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What changed in Jaguar Health, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Jaguar Health, 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.

+487 added−540 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-24)

Top changes in Jaguar Health, Inc.'s 2023 10-K

487 paragraphs added · 540 removed · 448 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

242 edited+25 added−52 removed122 unchanged
Biggest changeThis is done on an individual basis under the direct responsibility of the doctor, and the EMA does not need to be informed. In general, medicines that are not yet authorized are first made available through clinical trials and patients should always be considered for inclusion in trials before being offered compassionate use programs.
Biggest changeIn general, medicines that are not yet authorized are first made available through clinical trials, and patients should always be considered for inclusion in trials before being offered compassionate use programs. 25 Table of Contents Compassionate use recommendations EMA's recommendations cover how a medicine should be used in compassionate use programs across the EU, and the type of patient who may benefit from treatment.
We have received Minor Use in a Major Species (“MUMS”) designation from the FDA for Canalevia-CA1 to treat CID in dogs. FDA has established a "small number" threshold for minor use in each of the seven major species covered by the MUMS act.
We have received a Minor Use in a Major Species (“MUMS”) designation from the FDA for Canalevia-CA1 to treat CID in dogs. FDA has established a "small number" threshold for minor use in each of the seven major species covered by the MUMS Act.
The assessment of prophylactic effects on diarrhea will be measured by the average number of weekly loose and/or watery stools for the active (crofelemer) or placebo arms over 12-week Stage I treatment period. A significant proportion of patients undergoing cancer therapy experience diarrhea, which has the potential to cause dehydration, potential hospitalization, and non-adherence to treatment in this population.
The assessment of prophylactic effects on diarrhea will be measured by the average number of weekly loose and/or watery stools for the active crofelemer or placebo arms over the 12-week Stage I treatment period. A significant proportion of patients undergoing cancer therapy experience diarrhea, which has the potential to cause dehydration, potential hospitalization, and non-adherence to treatment in this population.
Napo received partial financial support for preclinical services from the National Institute of Allergy and Infectious Diseases (“NIAID”) of the National Institutes of Health, and Napo is grateful for their support of NP-300’s development. Cholera is an acute diarrheal illness caused by infection of the intestine with the bacterium Vibrio cholerae .
Napo received partial financial support for preclinical services from the National Institute of Allergy and Infectious Diseases (“NIAID”) of the National Institutes of Health, and Napo is grateful for their support of NP-300’s development. Cholera is an acute diarrheal illness caused by intestine infection with the bacterium Vibrio cholerae.
We believe the wealth of expertise, experience, and commitment of the ETI SST—comprised of multiple members of the original SST that contributed to development of Jaguar's proprietary library of plants—will play an instrumental role in advancing our shared initial goal of identifying plants in our library that may have the potential to treat mood disorders and neurodegenerative diseases, such as Alzheimer's disease, Parkinson's disease, and amyotrophic sclerosis.
We believe the wealth of expertise, experience, and commitment of the ETI SST—comprised of multiple members of the original SST that contributed to the development of Jaguar's proprietary library of plants—will play an instrumental role in advancing our shared initial goal of identifying plants in our library that may have the potential to treat mood disorders and neurodegenerative diseases, such as Alzheimer's disease, Parkinson's disease, and amyotrophic sclerosis.
Our management team has significant experience in gastrointestinal product development for both humans and animals. Napo was founded more than 30 years ago to perform drug discovery and development by leveraging the knowledge of traditional healers working in rainforest areas. Ten members of the Jaguar and Napo team have been together for more than 15 years. Dr.
Our management team has significant experience in gastrointestinal product development for both humans and animals. Napo was founded more than 30 years ago to perform drug discovery and development by leveraging the knowledge of traditional healers working in rainforest areas. Ten Jaguar and Napo team members have been together for more than 15 years. Dr.
The FDA ultimately assesses whether the protocol design and planned analysis of the trial are acceptable to support regulatory approval of the product candidate with respect to effectiveness of the indication studied.
