to begin to commercialize and market our FemaSeed product and generate revenue from product sales.
Based on our clinical experience to date, we believe the physicians and sonographers will require minimal training and it can be accomplished largely online. We expect to begin building our sales organization prior to potential FDA approval of the product candidate.
Additional sonographic training will be required for the healthcare practitioners or sonographers that will support the ultrasound confirmation test. Based on our clinical experience to date, we believe the physicians and sonographers will require minimal training and it can be accomplished largely online. We expect to begin building our sales organization prior to potential FDA approval of the product candidate.
Reimbursement is obtained from a variety of sources, including government-sponsored and private health insurance plans, and combinations of both. 15 Table of Contents In the United States, we expect to derive nearly all of our revenue from the sale of our FemBloc system to gynecology offices, which typically bill various third-party payors, including Medicare, Medicaid, private insurance companies, health maintenance organizations and other healthcare-related organizations.
In the United States, we expect to derive nearly all of our revenue from the sale of our FemBloc system to gynecology offices, which typically bill various third-party payors, including Medicare, Medicaid, private insurance companies, health maintenance organizations and other healthcare-related organizations.
Additional Women’s Health Solutions . We have also developed a novel technology platform for tissue sampling intended to be marketed alongside our other women-specific medical products in the physician’s office setting.
Follow-up will continue annually for five years post-market. 6 Table of Contents Additional Women’s Health Solutions . We have also developed a novel technology platform for tissue sampling intended to be marketed alongside our other women-specific medical products in the physician’s office setting.
The term of individual patents depends upon the legal term for patents in the countries in which they are granted. In most countries, including the United States, the patent term is 20 years from the earliest claimed filing date of a nonprovisional patent application in the applicable country.
In most countries, including the United States, the patent term is 20 years from the earliest claimed filing date of a nonprovisional patent application in the applicable country.
Some amendments have been added to the ACA including religious and moral exceptions and some states and insurance companies have additional limits. According to HealthCare.gov. under ACA, an insured patient’s plan must cover contraceptives without charging a copayment or coinsurance when provided by an in-network provider, even if the patient has not met their deductible.
According to HealthCare.gov. under ACA, an insured patient’s plan must cover contraceptives without charging a copayment or coinsurance when provided by an in-network provider, even if the patient has not met their deductible.
Certain other changes to an approved device require the submission and approval of a new PMA, such as when the design change leads to a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the originally submitted data are not applicable to the change.
Certain other changes to an approved device require the submission and approval of a new PMA, such as when the design change leads to a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the originally submitted data are not applicable to the change. 21 Table of Contents Clinical Trials Clinical trials are almost always required to support pre-market approval, are often required for de novo classification, and are sometimes required for 510(k) clearance.
We value innovation, passion, data-driven decision making, persistence and honesty, and are building a diverse environment where our employees can thrive and be inspired to make exceptional contributions to bring novel and proprietary diagnostic and device solutions to disrupt the approaches to women’s health worldwide. 24 Table of Contents Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, motivating and integrating our existing and future employees.
We value innovation, passion, data-driven decision making, persistence and honesty, and are building a diverse environment where our employees can thrive and be inspired to make exceptional contributions to bring novel and proprietary diagnostic and device solutions to disrupt the approaches to women’s health worldwide.
We also make available, through our website, our Corporate Governance Guidelines, the charters of the Audit Committee and the Compensation Committee of our board of directors, our Code of Business Conduct and Ethics and other information and materials. The information on our website is not incorporated by reference into this Form 10-K.
We also make available, through our website, our Corporate Governance Guidelines, the charters of the Audit Committee, Nominating and Corporate Governance Committee and the Compensation Committee of our board of directors, our Code of Business Conduct and Ethics and other information and materials.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSpecifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging growth companies, if we are a smaller reporting company with less than $100 million in annual revenue, we would not be required to obtain an attestation report Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management. 57 Table of Contents Provisions in the amended and restated certificate of incorporation and our amended and restated bylaws may delay or prevent an acquisition of us or a change in our management.
Biggest changeSpecifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and have reduced disclosure obligations regarding executive compensation, and, similar to emerging growth companies, if we are a smaller reporting company with less than $100 million in annual revenue, we would not be required to obtain an attestation report.
Additionally, FDA’s approval of an IDE application permits initiation of the clinical study described in the IDE application but does not mean that FDA agrees that the study design is appropriate or that the results of the study will be sufficient to obtain marketing authorization (i.e., PMA approval, 510(k) clearance, or grant of a de novo request).
Additionally, the FDA’s approval of an IDE application permits initiation of the clinical study described in the IDE application but does not mean that FDA agrees that the study design is appropriate or that the results of the study will be sufficient to obtain marketing authorization (i.e., PMA approval, 510(k) clearance, or grant of a de novo request).
Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our permanent birth control solution, artificial insemination solution, and women-specific medical products and manage our inventory. To ensure adequate inventory supply, we must forecast inventory needs and place orders with our suppliers based on our estimates of future demand for our products.
Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our artificial insemination solution, permanent birth control solution, and women-specific medical products and manage our inventory. To ensure adequate inventory supply, we must forecast inventory needs and place orders with our suppliers based on our estimates of future demand for our products.
Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our permanent birth control system, artificial insemination product and women-specific medical products or for products of our competitors, our failure to accurately forecast customer acceptance of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.
Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our artificial insemination product, permanent birth control system, and women-specific medical products or for products of our competitors, our failure to accurately forecast customer acceptance of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.
We rely on third-party suppliers for the raw materials and components used in our permanent birth control system, artificial insemination product and women-specific medical products. These suppliers may be unwilling or unable to supply the necessary materials and components reliably and at the levels we anticipate or that are required by the market.
We rely on third-party suppliers for the raw materials and components used in our artificial insemination product, permanent birth control system, and women-specific medical products. These suppliers may be unwilling or unable to supply the necessary materials and components reliably and at the levels we anticipate or that are required by the market.
To successfully market and sell our permanent birth control system, artificial insemination product and women specific medical product solutions in markets outside of the United States, we must address many international business risks with which we have limited experience.
To successfully market and sell our artificial insemination product, permanent birth control system, and women specific medical product solutions in markets outside of the United States, we must address many international business risks with which we have limited experience.
In April 2018, FDA restricted the sale and distribution of Essure. The product was removed by Bayer from all markets, including the U.S. effective December 2018. There can be no assurance that serious adverse safety concerns may not arise with the FemBloc system.
In April 2018, the FDA restricted the sale and distribution of Essure. The product was removed by Bayer from all markets, including the U.S. effective December 2018. There can be no assurance that serious adverse safety concerns may not arise with the FemBloc system.
In the course of conducting our business, we must adequately address quality issues that may arise with our permanent birth control system, artificial insemination product and women-specific medical product solutions, including defects in third-party components included in our products.
In the course of conducting our business, we must adequately address quality issues that may arise with our artificial insemination product, permanent birth control system, and women-specific medical product solutions, including defects in third-party components included in our products.
FemVue is a Class I device and we expect FemaSeed to be a Class IIb device and FemBloc to be a Class III device. European CE marks will continue to be recognized in GB until June 30, 2023, following which a UKCA mark will be required for a medical device to be marketed in GB.
FemVue is a Class I device and FemaSeed is a Class IIb device and we expect FemBloc to be a Class III device. European CE marks will continue to be recognized in GB until June 30, 2023, following which a UKCA mark will be required for a medical device to be marketed in GB.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.
Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use, that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device are supported by suitable evidence.
FDA may not agree with our determination whether a new 510(k) is required for a modification, in which case we may be required to cease marketing or recall the modified product until we receive 510(k) clearance.
The FDA may not agree with our determination whether a new 510(k) is required for a modification, in which case we may be required to cease marketing or recall the modified product until we receive 510(k) clearance.
Other parties may have developed technologies that may be related or competitive to our permanent birth control system, intrauterine artificial insemination product and women-specific medical product solutions, may have filed or may file patent applications and may have received or may receive patents that overlap or conflict with our patent applications, either by claiming the same methods or devices or by claiming subject matter that could dominate our patent position.
Other parties may have developed technologies that may be related or competitive to our intrauterine artificial insemination product, permanent birth control system, and women-specific medical product solutions, may have filed or may file patent applications and may have received or may receive patents that overlap or conflict with our patent applications, either by claiming the same methods or devices or by claiming subject matter that could dominate our patent position.
Competitors could purchase our permanent birth control system, intrauterine artificial insemination product, and women-specific medical product solutions and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our patents, or develop and obtain patent protection for more effective technologies, designs or methods.
Competitors could purchase our intrauterine artificial insemination product, permanent birth control system, and women-specific medical product solutions and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our patents, or develop and obtain patent protection for more effective technologies, designs or methods.
State attorneys general can also bring a civil action to enjoin a HIPAA violation or to obtain statutory damages on behalf of residents of his or her state; • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state laws that require device companies to comply with the industry's voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers, foreign and state laws, including the EU General Data Protection Regulation, governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; federal government price reporting laws, which may require calculations and reporting of complex pricing metrics in an accurate and timely manner to government programs; and state laws related to insurance fraud in the case of claims involving private insurers; and 48 Table of Contents • California recently enacted the California Consumer Privacy Act (CCPA) which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.
State attorneys general can also bring a civil action to enjoin a HIPAA violation or to obtain statutory damages on behalf of residents of his or her state; • analogous state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers, foreign and state laws, including the EU General Data Protection Regulation, governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; federal government price reporting laws, which may require calculations and reporting of complex pricing metrics in an accurate and timely manner to government programs; and state laws related to insurance fraud in the case of claims involving private insurers; and 56 Table of Contents • California recently enacted the California Consumer Privacy Act (CCPA) which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.
We may experience a number of events during the conduct of our clinical trials that could adversely affect the costs, timing or successful completion, including: • We are required to submit an IDE application to FDA, which must become effective prior to commencing human clinical trials, and FDA may reject our IDE application and notify us that we may not begin investigational trials; • Regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; • Regulators and/or IRBs or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; • We may not reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • Clinical trials may produce negative or inconclusive results, or we may not agree with regulatory authorities on the interpretation of our clinical trial results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • The number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; • Our third-party contractors, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • We might have to suspend or terminate clinical trials for various reasons, including a finding that the subjects are being exposed to unacceptable health risks; • We may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB and/or regulatory authorities for reexamination; • Regulators, IRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • The cost of clinical trials may be greater than we anticipate; • Clinical sites may not adhere to the clinical protocol or may drop out of a clinical trial; • We may be unable to recruit a sufficient number of clinical trial sites or trial subjects; • Regulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our • Manufacturing processes for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • Approval policies or regulations of FDA or applicable foreign regulatory authorities may change in a manner rendering our clinical data insufficient for approval; and • Our current or future products may have undesirable side effects or other unexpected characteristics. 30 Table of Contents Clinical trials must be conducted in accordance with the laws and regulations of the FDA and other applicable regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and IRBs at the medical institutions where the clinical trials are conducted.