The FDA ultimately assesses whether the protocol design and planned analysis of the trial are acceptable to support regulatory approval of the product candidate with respect to the effectiveness of the indication studied.
A documented SPA may be modified, and such modification will be deemed binding on the FDA review division, except under the circumstances described above, if FDA and the sponsor agree in writing to modify the protocol and such modification is intended to improve the study.
A documented SPA may be modified, and such modification will be deemed binding on the FDA review division, except under the circumstances described above, if the FDA and the sponsor agree in writing to modify the protocol and such modification is intended to improve the study.
Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.
Even with the submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.
Even if the FDA approves a product, it may limit the approved indications for use the of product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings, or precautions be included in the product labeling, require that post-approval studies, Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data. The FDA may impose a number of post-approval requirements as a condition of approval of an NDA.
There are also continuing annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data. The FDA may impose a number of post-approval requirements as a condition for approval of an NDA.
The applicant should indicate a request for conditional marketing authorization in their notification of intention to submit a marketing authorization application. They should submit this six to seven months before submitting the application. EMA also encourages applicants to further discuss their plans with EMA as part of a pre-submission meeting.
The applicant should indicate a request for conditional marketing authorization in their notification of intention to submit a marketing authorization application. They should submit this six to seven months before submitting the application. EMA also encourages applicants to discuss their plans further with EMA as part of a pre-submission meeting.
For products deemed suitable for a conditional marketing authorization, EMA encourages applicants to also consider requesting accelerated assessment. Applicants should include a formal request for a conditional marketing authorization in their marketing authorization application. The CHMP will assess this request together with the application.
For products deemed suitable for conditional marketing authorization, EMA also encourages applicants to consider requesting accelerated assessment. Applicants should include a formal request for a conditional marketing authorization in their marketing authorization application. The CHMP will assess this request together with the application.
Activities after orphan designation Orphan designation makes the sponsor eligible for a number of orphan incentives. Sponsors need to comply with various activities that take place after a designation has been granted. Sponsors should submit all post-designation activities, including annual reports. For information and guidance on using IRIS, see the IRIS homepage.
Activities after orphan designation The orphan designation makes the sponsor eligible for a number of orphan incentives. Sponsors need to comply with various activities that take place after a designation has been granted. Sponsors should submit all post-designation activities, including annual reports. For information and guidance on using IRIS, see the IRIS homepage.
Additionally, designation is granted for products intended for the diagnosis, prevention, or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the medicinal product.
Additionally, the designation is granted for products intended for the diagnosis, prevention, or treatment of a life-threatening, seriously debilitating, or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the medicinal product.
This period may be reduced to six years if the ODD criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. ODD must be requested before submitting an application for marketing approval.
This period may be reduced to six years if the ODD criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify the maintenance of market exclusivity. ODD must be requested before submitting an application for marketing approval.
Companies also have been prosecuted for allegedly violating the Anti-Kickback Statute and False Claims Act as a result of impermissible arrangements between companies and healthcare practitioners or as a result of the provision of remuneration by the companies to the healthcare practitioners.
Companies have also been prosecuted for allegedly violating the Anti-Kickback Statute and False Claims Act as a result of impermissible arrangements between companies and healthcare practitioners or as a result of the provision of remuneration by the companies to healthcare practitioners.
After collecting the remaining effectiveness data, the company submits an application to FDA for full approval. The agency reviews the application and, if appropriate, fully approves the drug.
After collecting the remaining effectiveness data, the company submits an application to the FDA for full approval. The agency reviews the application and, if appropriate, fully approves the drug.
Indexing An indexed animal drug is a drug on FDA’s Index of Legally Marketed Unapproved New Animal Drugs for Minor Species, referred to simply as “the Index.” As the name says, a drug listed on the Index is unapproved but has legal marketing status. It can be legally sold for a specific use in certain minor species.
Indexing An indexed animal drug is a drug on the FDA’s Index of Legally Marketed Unapproved New Animal Drugs for Minor Species, referred to simply as “the Index.” As the name says, a drug listed on the Index is unapproved but has legal marketing status. It can be legally sold for a specific use in certain minor species.