We may experience a number of events during the conduct of our clinical trials that could adversely affect the costs, timing or successful completion, including: • We are required to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials, and the FDA may reject our IDE application and notify us that we may not begin investigational trials; • Regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; • Regulators and/or IRBs or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; • We may not reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • Clinical trials may produce negative or inconclusive results, or we may not agree with regulatory authorities on the interpretation of our clinical trial results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • The number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; • Our third-party contractors, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • We might have to suspend or terminate clinical trials for various reasons, including a finding that the subjects are being exposed to unacceptable health risks; • We may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB and/or regulatory authorities for reexamination; • Regulators, IRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; 34 Table of Contents • The cost of clinical trials may be greater than we anticipate; • Clinical sites may not adhere to the clinical protocol or may drop out of a clinical trial; • We may be unable to recruit a sufficient number of clinical trial sites or trial subjects; • Regulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our • Manufacturing processes for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • Approval policies or regulations of FDA or applicable foreign regulatory authorities may change in a manner rendering our clinical data insufficient for approval; and • Our current or future products may have undesirable side effects or other unexpected characteristics. 35 Table of Contents Clinical trials must be conducted in accordance with the laws and regulations of the FDA and other applicable regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and IRBs at the medical institutions where the clinical trials are conducted.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: • any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our FemBloc system and FemaSeed product; • any of our pending patent applications will issue as patents; • we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; 53 Table of Contents • we were the first to make the inventions covered by each of our patents and pending patent applications; • we were the first to file patent applications for these inventions; • others will not develop similar or alternative technologies that do not infringe our patents; any of our patents will be found to ultimately be valid and enforceable; • any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; • we will develop additional proprietary technologies or products that are separately patentable; or • our commercial activities or products will not infringe upon the patents of others.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: • any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our FemBloc system and FemaSeed product; • any of our pending patent applications will issue as patents; • we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; • we were the first to make the inventions covered by each of our patents and pending patent applications; • we were the first to file patent applications for these inventions; • others will not develop similar or alternative technologies that do not infringe our patents; any of our patents will be found to ultimately be valid and enforceable; 62 Table of Contents • any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; • we will develop additional proprietary technologies or products that are separately patentable; or • our commercial activities or products will not infringe upon the patents of others.
Our future financial performance and our ability to commercialize any product candidates that are approved for marketing will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
Our future financial performance and our ability to commercialize our products and any product candidates that are approved for marketing will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.
For example, in December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, emerged in China. Since then, COVID-19 has spread to multiple countries worldwide, including the United States and member states of the European Union. In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic.
For example, in December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, emerged in China. Since then, COVID-19 spread to multiple countries worldwide, including the United States and member states of the European Union. In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic.
The COVID-19 pandemic has resulted in governments implementing numerous containment measures, such as travel bans and restrictions, particularly quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns. These containment measures are subject to change and the respective government authorities may tighten the restrictions at any time.
The COVID-19 pandemic resulted in governments implementing numerous containment measures, such as travel bans and restrictions, particularly quarantines, shelter-in-place or total lock-down orders and business limitations and shutdowns. These containment measures are subject to change and the respective government authorities may tighten the restrictions at any time.
We manufacture and assemble components for our products and product candidates, and a loss or degradation in performance of our manufacturing capabilities could have a material adverse effect on our business, financial condition and results of operations. We manufacture and assemble components used in our permanent birth control system, artificial insemination product and women-specific medical products.
We manufacture and assemble components for our products and product candidates, and a loss or degradation in the performance of our manufacturing capabilities could have a material adverse effect on our business, financial condition and results of operations. We manufacture and assemble components used in our artificial insemination product, permanent birth control system, and women-specific medical products.
Any future funding requirements will depend on many factors, including: • The initiation, scope, rate of enrollment, progress, success, and cost of our current or future clinical trials; • The cost of our research and development activities; • The acceptance of our clinical trial data by the FDA or foreign regulatory authorities; • Patient, physician and market acceptance of our permanent birth control system, intrauterine artificial insemination product and women-specific medical product solutions; • The cost of filing and prosecuting patent applications and defending and enforcing our patent or other intellectual property rights; • The cost of defending, in litigation or otherwise, any claims that we infringe third-party patents or other intellectual property rights; • The cost and timing of additional regulatory clearances, de novo grants or approvals; • The cost and timing of establishing additional sales and marketing capabilities; • Costs associated with any product recall that may occur; • The effect of competing technological and market developments; • The extent to which we acquire or invest in products, technologies and businesses, although we currently have no commitments or agreements relating to any of these types of transactions; and • The costs of operating as a public company.
Any future funding requirements will depend on many factors, including: 29 Table of Contents • The initiation, scope, rate of enrollment, progress, success, and cost of our current or future clinical trials; • The cost of our research and development activities; • The acceptance of our clinical trial data by the FDA or foreign regulatory authorities; • Patient, physician and market acceptance of our intrauterine artificial insemination product and permanent birth control system women-specific medical product solutions; • The cost of filing and prosecuting patent applications and defending and enforcing our patent or other intellectual property rights; • The cost of defending, in litigation or otherwise, any claims that we infringe third-party patents or other intellectual property rights; • The cost and timing of additional regulatory clearances, de novo grants or approvals; • The cost and timing of establishing additional sales and marketing capabilities; • Costs associated with any product recall that may occur; • The effect of competing technological and market developments; • The extent to which we acquire or invest in products, technologies and businesses, although we currently have no commitments or agreements relating to any of these types of transactions; and • The costs of operating as a public company.
Despite the implementation of security measures, our internal computer systems and those of our current and any future CROs, other contractors, consultants, potential future collaborators and other third-party service providers are vulnerable to damage from various methods, including cybersecurity attacks, breaches, intentional or accidental mistakes or errors, or other technological failures, which can include, among other things, computer viruses, unauthorized access attempts, including third parties gaining access to systems using stolen or inferred credentials, denial-of-service attacks, phishing attempts, service disruptions, natural disasters, fire, terrorism, war and telecommunication and electrical failures.
Despite the implementation of security measures, our internal computer systems and those of our current and any future CROs, other contractors, consultants, potential future collaborators and other third-party service providers are vulnerable to damage from various methods, including cybersecurity attacks, breaches, intentional or accidental mistakes or errors, attacks using artificial intelligence, or other technological failures, which can include, among other things, computer viruses, unauthorized access attempts, including third parties gaining access to systems using stolen or inferred credentials, denial-of-service attacks, phishing attempts, service disruptions, natural disasters, fire, terrorism, war and telecommunication and electrical failures.
We cannot assure you that an active trading market for our common stock will be sustained. The lack of an active trading market may impair the value of your shares and your ability to sell your shares at the time you wish to sell them.
An active trading market for our common stock may not be sustained. We cannot assure you that an active trading market for our common stock will be sustained. The lack of an active trading market may impair the value of your shares and your ability to sell your shares at the time you wish to sell them.
If one or more of these risks are realized, our business, financial condition and results of operations could be adversely affected. 37 Table of Contents We plan to rely on our own direct sales force for our women-specific medical products, which may result in higher fixed costs than our competitors and may slow our ability to reduce costs in the face of a sudden decline in demand for our products.
If one or more of these risks are realized, our business, financial condition and results of operations could be adversely affected. 43 Table of Contents We plan to rely on our own direct sales force for our women-specific medical products, which may result in higher fixed costs than our competitors and may slow our ability to reduce costs in the face of a sudden decline in demand for our products.
In addition, we rely on independent clinical investigators, CROs and other third-party service providers to assist us in managing, monitoring and otherwise carrying out our preclinical studies and clinical trials, including the collection of data from our clinical trials, and the continued spread of COVID-19 or variants may affect their ability to be present, devote sufficient time and resources to our programs, or to travel to sites to perform work for us.
In addition, we rely on independent clinical investigators, CROs and other third-party service providers to assist us in managing, monitoring and otherwise carrying out our preclinical studies and clinical trials, including the collection of data from our clinical trials, and the possible spread of COVID-19 or variants may affect their ability to be present, devote sufficient time and resources to our programs, or to travel to sites to perform work for us.
We continue to evaluate what effect, if any, these rules will have on our business; 47 Table of Contents • the federal civil and criminal false claims laws and civil monetary penalties laws, including the federal civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal healthcare programs that are false or fraudulent.
We continue to evaluate what effect, if any, these rules will have on our business; 55 Table of Contents • the federal civil and criminal false claims laws and civil monetary penalties laws, including the federal civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal healthcare programs that are false or fraudulent.
If clinical trials of our current FemBloc system, FemaSeed product and future products do not produce results necessary to support regulatory approval, a granted de novo classification or clearance in the United States or, with respect to our current or future products, elsewhere, we will be unable to commercialize these products and may incur additional costs or experience delays in completing, or ultimately be unable to complete, the commercialization of those products.
If clinical trials of our FemBloc system and future products do not produce results necessary to support regulatory approval, a granted de novo classification or clearance in the United States or, with respect to our current or future product candidates, elsewhere, we will be unable to commercialize these products and may incur additional costs or experience delays in completing, or ultimately be unable to complete, the commercialization of those products.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) enacted on April 16, 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments scheduled to begin in 2019 that are based on various performance measures and physicians' participation in alternative payment models such as accountable care organizations.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) enacted on April 16, 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments scheduled to begin in 2019 that are based on various performance measures and physician’s participation in alternative payment models such as accountable care organizations.
A severe or prolonged economic downturn, such as the global financial crisis, could result in a variety of risks to our business, including weakened demand for our products, and our ability to raise additional capital when needed on acceptable terms, if at all. Supply chain disruptions has lengthened our suppliers’ timelines and increased costs.
A severe or prolonged economic downturn, such as the global financial crisis, could result in a variety of risks to our business, including weakened demand for our products, and our ability to raise additional capital when needed on acceptable terms, if at all. Supply chain disruptions have lengthened our suppliers’ timelines and increased costs.
Many of the companies against which we may compete may have competitive advantages with respect to primary competitive factors in the women’s healthcare market, including: • greater company, product and brand recognition; • superior product safety, reliability and durability; • better quality and larger volume of clinical data; • more effective marketing to and education of patients and physicians; • more sales force experience and greater market access; • better product support and service; • more advanced technological innovation, product enhancements and speed of innovation; • more effective pricing and revenue strategies; • lower procedure costs to patients; • more effective reimbursement teams and strategies; • dedicated practice development; and • more effective clinical training teams.