Because people do not generally eat oyster spat, a drug to treat a disease in spat can be indexed, but a drug to treat a disease in adult oysters, which people commonly eat, cannot be indexed. Indexing a drug is quite different from the drug approval process. Indexing relies heavily on a panel of qualified experts outside FDA.
Because people do not generally eat oyster spat, a drug to treat a disease in spat can be indexed, but a drug to treat a disease in adult oysters, which people commonly eat, cannot be indexed. Indexing a drug is quite different from the drug approval process. Indexing relies heavily on a panel of qualified experts outside the FDA.
The experts review the drug’s safety in the specific minor species and the drug’s effectiveness for the intended use. All experts on the panel must agree that, when used according to the label, the drug’s benefits outweigh the risks to the treated animal. If FDA agrees with the panel, the agency adds the drug to the Index.
The experts review the drug’s safety in the specific minor species and the drug’s effectiveness for the intended use. All experts on the panel must agree that, when used according to the label, the drug’s benefits outweigh the risks to the treated animal. If the FDA agrees with the panel, the agency adds the drug to the Index.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach the required goals, thereby triggering the legislation’s automatic reduction to several government programs.
This HALT-D study evaluated 51 breast cancer patients who were eligible to receive at least three cycles of pertuzumab-containing regimen with chemotherapy that were randomly assigned to either crofelemer in cycles 1 and 2 or the control group, in which patients received standard of care. Breakthrough anti-diarrheal medicines (“BAM”) were permitted but not given prophylactically.
This HALT-D study evaluated 51 breast cancer patients eligible to receive at least three cycles of pertuzumab-containing regimen with chemotherapy that were randomly assigned to either crofelemer in cycles 1 and 2 or the control group, in which patients received standard of care. Breakthrough anti-diarrheal medicines (“BAM”) were permitted but not given prophylactically.
Jaguar’s exclusive license agreement with Napo Therapeutics provides a perpetual, royalty-bearing license for Europe, and includes traditional terms such as royalties on sales in Europe, and a supply agreement, and rights to utilize all data Napo Therapeutics generates for Jaguar development and approval activities globally. Competition There are several significantly larger pharmaceutical companies competing with us in the gastrointestinal segment.
Jaguar’s exclusive license agreement with Napo Therapeutics provides a perpetual, royalty-bearing license for Europe and includes traditional terms such as royalties on sales in Europe, and a supply agreement, and rights to utilize all data Napo Therapeutics generates for Jaguar development and approval activities globally. Competition Several significantly larger pharmaceutical companies are competing with us in the gastrointestinal segment.
Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when these data is not needed or appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients.
Further, the obligation to provide pediatric clinical trial data can be waived by the PDCO when these data are not needed or appropriate because the product is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric patients.
With support provided by concomitant marketing, promotional activities, patient empowerment programs, including an integrated social digital campaign, and medical education initiatives described below, we expect a proportional response in the number of patients treated with Mytesi. 13 Table of Contents Leverage our relationships with Scientific Advisory Board (SAB) members for crofelemer commercialization and development in follow-on indications The Company has retained several subject matter experts and KOLS as its SAB members across the therapeutic areas of HIV, CTD, gastrointestinal disorders, SBS, and/or CDD. ​ Establish partnerships to support moving pipeline indications to pivotal clinical trials The Company’s goal is to establish partnerships to support moving pipeline indications towards commercialization in the US and/or other geographies.
With support provided by concomitant marketing, promotional activities, patient empowerment programs, including an integrated social digital campaign, and medical education initiatives described below, we expect a proportional response in the number of patients treated with Mytesi. 12 Table of Contents Leverage our relationships with Scientific Advisory Board (SAB) members for crofelemer commercialization and development in follow-on indications The Company has retained several subject matter experts and KOLS as its SAB members across the therapeutic areas of HIV, CTD, gastrointestinal disorders, SBS, and/or CDD. ​ Establish partnerships to support moving pipeline indications to pivotal clinical trials The Company’s goal is to establish partnerships to support moving pipeline indications towards commercialization in the US and/or other geographies.