Many of the companies against which we may compete may have competitive advantages with respect to primary competitive factors in the women’s healthcare market, including: • greater company, product and brand recognition; • superior product safety, reliability and durability; • better quality and larger volume of clinical data; • more effective marketing to and education of patients and physicians; • more sales force experience and greater market access; • better product support and service; • more advanced technological innovation, product enhancements and speed of innovation; 39 Table of Contents • more effective pricing and revenue strategies; • lower procedure costs to patients; • more effective reimbursement teams and strategies; • dedicated practice development; and • more effective clinical training teams.
We cannot provide assurance that any data that we or others may generate in the future will be consistent with that observed in our existing clinical trials. 33 Table of Contents The training required for physicians to use our permanent birth control solution and artificial insemination solution could reduce the market acceptance of our products.
We cannot provide assurance that any data that we or others may generate in the future will be consistent with that observed in our existing clinical trials. 38 Table of Contents The training required for physicians to use our artificial insemination solution and permanent birth control solution could reduce the market acceptance of our products.
It is impossible to determine whether similar taxes could be instated in the future; 50 Table of Contents • established a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical efficacy research in an effort to coordinate and develop such research; • implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; and • expanded the eligibility criteria for Medicaid programs.
It is impossible to determine whether similar taxes could be instated in the future; • established a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical efficacy research in an effort to coordinate and develop such research; • implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; and • expanded the eligibility criteria for Medicaid programs.
If one or more manufacturers successfully develops a product for providing localized directional intrauterine insemination that is more effective or otherwise more attractive than our artificial insemination solution, sales of our FemaSeed product could be significantly and adversely affected, which could have a material adverse effect on our business, financial condition and results of operations.
If one or more manufacturers successfully develops a product for providing localized directional intratubal insemination that is more effective or otherwise more attractive than our artificial insemination solution, sales of our FemaSeed product could be significantly and adversely affected, which could have a material adverse effect on our business, financial condition and results of operations.
We, IRBs, the FDA, or another regulatory authority may suspend or terminate clinical trials at any time to avoid exposing trial participants to unacceptable health risks. 29 Table of Contents Successful results of preclinical studies are not necessarily indicative of future clinical trial results, and predecessor clinical trial results may not be replicated in subsequent clinical trials.
We, IRBs, the FDA, or another regulatory authority may suspend or terminate clinical trials at any time to avoid exposing trial participants to unacceptable health risks. 33 Table of Contents Successful results of preclinical studies are not necessarily indicative of future clinical trial results, and predecessor clinical trial results may not be replicated in subsequent clinical trials.
As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. 59 Table of Contents General Risk Factors Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. 69 Table of Contents General Risk Factors Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
The extent to which the COVID19 pandemic may impact our clinical trial operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration and geographic reach of the outbreak, the severity of COVID-19, and the effectiveness of actions to contain and treat COVID-19.
The extent to which the COVID19 pandemic may impact our clinical trial operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration and geographic reach of an outbreak, the severity of COVID-19 and future variants, and the effectiveness of actions to contain and treat COVID-19.
These provisions include: • a prohibition on actions by our stockholders by written consent; • advance notice requirements for election to our board of directors and for proposing matters that can be acted upon at stockholder meetings; • a requirement that directors may only be removed “for cause”; • a requirement that only the board of directors may change the number of directors and fill vacancies on the board; • division of our board of directors into three classes, serving staggered terms of three years each; and • the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.
These provisions include: • a prohibition on actions by our stockholders by written consent; • advance notice requirements for election to our board of directors and for proposing matters that can be acted upon at stockholder meetings; 67 Table of Contents • a requirement that directors may only be removed “for cause”; • a requirement that only the board of directors may change the number of directors and fill vacancies on the board; • division of our board of directors into three classes, serving staggered terms of three years each; and • the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.
This would require the enrollment of large numbers of suitable subjects, which may be difficult to identify, recruit and maintain as participants in the clinical trial. The earlier clinical studies supporting the IDE for the new pivotal trial, which will be the basis for the PMA application for our FemBloc system, involved 228 subjects.
This would require the enrollment of large numbers of suitable subjects, which may be difficult to identify, recruit and maintain as participants in the clinical trial. The earlier clinical studies involved 228 subjects and supported the IDE for the new pivotal trial, which will be the basis for the PMA application for our FemBloc system.
Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. From time to time, we may also disclose interim data from our clinical trials.
Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data is available. From time to time, we may also disclose interim data from our clinical trials.
In addition, if other companies are successful in developing products that are approved for a broader range of indications than our intrauterine artificial insemination system, we will be at a further competitive disadvantage, which could also affect our business, financial condition and results of operations.
In addition, if other companies are successful in developing products that are approved for a broader range of indications than our artificial intratubal insemination system, we will be at a further competitive disadvantage, which could also affect our business, financial condition and results of operations.
If we are unable to expand our sales and marketing capabilities, we may not be able to effectively commercialize our FemaSeed product, FemBloc system and other women-specific medical products, which could have an adverse effect on our business, financial condition and results of operations.
If we are unable to expand our sales and marketing capabilities, we may not be able to effectively commercialize our FemaSeed product and other women-specific medical products, which could have an adverse effect on our business, financial condition and results of operations.
The market price of our common stock has been highly volatile and may fluctuate substantially due to many factors, some of which are beyond our control, including: • announcements of regulatory approval or disapproval of our FemBloc system or the FDA’s decision to grant or decline the de novo request for our FemaSeed product and any future approvals or clearances for enhancements to our products; • adverse results from or delays in clinical trials of our FemBloc system and/ or FemaSeed product; • unanticipated safety concerns related to the use of our FemBloc system and/ or FemaSeed product; • FDA or other U.S. or foreign regulatory or legal actions or changes affecting us or our industry; • our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced medical products on a timely basis; • any voluntary or mandated product recalls; • adverse developments concerning our suppliers or any future strategic partnerships; • the volume and timing of sales of our products; • the introduction of new products or product enhancements by us or others in our industry; • disputes or other developments with respect to our or others' intellectual property rights; • product liability claims or other litigation; • quarterly variations in our results of operations or those of others in our industry; • media exposure of our products or of those of others in our industry; • changes in governmental regulations or in reimbursement; • changes in earnings estimates or recommendations by securities analysts; • changes in financial estimates or guidance, including our ability to meet our future revenue and operating profit or loss estimates or guidance; • the public’s reaction to our earnings releases, other public announcements and filings with the SEC; • sales of substantial amounts of our stock by directors, officers or significant stockholders, or the expectation that such sales might occur; • operating and stock performance of other companies that investors deem comparable to us and overall performance of the equity markets; • additions or departures of key personnel; • changes in our capital structure, such as future issuances of securities and the incurrence of debt; • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors; and • other factors described in this “Risk Factors” section.
The market price of our common stock has been highly volatile and may fluctuate substantially due to many factors, some of which are beyond our control, including: • announcements of regulatory approval or disapproval of our FemBloc system or the FDA’s decision to grant or decline any future approvals or clearances for enhancements to our products; • adverse results from or delays in clinical trial of our FemBloc system; • unanticipated safety concerns related to the use of our FemBloc system; • FDA or other U.S. or foreign regulatory or legal actions or changes affecting us or our industry; • our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced medical products on a timely basis; • any voluntary or mandated product recalls; • adverse developments concerning our suppliers or any future strategic partnerships; • the volume and timing of sales of our products; • the introduction of new products or product enhancements by us or others in our industry; 72 Table of Contents • disputes or other developments with respect to our or others’ intellectual property rights; • product liability claims or other litigation; • quarterly variations in our results of operations or those of others in our industry; • media exposure of our products or of those of others in our industry; • changes in governmental regulations or in reimbursement; • changes in earnings estimates or recommendations by securities analysts; • changes in financial estimates or guidance, including our ability to meet our future revenue and operating profit or loss estimates or guidance; • the public’s reaction to our earnings releases, other public announcements and filings with the SEC; • sales of substantial amounts of our stock by directors, officers or significant stockholders, or the expectation that such sales might occur; • operating and stock performance of other companies that investors deem comparable to us and overall performance of the equity markets; • additions or departures of key personnel; • changes in our capital structure, such as future issuances of securities and the incurrence of debt; • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors; and • other factors described in this “Risk Factors” section.
We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 68 Table of Contents These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
We may also occasionally use these proceedings to challenge the patent rights of others. We cannot be certain that any particular challenge will be successful in limiting or eliminating the challenged patent rights of the third party. 54 Table of Contents Any lawsuits resulting from such allegations could subject us to significant liability for damages and invalidate our proprietary rights.
We may also occasionally use these proceedings to challenge the patent rights of others. We cannot be certain that any particular challenge will be successful in limiting or eliminating the challenged patent rights of the third party. Any lawsuits resulting from such allegations could subject us to significant liability for damages and invalidate our proprietary rights.
If any party infringes any of the trademarks on which we rely, enforcing those trademarks may be difficult, costly, time-consuming and ultimately unsuccessful. Risks Related to Our Common Stock We are a “smaller reporting company” and an “emerging growth company” and the reduced disclosure requirements applicable to “smaller reporting companies” may make our common stock less attractive to investors.
If any party infringes on any of the trademarks on which we rely, enforcing those trademarks may be difficult, costly, time-consuming and ultimately unsuccessful. 66 Table of Contents Risks Related to Our Common Stock We are a “smaller reporting company” and an “emerging growth company” and the reduced disclosure requirements applicable to “smaller reporting companies” may make our common stock less attractive to investors.
Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed. In addition to patent protection, we also rely upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants and third parties, to protect our confidential and proprietary information.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed. 64 Table of Contents In addition to patent protection, we also rely upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants and third parties, to protect our confidential and proprietary information.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Recent changes in U.S. patent laws could diminish the value of patents in general and may limit our ability to obtain, defend and/or enforce our patents.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. 65 Table of Contents Recent changes in U.S. patent laws could diminish the value of patents in general and may limit our ability to obtain, defend and/or enforce our patents.
Certain substantial changes in our ownership between February 2004 and June 2021 will more likely than not limit our ability to utilize the amount of our existing NOLs and research and development credit carryforwards, and if we undergo any further ownership change, our ability to utilize NOLs and research and development credit carryforwards could be further limited by Sections 382 and 383 of the Code.
Certain substantial changes in our ownership between February 2004 to date will more likely than not limit our ability to utilize the amount of our existing NOLs and research and development credit carryforwards, and if we undergo any further ownership change, our ability to utilize NOLs and research and development credit carryforwards could be further limited by Sections 382 and 383 of the Code.
In addition, we do carry “key person” insurance policy for our Chief Executive Officer and President that could offset potential loss of service under applicable circumstances. 40 Table of Contents We will need to grow the size of our organization, and we may experience difficulties in managing this growth.
In addition, we do carry “key person” insurance policy for our Chief Executive Officer and President that could offset potential loss of service under applicable circumstances. We will need to grow the size of our organization, and we may experience difficulties in managing this growth.
In the event of an accident, state or federal or other applicable authorities may curtail our use of these materials and interrupt our business operations which could adversely affect our business. We are subject to anti-bribery, anti-corruption, and anti-money laundering laws, including the U.S.
In the event of an accident, state or federal or other applicable authorities may curtail our use of these materials and interrupt our business operations which could adversely affect our business. 60 Table of Contents We are subject to anti-bribery, anti-corruption, and anti-money laundering laws, including the U.S.
Other factors that may cause fluctuations in our quarterly and annual results include: • Patient and physician adoption of our FemBloc system, if approved to market; • Patient and physician adoption of our FemaSeed product, if granted de novo classification; • Changes in coverage policies by third-party payors that affect the reimbursement of procedures using our products; • Unanticipated pricing pressure; • The hiring, retention and continued productivity of sales representatives; • Our ability to expand the geographic reach of our sales and marketing efforts; • Our ability to obtain regulatory clearance or approval for any products in development or for our current products for additional indications or in additional countries outside the United States; • Results of clinical research and trials on our existing products and products in development; • Delays in receipt of anticipated purchase orders; • Delays in, or failure of, component and raw material deliveries by our suppliers; and • Positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry.
Other factors that may cause fluctuations in our quarterly and annual results include: • Patient and physician adoption of our FemBloc system, if approved to market; • Patient and physician adoption of our FemaSeed product; • Changes in coverage policies by third-party payors that affect the reimbursement of procedures using our products; • Unanticipated pricing pressure; • The hiring, retention and continued productivity of sales representatives; • Our ability to expand the geographic reach of our sales and marketing efforts; 30 Table of Contents • Our ability to obtain regulatory clearance or approval for any products in development or for our current products for additional indications or in additional countries outside the United States; • Results of clinical research and trials on our existing products and products in development; • Delays in receipt of anticipated purchase orders; • Delays in, or failure of, component and raw material deliveries by our suppliers; and • Positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry.
We have, and we may in the future, receive letters or other threats or claims from third parties inviting us to take licenses under, or alleging that we infringe, their patents. Moreover, we may become party to future adversarial proceedings regarding our patent portfolio or the patents of third parties.
We have, and we may in the future, receive letters or other threats or claims from third parties inviting us to take licenses under, or alleging that we infringe, their patents. 63 Table of Contents Moreover, we may become party to future adversarial proceedings regarding our patent portfolio or the patents of third parties.
In addition, if we are unable to continue to meet these requirements, we may be unable to remain listed on Nasdaq. 58 Table of Contents Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to the periodic reporting requirements of the Exchange Act.
In addition, if we are unable to continue to meet these requirements, we may be unable to remain listed on Nasdaq. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to the periodic reporting requirements of the Exchange Act.
If we raise additional funds through collaboration and licensing arrangements with third-parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. 26 Table of Contents Furthermore, we cannot be certain that additional funding will be available on acceptable terms, if at all.
If we raise additional funds through collaboration and licensing arrangements with third-parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. Furthermore, we cannot be certain that additional funding will be available on acceptable terms, if at all.
We focus our sales, marketing and training efforts primarily on obstetrical and gynecological physicians. However, physicians from other disciplines, including primary care physicians, as well as other medical professionals, such as nurse practitioners and physician assistants, are often the initial point of contact for patients with contraceptive needs.
With respect to FemBloc, we intend to focus our sales, marketing and training efforts primarily on obstetrical and gynecological physicians. However, physicians from other disciplines, including primary care physicians, as well as other medical professionals, such as nurse practitioners and physician assistants, are often the initial point of contact for patients with contraceptive needs.
We have other commercial products and others in development, but their revenue is currently minimal, thus, if we are unsuccessful in commercializing the FemBloc system or FemaSeed product or are unable to market the FemBloc system or FemaSeed product as a result of a quality problem, failure to maintain or obtain regulatory marketing authorizations, unexpected or serious complications or other unforeseen negative effects related to these systems or the other factors discussed in these risk factors, we would lose an additional source of revenue, and our business will be materially adversely affected.
We have other commercial products, but their revenue is currently minimal, thus, if we are unsuccessful in commercializing the FemBloc system or are unable to market the FemBloc system as a result of a quality problem, failure to maintain or obtain regulatory marketing authorizations, unexpected or serious complications or other unforeseen negative effects related to this system or the other factors discussed in these risk factors, we would lose an additional source of revenue, and our business will be materially adversely affected.
Securities analysts may not continue to publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline. 62 Table of Contents The trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business.
Securities analysts may not continue to publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline. The trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business.
We perform substantially all of our research, development, manufacturing and back office activity and maintain all our finished goods inventory in a single location in Suwanee, Georgia. Our facility, equipment and inventory would be costly to replace and could require substantial lead time to repair or replace.
We do not have redundant facilities. We perform substantially all of our research, development, manufacturing and back-office activity and maintain all our finished goods inventory in a single location in Suwanee, Georgia. Our facility, equipment and inventory would be costly to replace and could require substantial lead time to repair or replace.
We need substantial additional funding and may be unable to raise capital when needed, which could force us to delay or reduce our commercialization efforts or product development programs. Based on our current operating plan, our current cash, cash equivalents and revenue are expected to be sufficient to fund our ongoing operations into the first quarter of 2024.
We need substantial additional funding and may be unable to raise capital when needed, which could force us to delay or reduce our commercialization efforts or product development programs. Based on our current operating plan, our current cash, cash equivalents and revenue are expected to be sufficient to fund our ongoing operations into the second half of 2025.
We currently sell our FemVue device, FemCerv device, and FemCath device through a very limited direct effort, that targets obstetrician-gynecologist physicians, reproductive endocrinologist physicians, and physician practices in the United States, including online training and new customer support, and also utilize various direct-to-patient marketing initiatives, including social media, a physician locator on a patient website, and online videos.
We currently sell our FemaSeed device, FemVue device, FemCerv device, and FemCath device through a very limited direct effort, that targets obstetrician-gynecologist physicians, reproductive endocrinologist physicians, and physician practices in North America, including online training and new customer support, and also utilize various direct-to-patient marketing initiatives, including social media, a physician locator on a patient website, and online videos.
There are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
There are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
If we do not obtain and maintain international regulatory registrations or approvals for our products, we will be unable to market and sell our products outside of the United States. Sales of our products outside of the United States are subject to foreign regulatory requirements that vary widely from country to country.
If we do not obtain and maintain international regulatory registrations or approvals for our products, we will be unable to market and sell our products outside of North America. Sales of our products outside of North America are subject to foreign regulatory requirements that vary widely from country to country.
Further, because we have incurred costs prospectively in advance of FDA authorization, we would be unable to recoup these costs if the product candidates are not authorized for marketing by the FDA.
Further, because we have incurred costs prospectively in advance of FDA authorization, we would be unable to recoup these costs if the product candidate is not authorized for marketing by the FDA.
The de novo classification process, which is the anticipated premarket review pathway for our FemaSeed product, provides a pathway to classify novel medical devices for which general controls alone, or general and special controls, provide reasonable assurance of safety and effectiveness for the device with the proposed intended use, but for which there is no legally marketed predicate device.
The de novo classification process provides a pathway to classify novel medical devices for which general controls alone, or general and special controls, provide reasonable assurance of safety and effectiveness for the device with the proposed intended use, but for which there is no legally marketed predicate device.
Third-party payors and physicians who do not cover or use our permanent birth control solution or other women’s healthcare devices may require additional clinical data prior to adopting or maintaining coverage of our FemBloc system.
Third-party payors and physicians who do not cover or use our artificial insemination solution, permanent birth control solution or other women’s healthcare devices may require additional clinical data prior to adopting or maintaining coverage of our products.
We plan to rely on our own direct sales force in the United States and third-party distribution partners in Europe and other international countries, to market and sell our products. Some of our competitors rely predominantly on independent sales agents and third-party distributors.
We plan to rely on our own direct sales force in North America and third-party distribution partners in Europe and other international countries, to market and sell our products. Some of our competitors rely predominantly on independent sales agents and third-party distributors.
If we obtain FDA approval of any of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws will also increase.
As we begin commercializing our products and if we obtain FDA approval of our product candidate in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws will also increase.
If we are unable to obtain authorization from the FDA to market and sell these systems in the United States and then to achieve significant market acceptance in the United States, our results of operations will be adversely affected as the United States is expected to be the principal market for these products.
If we are unable to obtain authorization from the FDA to market and sell this system in the United States and then to achieve significant market acceptance in the United States, our results of operations will be adversely affected as the United States is expected to be the principal market for this product.
We rely extensively on information technology systems to conduct our business. These systems affect, among other things, ordering and managing materials from suppliers, shipping products to customers, processing transactions, summarizing and reporting results of operations, complying with regulatory, legal or tax requirements, data security and other processes necessary to manage our business.
These systems affect, among other things, ordering and managing materials from suppliers, shipping products to customers, processing transactions, summarizing and reporting results of operations, complying with regulatory, legal or tax requirements, data security and other processes necessary to manage our business.
In addition, we rely on clinical trial sites to ensure timely conduct of our clinical trials and, while we have entered into agreements governing their services, we are limited in our ability to compel their actual performance.
In addition, we rely on clinical trial sites to ensure timely conduct of our clinical trials and, while we have entered into agreements governing their services, we are limited in our ability to compel their actual performance. Our current product candidates are in various stages of development.
Our primary strategy to grow our revenue is to drive the adoption of our permanent birth control using the FemBloc system with an ultrasound confirmatory test, and for physicians to employ our products to treat or diagnosis their patients with reproductive disorders or cancers.
Our primary strategy to grow our revenue is to drive the adoption of our permanent birth control using the FemBloc system with an ultrasound confirmatory test, our artificial insemination solution using the FemaSeed product and companion diagnostics, and for physicians to employ our products to treat or diagnosis their patients with reproductive disorders or cancers.
As of December 31, 2022, we had 34 full-time employees, 2 part-time employees and 18 consultants. As our development and commercialization plans and strategies develop, we expect to need additional managerial, operational, sales, marketing, financial and other personnel.
As of December 31, 2023, we had 32 full-time employees, 2 part-time employees and 21 consultants. As our development and commercialization plans and strategies develop, we expect to need additional managerial, operational, sales, marketing, financial and other personnel.
Certain voluntary field actions are required to be reported to FDA and other regulatory authorities. Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary withdrawals or corrections for our products in the future that we determine do not require notification of the FDA.
Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary withdrawals or corrections for our products in the future that we determine do not require notification of the FDA.
Our actual or perceived failure to comply with such obligations could harm our business. Ensuring compliance with such laws could also impair our efforts to maintain and expand our customer base, and thereby decrease our revenue. In the conduct of our business, we may at times process personal data, including health-related personal data.