Guideline on the scientific application and the practical arrangements necessary to implement Regulation (EC) No 507/2006 on the conditional marketing authorization for medicinal products for human use falling within the scope of Regulation (EC) No 726/2004. Distinction from authorization under exceptional circumstances EMA may also grant a marketing authorization in absence of comprehensive data under exceptional circumstances.
Guideline on the scientific application and the practical arrangements necessary to implement Regulation (EC) No 507/2006 on the conditional marketing authorization for medicinal products for human use falling within the scope of Regulation (EC) No 726/2004. Distinction from authorization under exceptional circumstances EMA may also grant marketing authorization in the absence of comprehensive data under exceptional circumstances.
Animal Health Prescription Drugs Under the FDCA, the term "drug" means articles recognized in the official United States Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary; articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and articles other than food intended to affect the structure or any function of the body of man or other animals.
Animal Health Prescription Drugs Under the FDCA, the term "drug" means articles recognized in the official US Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary; articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; and articles other than food intended to affect the structure or any function of the body of man or other animals.
In most cases, the submission of an NDA is subject to a substantial application user fee. Under the Prescription Drug User Fee Act (“PDUFA”), guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.
In most cases, submitting an NDA is subject to a substantial application user fee. Under the Prescription Drug User Fee Act (“PDUFA”) guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission.
For example, in March 2010, the ACA was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; introduced a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected; extended the Medicaid Drug Rebate Program to the utilization of prescriptions of individuals enrolled in Medicaid managed care plans; imposed mandatory discounts for certain Medicare Part D beneficiaries as a condition for manufacturers’ outpatient drugs covered under Medicare Part D; subjected drug manufacturers to new annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs; created a new Patient Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; creation of the Independent Payment Advisory Board, once empaneled, will have authority to recommend certain changes to the Medicare program that could result in reduced payments for prescription drugs; and establishment of a Center for Medicare Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.
For example, in March 2010, the ACA was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; introduced a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated 32 Table of Contents for drugs that are inhaled, infused, instilled, implanted or injected; extended the Medicaid Drug Rebate Program to the utilization of prescriptions of individuals enrolled in Medicaid managed care plans; imposed mandatory discounts for certain Medicare Part D beneficiaries as a condition for manufacturers’ outpatient drugs covered under Medicare Part D; subjected drug manufacturers to new annual fees based on pharmaceutical companies’ share of sales to federal healthcare programs; created a new Patient Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; creation of the Independent Payment Advisory Board, once empaneled, will have authority to recommend certain changes to the Medicare program that could result in reduced payments for prescription drugs; and establishment of a Center for Medicare Innovation at the CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending.
In particular, for diarrhea predominant irritable bowel syndrome, Napo has two issued U.S. patents, US 8,846,113 and US 9,980,938, which expire on February 9, 2027, as well as issued patents in Australia, Canada, Europe, Gulf States, Hong Kong, Japan, South Korea, Mexico, New Zealand, Singapore, Thailand, and Taiwan and pending applications in Bangladesh, and Venezuela, all of which are estimated to expire April 30, 2027; for constipation predominant irritable bowel syndrome, Napo has three issued U.S. patents, with terms to at least April 30, 2027, patents in Australia, Canada, Europe, Hong Kong, Mexico, New Zealand, and Singapore, all of which are estimated to expire April 30, 2027; and for inflammatory bowel disease, familial adenomatous polyposis and/or colon cancer, Napo has two issued U.S. patents, US 8,852,649 and US 9,987,250 with terms until at least January 4, 2028, as well as issued patents in Australia, Hong Kong, and Europe and Canada, which have estimated expiration dates of April 30, 2027.