Ensuring compliance with such laws could also impair our efforts to maintain and expand our customer base, and thereby decrease our revenue. In the conduct of our business, we may at times process personal data, including health-related personal data.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention, or seizure of our products; • customer notifications or repair, replacement or refunds; • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future PMA approvals or foreign regulatory approvals of new products, new intended uses, or modifications to existing products; • withdrawals or suspensions of our current PMA or foreign regulatory approvals, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution. 44 Table of Contents Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition and results of operations.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention, or seizure of our products; • customer notifications or repair, replacement or refunds; • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future PMA approvals or foreign regulatory approvals of new products, new intended uses, or modifications to existing products; 51 Table of Contents • withdrawals or suspensions of our current PMA or foreign regulatory approvals, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
We are substantially dependent on the FDA’s permission to market our FemBloc system and FemaSeed product, as well as market acceptance in the United States for them, and our failure to receive FDA authorization to market either the FemBloc system or FemaSeed product or the failure of them to gain such market acceptance would negatively impact our business.
We are significantly dependent on the FDA’s permission to market our FemBloc system, as well as market acceptance in the United States for it, and our failure to receive FDA authorization to market the FemBloc system or the failure of it to gain such market acceptance would negatively impact our business.
The FDA and foreign regulatory authorities regulate, among other things, with respect to medical devices: design, development and manufacturing; testing, labeling, clinical trials; product safety; establishment registration and device listing; marketing, sales and distribution; pre-market clearance and approval; complaint handling; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, would be likely to cause or contribute to death or serious injury; post-market approval studies; and product import and export. 41 Table of Contents The regulations to which we are subject are complex and have tended to become more stringent over time.
The FDA and foreign regulatory authorities regulate, among other things, with respect to medical devices: design, development and manufacturing; testing, labeling, clinical trials; product safety; establishment registration and device listing; marketing, sales and distribution; pre-market clearance and approval; complaint handling; record keeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, would be likely to cause or contribute to death or serious injury; post-market approval studies; and product import and export.
In addition, if we experience a significant increase in demand, additional supplies of raw materials or additional manufacturing capacity may not be available when required on terms that are acceptable to us, or at all, or suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, which could have an adverse effect on our ability to meet customer demand for our products and our results of operations.
In addition, if we experience a significant increase in demand, additional supplies of raw materials or additional manufacturing capacity may not be available when required on terms that are acceptable to us, or at all, or suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, which could have an adverse effect on our ability to meet customer demand for our products and our results of operations. 40 Table of Contents We seek to maintain sufficient levels of inventory and components in order to protect ourselves from supply interruptions.
The FDA or foreign regulatory bodies can delay, limit or deny a marketing authorization of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our products are safe or effective for their intended uses or, for a 510(k) device, that they are substantially equivalent to the predicate; 42 Table of Contents • the disagreement of the FDA or the applicable foreign regulatory body with the design or implementation of our clinical trials or the interpretation of data from preclinical studies or clinical trials; • serious and unexpected adverse device effects experienced by participants in our clinical trials; • the data from our preclinical studies and clinical trials may be insufficient to support approval, de novo classification or clearance where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • the manufacturing process or facilities we use may not meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient to support a marketing authorization.
The FDA or foreign regulatory bodies can delay, limit or deny a marketing authorization of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our products are safe or effective for their intended uses or, for a 510(k) device, that they are substantially equivalent to the predicate; • the disagreement of the FDA or the applicable foreign regulatory body with the design or implementation of our clinical trials or the interpretation of data from preclinical studies or clinical trials; • serious and unexpected adverse device effects experienced by participants in our clinical trials; • the data from our preclinical studies and clinical trials may be insufficient to support approval, de novo classification or clearance where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • the manufacturing process or facilities we use may not meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient to support a marketing authorization. 49 Table of Contents In addition, the FDA may change its policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay approval, de novo classification or clearance of our future products under development or impact our ability to modify our currently cleared products on a timely basis.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur lease expires in January 2024, and we have the option to extend the term for two consecutive terms of five years, subject to certain terms and conditions. Item 3. Legal Proceedings. None
Biggest changeOur lease expires in April 2029, and we have the option to extend the term for one consecutive term of five years, subject to certain terms and conditions.
Item 2. Properties. We lease our facility in Suwanee, Georgia which, together with our research and development, controlled environment room and office space, currently totals approximately 45,000 square feet. As of December 31, 2022, our monthly rent payment was $45,659 and is subject to increases on an annual basis.
Item 2. Properties. We lease our facility in Suwanee, Georgia which, together with our research and development, controlled environment room and office space, currently totals approximately 41,000 square feet. As of December 31, 2023, our monthly rent payment was $47,029 and is subject to increases on an annual basis.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur transfer agent and registrar is Broadridge Investor Communication Solutions, Inc. Recent Sales of Unregistered Securities None. Use of Proceeds On June 17, 2021, our Registration Statement on Form S-1, as amended (Reg. No. 333-256156), was declared effective in connection with the IPO.
Biggest changeOur transfer agent and registrar is Broadridge Investor Communication Solutions, Inc. Recent Sales of Unregistered Securities None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. MARKET FOR COMMON EQUITY Market Information Our common stock is listed on the NASDAQ Capital Market under the ticker symbol FEMY. On March 24, 2023 there were 160 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. MARKET FOR COMMON EQUITY Market Information Our common stock is listed on the NASDAQ Capital Market under the ticker symbol FEMY. On March 20, 2024 there were 142 holders of record of our common stock.
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There has been no material change in the planned use of proceeds from our IPO as described in the Prospectus relating to that offering dated June 21, 2021. 64 Table of Contents Equity Compensation Plan Information The following table provides information as of December 31, 2022 regarding shares authorized for issuance under our equity compensation plans: Plan category Number of shares to be issued upon exercise of outstanding options (#) Weighted verage exercise price of outstanding options ($) Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) (1) (a) (b) (c) Equity compensation plans approved by stockholders 2021 Plan 357,950 $ 5.40 1,605,111 Equity compensation plans not approved by stockholders 2015 Plan 573,600 $ 3.07 n/a Inducement Awards (2) 150,000 $ 2.42 n/a Total 1,081,550 1,605,111 1 Represents 1,325,247 shares of common stock available for awards under our 2021 stock option plan and 279,864 shares of common stock available for purchase under our 2021 employee stock purchase plan. 2 Represents inducement grants material to key officers entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).
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Equity Compensation Plan Information The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 11. of Part III of this Annual Report on Form 10-K. 74 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur future capital requirements will depend on many factors, including: • the cost, timing and results of our clinical trials and regulatory reviews; • the cost and timing of establishing sales, marketing and distribution capabilities; • the timing, receipt and amount of sales from our current and potential products; • our ability to continue manufacturing our products and product candidates and to secure the components, services and supplies needed in their production; • the degree of success we experience in commercializing our products; • the emergence of competing or complementary technologies; • the cost of preparing, filing, prosecuting, maintaining, defending and enforcing any patent claims and other intellectual property rights; and • the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions. 71 Table of Contents Cash Flows Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes our cash flows for the years ended December 31: Year Ended December 31, 2022 2021 Net cash used in operating activities $ (10,731,973 ) (7,930,785 ) Net cash used in investing activities (407,475 ) (306,868 ) Net cash (used in) provided by financing activities (681,645 ) 29,698,456 Net change in cash and cash equivalents $ (11,821,093 ) 21,460,803 Operating activities In 2022, cash used in operating activities was $10,731,973, attributable to a net loss of $11,394,170 and a net change in our net operating assets and liabilities of $458,267 and offset by net non-cash charges of $1,120,464.
Biggest changeOur future capital requirements will depend on many factors, including: • the cost, timing and results of our clinical trials and regulatory reviews; • the cost and timing of establishing sales, marketing and distribution capabilities; • the timing, receipt and amount of sales from our current and potential products; • our ability to continue manufacturing our products and product candidates and to secure the components, services and supplies needed in their production; • the degree of success we experience in commercializing our products; • the emergence of competing or complementary technologies; • the cost of preparing, filing, prosecuting, maintaining, defending and enforcing any patent claims and other intellectual property rights; and • the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
FDA viewed these unintended pregnancies as a safety concern and, as a result, in February 2019 we paused the pivotal clinical trial for FemBloc (although subjects are still followed for safety through 5 years).
The FDA viewed these unintended pregnancies as a safety concern and, as a result, in February 2019 we paused the pivotal clinical trial for FemBloc (although subjects are still followed for safety through 5 years).
Publications of clinical results by us, our competitors and other third parties can have a significant influence on whether, and the degree to which, our products are used by physicians and the procedures and treatments those physicians choose to provide. • Market acceptance .
Publications of clinical results by us, our competitors and other third parties can have a significant influence on whether, and the degree to which, our products are used by physicians and the procedures and treatments those physicians choose to provide. • Commercialization and market acceptance .
There have been no serious safety events reported to date in any of the subjects and over 90% of the events reported that were classified as related to the device, procedure or both, were on the day of the procedure or within seven days after the procedure.
There have been no serious safety events reported to date in any of the subjects and over 90% of the events reported that were classified as related to the device, procedure or both, were on the day of the FemBloc procedure or within seven days after the procedure.
Depreciation and amortization Depreciation and amortization expense consist of depreciation expense associated with our fixed assets and lease right of-use assets and amortization expense associated with our patents. We expect to invest in capital equipment to support our ongoing and planned commercialization efforts and continue to invest in our intellectual property.
Depreciation and amortization Depreciation and amortization expenses consist of depreciation expense associated with our fixed assets and lease right of-use assets and amortization expense associated with our patents. We expect to invest in capital equipment to support our ongoing and planned commercialization efforts and continue to invest in our intellectual property.
We must successfully recruit and enroll clinical trial participants in our clinical trials for FemBloc and FemaSeed, which is further complicated by the after effects and public health concerns of the COVID-19 pandemic, in order to have the requisite data for regulatory submissions, both to the FDA and to international regulatory bodies, for marketing authorization. • Regulatory approval of our product candidates .
We must successfully recruit and enroll clinical trial participants in our clinical trial for FemBloc, which is further complicated by the after effects and public health concerns of the COVID-19 pandemic, in order to have the requisite data for regulatory submissions, both to the FDA and to international regulatory bodies, for marketing authorization. • Regulatory approval of our product candidates .
Subjects are being followed for five years for safety, and for the initial 49 subject pilot study, four years of follow-up have been completed.
Subjects are being followed for five years for safety, and for the initial 49 subject pilot study, five years of follow-up have been completed.
Our cash and cash equivalents as of December 31, 2022 will not be sufficient to fund all of our product candidates through regulatory approval, and we anticipate needing to raise additional capital to complete the development and commercialization of our product candidates.
Our cash and cash equivalents as of December 31, 2023 will not be sufficient to fund all of our product candidates through regulatory approval, and we anticipate needing to raise additional capital to complete the development and commercialization of our product candidates.
If approved, we expect FemBloc to be the first and only non-surgical permanent birth control option, using a minimally invasive delivery system that locally instills a degradable biopolymer, which is designed to cause the fallopian tubes to close using the patient’s own scar tissue, resulting in permanent birth control for the patient without a permanent implant.
If approved, we expect FemBloc to be the first and only non-surgical permanent birth control option, using a minimally invasive delivery system that locally instills a degradable biopolymer, which is designed to cause the fallopian tubes to close using the patient’s own tissue in-growth, resulting in permanent birth control (sterilization) for the patient without a permanent implant.
Our permanent birth control solution in development includes our proprietary FemBloc system, which features dual intrauterine directional delivery targeting both fallopian tubes simultaneously with a degradable biopolymer followed by an ultrasound confirmation test to confirm procedure success.
Our permanent birth control solution in late-stage clinical development includes our proprietary FemBloc system, which features dual intrauterine directional delivery targeting both fallopian tubes simultaneously with a degradable biopolymer followed by an ultrasound confirmation test to confirm procedure success.
We are a woman-founded and led company with an expansive, internally created intellectual property portfolio with over 150 patents globally, in-house chemistry, manufacturing, and controls (CMC) and device manufacturing capabilities and proven ability to develop and commercialize products.
We are a woman-founded and led company with an expansive, internally created intellectual property portfolio with 180 patents globally, in-house chemistry, manufacturing, and controls (CMC) and device manufacturing capabilities and proven ability to develop and commercialize products.
Our suite of products and product candidates address what we believe are multi-billion dollar global market segments in which there has been little advancement for many years, helping women avoid pharmaceutical solutions, implants and surgery that can be expensive and expose women to harm.
Our suite of products and product candidates address what we believe are multi-billion dollar global market segments in which there has been little advancement for many years, helping women avoid pharmaceutical solutions, implants and surgery that can be expensive and expose women to harm. FemaSeed – Our Artificial Insemination Solution .
These accrued R&D costs are included in accrued expenses on the balance sheet and within R&D expense on the statement of comprehensive loss. Recent Accounting Pronouncements See Notes 2(z) and 2(aa) to our financial statements in Part II, Item 8 for information related to recently issued accounting pronouncements.
These accrued R&D costs are included in accrued expenses on the balance sheet and within R&D expense on the statement of comprehensive loss. Recent Accounting Pronouncements See Notes 2(ab) and 2(ac) to our financial statements in Part II, Item 8 for information related to recently issued accounting pronouncements.
Our FDA-cleared FemCerv product is a biopsy device for endocervical curettage that can be used to sample cervical cells and tissue circumferentially with sample containment within the device to minimize contamination.
Our FDA-cleared and Health Canada approved FemCerv product is a biopsy device for endocervical curettage that can be used to sample cervical cells and tissue circumferentially with sample containment within the device to minimize contamination.
In the future, we expect R&D expenses to increase in absolute dollars as we continue to develop our product candidates, expand our product candidate pipeline, enhance our existing products and technologies and perform activities related to obtaining additional regulatory approval. Sales and marketing Sales and marketing expense consist of personnel-related expenses, including salaries, benefits, and stock-based compensation.
In the future, we expect R&D expenses to increase in absolute dollars as we continue to develop our product candidates, expand our product candidate pipeline, enhance our existing products and technologies and perform activities related to obtaining additional regulatory approval. 78 Table of Contents Sales and marketing Sales and marketing expenses consist of personnel-related expenses, including compensation, benefits, and stock-based compensation.
As of December 31, 2022, we have not had a history of significant returns. Accrued expenses We accrue expenses for estimated costs of R&D activities conducted by our third-party service providers, which include the conduct of preclinical studies and clinical trials.
As of December 31, 2023, we have not had a history of significant returns. 83 Table of Contents Accrued expenses We accrue expenses for estimated costs of R&D activities conducted by our third-party service providers, which include the conduct of preclinical studies and clinical trials.
General and administrative General and administrative expense consist of personnel-related expenses, including salaries, benefits, travel and stock-based compensation. Other general and administrative expenses include professional services fees, including legal, audit and tax fees, insurance costs, cost of outside consultants and employee recruiting and training costs.
General and administrative General and administrative expenses consist of personnel-related expenses, including compensation, benefits, travel and stock-based compensation. Other general and administrative expenses include professional services fees, including legal, audit and tax fees, insurance costs, cost of outside consultants and employee recruitment and training costs.
As a result, we expect our depreciation and amortization expenses to increase in absolute dollars in the future. 68 Table of Contents Other income (expense) Other income (expense) consists largely of interest earned on our cash equivalents and short-term investments, other income earned from grants, and offset by interest expense and other expenses.
As a result, we expect our depreciation and amortization expenses to increase in absolute dollars in the future. Other income (expense) Other income (expense) consists largely of interest earned on our cash equivalents and short-term investments, offset by interest expense and other expenses.
Our artificial insemination solution combines FemaSeed with a diagnostic companion product, our FDA-cleared and marketed FemVue device, which, creates saline and air contrast to safely assess the fallopian tubes for patency prior to treatment with FemaSeed. FemVue can be used with our FDA-cleared and marketed FemCath device, which allows for selective evaluation of the fallopian tube.
Our first-line therapeutic infertility solution, FemaSeed, combines with a diagnostic companion product, our FDA-cleared and marketed FemVue device, which, creates saline and air contrast to safely assess the fallopian tubes for patency prior to treatment with FemaSeed. FemVue can be used with our FDA-cleared and marketed FemCath device, which allows for selective evaluation of the fallopian tube.
In 2021, cash used in investing activities for the purchase of equipment was $306,868. Financing activities In 2022, cash used in financing activities was $681,645, attributable to payments of deferred offering costs of $232,845, repayments on notes payable of $505,205, payments under lease obligations of $23,058, and offset by proceeds from issuance of common stock of $79,463.
In 2022, cash used in financing activities was $681,645, attributable to payments of deferred offering costs of $232,845, repayments on notes payable of $505,205 and payments under lease obligations of $23,058, partially offset by proceeds from issuance of common stock of $79,463.
Fallopian tube patency is necessary for successful fertilization, and we believe FemVue offers significant advantages over other existing procedures, including being able to provide ultrasound evaluation of a woman’s fallopian tubes as part of a diagnostic infertility assessment.
At least one open fallopian tube is necessary for successful fertilization, and we believe FemVue offers significant advantages over other existing approaches, including being able to provide ultrasound evaluation of a woman’s fallopian tubes as part of an existing diagnostic infertility assessment.
(“Piper Sandler” or the “Sales Agent”) and filed a related Prospectus establishing an “at-the-market” facility, pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $8,800,000 from time to time through the Sales Agent pursuant to the Prospectus.
(“Piper Sandler” or the “Sales Agent”) and filed a related prospectus establishing an “at-the-market” facility, pursuant to which we may offer and sell shares of our common stock from time to time through the Sales Agent.
For our sales to grow, we will need to receive FDA approval for the FemBloc system for permanent birth control and FDA grant of a de novo classification request for the FemaSeed product for artificial insemination in the United States, and will need to obtain regulatory approval, grant, clearance or marketing authorization of our other pipeline products in the United States and in international markets. • Clinical results .
For our sales to grow, we will need to receive FDA approval for the FemBloc system for permanent birth control, and will need to obtain regulatory approval, grant, clearance or marketing authorization of our other pipeline products in the United States and in international markets. • Clinical results .
Funding requirements Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations into the first quarter of 2024.
Funding requirements Based on our current operating plan, our current cash and cash equivalents are expected to be sufficient to fund our ongoing operations into the second half of 2025.
Impact of COVID-19 on Our Business In March 2020, the World Health Organization declared the outbreak of COVID-19 caused by a novel strain of coronavirus as a pandemic.
See the section titled “Risk Factors” for more information. Impact of COVID-19 on Our Business In March 2020, the World Health Organization declared the outbreak of COVID-19 caused by a novel strain of coronavirus as a pandemic.
We sponsored a post-market study of FemCerv where subjects found the procedure to be relatively pain-free and the sample obtained was complete for analysis, which we believe may aid in reliable diagnosis. There were no adverse events reported. We began commercializing the FemCerv product in September 2022.
We sponsored a post-market study of FemCerv where subjects found the procedure to be relatively pain-free and the sample obtained was complete for analysis, which we believe may aid in reliable diagnosis. Our FemCerv product was introduced through a limited release in September 2022.
We must continue to successfully compete in light of our competitors’ existing and future products and related pricing and their resources to successfully market to the physicians who use our products. While these factors may present significant opportunities for us, they also pose significant risks and challenges that we must address. See the section titled “Risk Factors” for more information.
Our industry has a number of large, well-capitalized companies. We must continue to successfully compete in light of our competitors’ existing and future products and related pricing and their resources to successfully market to the physicians who use our products. While these factors may present significant opportunities for us, they also pose significant risks and challenges that we must address.
Additional Women’s Health Solutions . We have also developed a novel technology platform for tissue sampling intended to be marketed alongside our other women-specific medical products in the physician’s office setting.
Follow-up will continue annually for five years post-market. 76 Table of Contents Additional Women’s Health Solutions . We have also developed a novel technology platform for tissue sampling intended to be marketed alongside our other women-specific medical products in the physician’s office setting.
Our permanent birth control solution combines FemBloc with an ultrasound in-office diagnostic test, which uses saline and air contrast to permit the same physician to evaluate the fallopian tubes in-office to confirm the success of FemBloc approximately three months after the FemBloc procedure, rather than requiring the patient to visit another provider for a radiology-based exam, exposing the patient unnecessarily to radiation and the use of x-ray dye. 65 Table of Contents We have studied FemBloc in three clinical trials (a pilot safety study, a pivotal trial, and a validation study) pursuant to an FDA approved investigational device exemption (IDE) for each study with evaluation of safety in a total of 228 subjects.
Our permanent birth control solution combines FemBloc with an ultrasound in-office diagnostic test, which uses saline and air contrast to permit the same physician to evaluate the fallopian tubes in-office to confirm the success of FemBloc approximately three months after the final FemBloc procedure, rather than requiring the patient to visit another provider for a radiology-based exam, exposing the patient unnecessarily to radiation and the use of x-ray dye.
For the years ended December 31, 2022 and 2021 Bayer Yakuhin, Ltd. accounted for approximately 10% and 15%, respectively, of our total revenue. For products sold through direct customer service, control is transferred upon shipment to customers.
We sell our product to physician offices, primarily through direct customer service, as well as through distributors in selected international markets. For the years ended December 31, 2023 and 2022, Bayer Yakuhin, Ltd. accounted for approximately 5% and 10%, respectively, of our total revenue. For products sold through direct customer service, control is transferred upon shipment to customers.
If we are unable to raise adequate additional capital as and when required in the future, we could be forced to cease development activities and terminate our operations, and you could experience a complete loss of your investment.
If we are unable to raise adequate additional capital as and when required in the future, we could be forced to cease development activities and terminate our operations, and you could experience a complete loss of your investment. 81 Table of Contents We expect to continue to make substantial investments in our ongoing trials and in additional clinical trials that are designed to provide clinical evidence of the safety and effectiveness of our products.
Subjects were informed to rely on FemBloc only if both tests confirm procedure success. There were no pregnancies in subjects told to rely on FemBloc.
Subjects were informed to rely on FemBloc only if both tests and two independent central readers confirmed procedure success. There have been no pregnancies in subjects accurately told to rely on FemBloc.
Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP.
Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures.
If our product candidates are approved, we will need to make investments in our sales and marketing organization. Because of these and other factors, we expect to continue to incur substantial net losses and negative cash flows from operations for the foreseeable future.
Because of these and other factors, we expect to continue to incur substantial net losses and negative cash flows from operations for the foreseeable future.
The success of our business will ultimately depend on our ability to gain broad acceptance of our products, which will require an extensive education process for both physicians and patients of the benefits of our products. • Competition . Our industry has a number of large, well-capitalized companies.
The success of our business will ultimately depend on our ability to commercialize our approved products and gain broad market acceptance of our products, which will require an extensive education process for both physicians and patients of the benefits of our products, engagement of a robust sales force infrastructure and increased manufacturing capacity. • Competition .
While our significant accounting policies are more fully described in Note 2 to our financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments. 72 Table of Contents Revenue recognition Our policy is to recognize revenue when a customer obtains control of the promised goods under Accounting Standards Codification 606— Revenue from Contracts with Customers (Topic 606) , which we adopted effective January 1, 2018.
While our significant accounting policies are more fully described in Note 2 to our financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments.
Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate. We do not expect liquidity to be sufficient for twelve months from the date of these financial statements.
Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate.
Liquidity and Capital Resources Sources of liquidity Since our inception through December 31, 2022, our operations have been financed primarily by net proceeds from the sale of our common stock and convertible preferred stock, indebtedness and, to a lesser extent, product revenue.
Income tax expense Income tax expense decreased by $1,962 or 31.1%, to $4,338 in 2023 from $6,300 in 2022 due to a decrease in the minimum net worth taxes we are required to pay. 80 Table of Contents Liquidity and Capital Resources Sources of liquidity Since our inception through December 31, 2023, our operations have been financed primarily by net proceeds from the sale of our common stock and convertible preferred stock, indebtedness and, to a lesser extent, product revenue.
Our mission is to provide women with superior minimally-invasive, non-surgical product technologies, accessible in the office, improving patient care and overall health economics.
Our mission is to provide women with superior minimally-invasive, non-surgical product technologies, accessible in the office, improving patient care and overall health economics focused on servicing the reproductive health needs for those seeking solutions for infertility issues (FemaSeed and FemVue) or permanent birth control (FemBloc).
Non-cash charges primarily consisted of $224,939 in stock-based compensation and $889,140 in depreciation and amortization. The change in our net operating assets and liabilities was primarily due to an increase of $232,553 in inventory and a decrease of $383,616 in lease liabilities, offset by a change in other assets of $295,862.
The change in our net operating assets and liabilities was primarily due to an increase of $232,553 in inventory and a decrease of $383,616 in lease liabilities, offset by a change in prepaid and other assets of $295,862. Investing activities In 2023, cash used in investing activities for the purchase of equipment was $143,917.
FemBloc has the potential to offer significant advantages over the only existing option, surgical tubal ligation, or “having her tubes tied.” FemBloc is a procedure that can be completed in a physician’s office, with no anesthesia, no incisions or cannulation, no specialty skill set or capital equipment and minimal pain and recovery time, and no residual implant remaining in the patient’s body after the scar tissue develops, which we believe will likely be at half the cost.
FemBloc is a procedure that can be completed in a physician’s office, with no anesthesia, no incisions or cannulation, no specialty skill set or capital equipment and minimal pain and recovery time, and no residual implant remaining in the patient’s body after the tissue in-growth develops.
We expect to continue to make substantial investments in our ongoing trials and in additional clinical trials that are designed to provide clinical evidence of the safety and effectiveness of our products. We also expect to continue to make investments in research and development, manufacturing, regulatory affairs and clinical trials to develop future products.
We also expect to continue to make investments in research and development, manufacturing, regulatory affairs and clinical trials to develop future products. If our product candidates are approved, we will need to make investments in our sales and marketing organization.
We have no assurance that demand for elective reproductive surgery will return to pre-pandemic levels in the future, or at all. We are continuing to monitor the potential impact of the pandemic, but we cannot be certain what the overall impact will be on our business, financial condition, results of operations and prospects.
We have no assurance that demand for elective reproductive surgery will return to pre-pandemic levels in the future, or at all.
We expect to see improvement in our gross margin in the future as we are investing in equipment and tooling which will enable us to reduce labor in certain manufacturing processes and reduce material costs as well. 69 Table of Contents Research and development The following table summarizes our R&D expenses incurred during the periods presented: Year Ended December 31, 2022 2021 Compensation and related personnel costs $ 2,935,580 2,384,135 Clinical-related costs 1,839,643 882,138 Material and development costs 548,623 587,777 Professional and outside consultant costs 344,701 160,120 Other costs 145,208 70,134 Total research and development expenses $ 5,813,755 4,084,304 R&D expenses increased by $1,729,451 or 42.3%, to $5,813,755 in 2022 from $4,084,304 in 2021.
Research and development The following table summarizes our R&D expenses incurred during the periods presented: Year Ended December 31, 2023 2022 Compensation and related personnel costs $ 3,733,928 2,935,580 Clinical-related costs 1,702,985 1,839,643 Material and development costs 1,091,930 548,623 Professional and outside consultant costs 570,628 344,701 Other costs 109,230 145,208 Total research and development expenses $ 7,208,701 5,813,755 R&D expenses increased by $1,394,946 or 24.0%, to $7,208,701 in 2023 from $5,813,755 in 2022.
Depreciation and amortization Depreciation and amortization expenses decreased by $29,835, or 5.0%, to $561,233 in 2022 from $591,068 in 2021 primarily due to reduction of amortization expense associated with the Company’s intangible assets.
Depreciation and amortization Depreciation and amortization expenses decreased by $77,752, or 13.9%, to $483,481 in 2023 from $561,233 in 2022. The decrease relates to depreciation expense associated with the Company’s fixed assets and amortization expense associated with the Company’s intangible assets that have reached the end of their useful lives.
In 2021, cash used in operating activities was $7,930,785, attributable to a net loss of $7,537,845 and a net change in our net operating assets and liabilities of $732,716 and offset by net non-cash charges of $339,776. Non-cash charges primarily consisted of $193,366 in stock-based compensation and $964,287 in depreciation and amortization offset by the PPP loan forgiveness of $821,515.
In 2022, cash used in operating activities was $10,731,973, attributable to a net loss of $11,394,170 and a net change in our net operating assets and liabilities of $458,267, offset by non-cash charges of $1,120,464. Non-cash charges primarily consisted of $224,939 in stock-based compensation and $889,140 in depreciation and amortization.
The change in our net operating assets and liabilities was primarily due to a decrease in accounts payable, accrued expenses, and lease liabilities totaling $1,146,822, offset by an increase in other assets of $475,993. Investing activities In 2022, cash used in investing activities for the purchase of equipment was $407,475.
Non-cash charges primarily consisted of $675,700 in stock-based compensation, $907,985 in depreciation and amortization and $107,963 in amortization of the discount on the convertible notes. The change in our net operating assets and liabilities was primarily due to an increase of $1,614,647 in accounts payable and accrued liabilities, partially offset by and a decrease of $440,489 in lease liabilities.
Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following table shows our results of operations for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Change % Change Sales $ 1,206,218 1,179,689 26,529 2.2 % Cost of sales 441,938 370,384 71,554 19.3 % Gross margin 764,280 809,305 (45,025 ) -5.6 % Operating expenses: Research and development 5,813,755 4,084,304 1,729,451 42.3 % Sales and marketing 558,852 208,735 350,117 167.7 % General and administrative 5,430,704 4,262,002 1,168,702 27.4 % Depreciation and amortization 561,233 591,068 (29,835 ) -5.0 % Total operating expenses 12,364,544 9,146,109 3,218,435 35.2 % Loss from operations (11,600,264 ) (8,336,804 ) (3,263,460 ) 39.1 % Other income (expense): Interest income, net 228,164 3,768 224,396 5955.3 % Other income — 821,515 (821,515 ) -100.0 % Interest expense (13,464 ) (19,226 ) 5,762 -30.0 % Other expense (2,306 ) (3,098 ) 792 100.0 % Total other income (expense) 212,394 802,959 (590,565 ) -73.5 % Loss before income taxes (11,387,870 ) (7,533,845 ) (3,854,025 ) 51.2 % Income tax expense 6,300 4,000 2,300 57.5 % Net loss $ (11,394,170 ) (7,537,845 ) (3,856,325 ) 51.2 % Sales Sales increased by $26,529, or 2.2%, to $1,206,218 in 2022 from $1,179,689 in 2021.
Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table shows our results of operations for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Change % Change Sales $ 1,071,970 1,206,218 (134,248 ) -11.1 % Cost of sales (excluding depreciation expense) 380,069 441,938 (61,869 ) -14.0 % Operating expenses: Research and development 7,208,701 5,813,755 1,394,946 24.0 % Sales and marketing 650,126 558,852 91,274 16.3 % General and administrative 6,858,008 5,430,704 1,427,304 26.3 % Depreciation and amortization 483,481 561,233 (77,752 ) -13.9 % Total operating expenses 15,200,316 12,364,544 2,835,772 22.9 % Loss from operations (14,508,415 ) (11,600,264 ) (2,908,151 ) 25.1 % Other income (expense): Interest income 431,019 228,164 202,855 88.9 % Interest expense (165,390 ) (13,464 ) (151,926 ) 1128.4 % Other expense — (2,306 ) 2,306 -100.0 % Other income (expense), net 265,629 212,394 53,235 25.1 % Loss before income taxes $ (14,242,786 ) (11,387,870 ) (2,854,916 ) 25.1 % Income tax expense 4,338 6,300 (1,962 ) -31.1 % Net loss $ (14,247,124 ) (11,394,170 ) (2,852,954 ) 25.0 % 79 Table of Contents Sales from FemVue decreased by $134,248 or 11.1%, to $1,071,970 in 2023 from $1,206,218 in 2022.
In addition, we plan to explore expanded indications for the single or dual intrauterine directional delivery to instill therapeutic drugs for the treatment of ailments of the fallopian tubes, for which we have issued patents. 66 Table of Contents Factors Affecting Our Business There are a number of factors that have impacted, and we believe will continue to impact, our results of operations and growth.
Factors Affecting Our Business There are a number of factors that have impacted, and we believe will continue to impact, our results of operations and growth. These factors include: • Commencement and conduct of clinical trials for our product candidates .
In October 2022, we announced an updated study design for the pivotal trial, which will now focus on couples experiencing male factor infertility. This update reflects a revised strategy to address this underserved population experiencing infertility with a goal of facilitating accelerated enrollment.
In April 2021 we received an IDE approval from the FDA that allowed us to initiate a pivotal trial for the FemaSeed device. The first subject was enrolled in July 2021. In October 2022, we announced an updated study design for the pivotal trial to focus on couples experiencing male factor infertility, an underserved patient segment.
International sales decreased by 33.4% in 2022 compared to 2021 and were $115,859 in 2022 as compared to $174,077 in 2021, representing a 33.4% decrease in units sold with the average selling price remaining the same. Cost of sales and gross margin percentage Cost of sales increased by $71,554, or 19.3%, to $441,938 in 2022 from $370,384 in 2021.
International sales decreased by 49.9% in 2023 compared to 2022, represented by a 50.1% decrease in units sold, offset by a 0.4% increase in the average selling price. Cost of sales Cost of sales decreased by $61,869, or 14.0%, to $380,069 in 2023 from $441,938 in 2022.
The increase was attributable to a $84,747 increase in U.S. sales and a $58,218 decrease in international sales. U.S. sales increased by 8.4% in 2022 as compared to 2021 and were $1,090,359 in 2022 as compared to $1,005,612 in 2021, representing a 45.1% increase in units sold but were offset by a reduction in the average selling price.
The decrease is attributable to reduced U.S. and international sales of $76,434 and $57,814, respectively for the comparable periods. U.S. sales decreased by 7.0% in 2023 as compared to 2022, represented by a 9.0% decrease in units sold, offset by a slightly increased average selling price.
While we expect gross margin percentage to increase over the long term, it will likely fluctuate from quarter to quarter as we continue to introduce new products and adopt new manufacturing processes and technologies. Research and development Research and development, or R&D, expense consist of engineering, product development, clinical, and regulatory expenses.
We expect cost of sales to increase in absolute terms as our revenue grows. Research and development Research and development, or R&D, expenses consist of engineering, product development, clinical, and regulatory expenses.
Our artificial insemination solution in development includes our proprietary FemaSeed product candidate for artificial insemination, which features single intrauterine directional delivery with sperm, offering significant advantages over existing artificial insemination solutions, including being the only approach that allows selective delivery of sperm locally and directly to the fallopian tube where conception occurs.
Our FDA-cleared artificial insemination solution features single intratubal sperm delivery directed to the selected fallopian tube, the natural site of conception, offering significant advantages over existing assisted reproductive approaches, including significant cost savings and reduction of safety risks.
Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . We are a biomedical company focused on transforming women’s healthcare by developing novel solutions and next-generation advancements providing significant clinical impact to address severely underserved areas.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. We are a leading biomedical company focused on addressing significant unmet needs of women worldwide with a broad portfolio of in-office, accessible, and innovative therapeutic and diagnostic solutions, including a lead revolutionary product candidate and FDA-cleared products.
Removed
With an initial focus in the area of reproductive health, our two lead product candidates offer solutions for two ends of the spectrum: FemBloc for permanent birth control and FemaSeed as an artificial insemination infertility treatment. FemBloc – Our Permanent Birth Control Solution .
Added
In April 2023 we received approval to sell FemaSeed in Canada. In September 2023 we announced 510(k) clearance from the FDA for FemaSeed for intratubal insemination. The clinical trial was still ongoing at the time of receiving U.S. regulatory clearance from FDA, however, the study was concluded with enrollment completed in November 2023.
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We plan to use the study data to support which of the two confirmation tests (ultrasound or radiology) should be studied in a new pivotal trial to support a potential future application for PMA for FemBloc.
Added
Topline results of the clinical trial were announced in March 2024. The trial demonstrated that 24% of women became pregnant after FemaSeed with severe male factor (1 million to 20 million total motile sperm count (TMSC)).
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Results of the small study along with the trial design for the pivotal clinical trial is planned for submission to the FDA in the first quarter of 2023. FemaSeed – Our Artificial Insemination Solution .
Added
In contrast, a 6.7% pregnancy rate by cycle was described in the literature for intrauterine insemination (IUI) with male factor (greater than 1 million TMSC). Although permitted to have multiple FemaSeed attempts, the majority of women who became pregnant did so after the first FemaSeed procedure. The majority of adverse events were reported as mild (n=127 subjects, 216 cycles).
Removed
The safety profile of FemaSeed to date is supported by data from our FemBloc clinical trials and a post-market study of an identical single intrauterine directional delivery device design, for which we received FDA clearance for another indication. The FemaSeed pivotal trial began in July 2021, pursuant to an FDA-approved IDE received in April 2021, at multiple U.S. sites.
Added
No new safety concerns were observed through the seven-week follow-up. All adverse events were consistent with those known for IUI. The approved labeling includes women or couples wishing to become pregnant by way of intratubal insemination. We began the first phase of commercial launch in March 2024 with the announcement of the first commercial use of FemaSeed.
Removed
Completion of enrollment is expected in the second quarter of 2023 followed by a planned submission of the results from the trial to FDA in support of a future de novo classification request for FemaSeed. Our FemVue product, a companion diagnostic to FemaSeed, currently has marketing clearances or authorization in the United States, Canada, and Japan.
Added
FemVue, a solution that enables fallopian tube assessment with ultrasound as an alternative to the radiologic approach (hysterosalpingogram) for the diagnosis of infertility, is approved for sale in the U.S., Japan, and Canada. FemChec allows for fallopian tube evaluation after a FemBloc procedure to confirm occlusion (or procedure success) and is being studied as part of the FemBloc pivotal trial.
Removed
Our FemCath product, currently has marketing clearance in the United States. Extenuating circumstances at clinical trial sites may result in a slowdown in enrollment due to consolidation activities and the aftermath of the overturn of Roe v Wade.
Added
FemCath, allows for selective evaluation of an individual fallopian tube as an alternative to the traditional intrauterine catheter that is undirected, is approved for sale in the U.S and Canada.
Removed
It has been reported that there have been over 25 transactions since the start of 2021 in the infertility market, which is rapidly evolving into large commercial entities. This rapidly changing market dynamics may be disruptive to the practice and affect the conduct of clinical studies as integration occurs.
Added
FemCerv is an alternative for the diagnosis of cervical cancer by obtaining a comprehensive tissue sample with minimal contamination of the endocervical canal, and is approved for sale in the U.S and Canada.
Removed
The American Society of Reproductive Medicine (ASRM) issued a statement March 17, 2023 on the abortion policy proposals affecting reproductive medicine.
Added
In August 2023 the Company announced it had obtained a Medical Device Establishment License from Health Canada allowing the Company to directly sell its four products, FemaSeed, FemVue, FemCath and FemCerv, in Canada.
Removed
ASRM stated, “At the crux of the issue many of the proposals to ban or otherwise limit access to abortion care fail to protect the use of assisted reproductive technologies, including IVF, and so-called “personhood” measures (defining life as beginning at conception or fertilization) are multiplying across the nation, causing alarm bells to sound for medical practitioners and infertility patients alike.
Added
In October 2023, the Company announced it had completed the European Union Medical Device Regulation (MDR) final audit, the last step in obtaining an MDR certificate and CE marking, demonstrating Femasys’ compliance with the highest required regulatory standards. 75 Table of Contents FemBloc – Our Permanent Birth Control Solution .
Removed
Such proposals could, intentionally or not, limit and even ban the use of IVF and routine, safe, and medically proven procedures, such as the removal of an embryo that fails to implant in a uterus, or the disposal of unused embryos.” This uncertainty may affect subject enrollment in clinical studies being conducted at facilities providing infertility services.
Added
FemBloc has the potential to offer significant advantages over the only existing option, surgical tubal ligation, or “having her tubes tied,” including a significant cost savings at likely half the overall cost.
Removed
These factors include: • Commencement and conduct of clinical trials for our product candidates . We must successfully obtain timely IDE approval to be able to commence pivotal clinical trial for FemBloc, as well as our future products.
Added
We have studied FemBloc in three prior clinical trials (a pilot safety study, a pivotal trial, and a validation study) pursuant to an FDA approved investigational device exemption (IDE) for each study with evaluation of safety in a total of 228 subjects.
Removed
Components of Our Comprehensive Loss Sales Sales are primarily from the sale of our FemVue product. 67 Table of Contents We sell our product to physician offices, primarily through direct customer service, as well as through distributors in selected international markets.
Added
In June 2023 we received FDA approval of our IDE to evaluate the safety and efficacy of FemBloc, our non-surgical, non-implant, in-office solution for permanent birth control in a pivotal clinical trial. In August 2023 we announced the initiation of enrollment in the FINALE [Prospective Multi-Center Trial for FemBloc INtratubal Occlusion for TranscervicAL PErmanent Birth Control] pivotal trial.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−0 removed7 unchanged
Biggest changeConcentration of credit risk Substantially all of our cash and cash equivalents were held at Silicon Valley Bank (SVB), and the amounts frequently exceeded federally insured limits. On March 10, 2023, the Federal Deposit Insurance Corporation (FDIC) announced that SVB had been closed by the California Department of Financial Protection and Innovation.
Biggest changeConcentration of credit risk As of December 31, 2022, substantially all of our cash and cash equivalents were held at Silicon Valley Bank (SVB), and the amounts frequently exceeded federally insured limits. On March 10, 2023, the Federal Deposit Insurance Corporation (FDIC) announced that SVB had been closed by the California Department of Financial Protection and Innovation.
For the years ended December 31, 2022 and 2021, all our sales were in U.S. dollars. Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States.
For the years ended December 31, 2023 and 2022, all our sales were in U.S. dollars. Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States.
We have elected not to take advantage of such extended transition period, which means that we will adopt a new standard when a standard is issued or revised. 73 Table of Contents
We have elected not to take advantage of such extended transition period, which means that we will adopt a new standard when a standard is issued or revised. 84 Table of Contents
A 10% change in exchange rates would not result in a material change in fair value of our cash and accounts receivable in 2022.
A 10% change in exchange rates would not result in a material change in fair value of our cash and accounts receivable in 2023.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest rate risk Our cash and cash equivalents as of December 31, 2022 consisted of $12,961,936 in bank deposits and money market funds that presently earn very little interest. We believe such interest-earning instruments carry a low degree of interest rate risk.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest rate risk Our cash and cash equivalents as of December 31, 2023 consisted of $21,716,077 in bank deposits and money market funds that earn interest. We believe such interest-earning instruments carry a low degree of interest rate risk.

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