In particular, for diarrhea predominant irritable bowel syndrome, Napo has two issued US patents, US 8,846,113 and US 9,980,938, which expire on February 9, 2027, as well as issued patents in Australia, Canada, Europe, Gulf States, Hong Kong, Japan, South Korea, Mexico, New Zealand, Singapore, Thailand, and Taiwan and pending applications in Bangladesh, and Venezuela, all of which are estimated to expire April 30, 2027; for constipation predominant irritable bowel syndrome, Napo has three issued US patents, with terms to at least April 30, 2027, patents in Australia, Canada, Europe, Hong Kong, Mexico, New Zealand, and Singapore, all of which are estimated to expire April 30, 2027; and for inflammatory bowel disease, familial adenomatous polyposis and/or colon cancer, Napo has two issued US patents, US 8,852,649 and US 9,987,250 with terms until at least January 4, 2028, as well as issued patents in Australia, Hong Kong, and Europe and Canada, which have estimated expiration dates of April 30, 2027.
Multiple sites may necessitate the involvement of multiple IRBs and submissions for human health products; 18 Table of Contents ● performance of adequate and well controlled human clinical trials in accordance with good clinical practices (“GCPs”), requirements to establish the safety and efficacy of the proposed drug product for each indication; ● submission to the FDA of an NDA for marketing approval of human prescription drugs; ● satisfactory completion of FDA advisory committees review, if applicable; ● satisfactory completion of an FDA pre-approval inspection (“PAI”) of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices (“cGMPs”), requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and ● FDA review and approval of the NDA.
Multiple sites may necessitate the involvement of multiple IRBs and submissions for human health products; ● performance of adequate and well-controlled human clinical trials in accordance with good clinical practices (“GCPs”), requirements to establish the safety and efficacy of the proposed drug product for each indication; ● submission to the FDA of an NDA for marketing approval of human prescription drugs; ● satisfactory completion of FDA advisory committees review, if applicable; ● satisfactory completion of an FDA pre-approval inspection (“PAI”) of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing 17 Table of Contents practices (“cGMPs”), requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and ● FDA review and approval of the NDA.
Crofelemer is a novel, first-in-class anti-secretory antidiarrheal drug which has a normalizing effect on electrolyte and fluid balance in the gut, and this mechanism of action has the potential to benefit multiple disorders that cause gastrointestinal distress, including diarrhea and abdominal discomfort.
Crofelemer is a novel, first-in-class anti-secretory antidiarrheal drug that has a normalizing effect on electrolyte and fluid balance in the gut, and this mechanism of action has the potential to benefit multiple disorders that cause gastrointestinal distress, including diarrhea and abdominal discomfort.
These therapies cause CID in up to 80% of breast cancer patients, reaching grade 3, which often requires hospitalization, in 8-12% of patients. No antidiarrheal medications are currently approved that specifically target the underlying mechanism of CID associated with pertuzumab-containing regimens.
These therapies cause diarrhea in up to 80% of breast cancer patients, reaching grade 3, which often requires hospitalization, in 8-12% of patients. No antidiarrheal medications that specifically target the underlying mechanism of CID associated with pertuzumab-containing regimens are currently approved.
In the interest of public health, applicants may be granted a conditional marketing authorization for such medicines on less comprehensive clinical data than normally required, where the benefit of immediate availability of the medicine outweighs the risk inherent in the fact that additional data are still required.
In the interest of public health, applicants may be granted conditional marketing authorization for such medicines on less comprehensive clinical data than normally required, where the benefit of immediate availability of the medicine outweighs the risk inherent in the fact that additional data are still required.
Furthermore, it has been reported that patients with CRD used significantly more resources, including outpatient services, emergency room visits, and hospitalizations. Effective prevention of CRD provides an untapped market opportunity to reduce the overall cost of cancer care 3 .
Furthermore, it has been reported that patients with CRD used significantly more resources, including outpatient services, emergency room visits, and hospitalizations. Effective prevention of CRD provides an untapped market opportunity to reduce the overall cost of cancer care.
ODD qualifies the sponsor of the drug for various development incentives, including tax credits for qualified clinical testing and relief of filing fees. Additionally, the ODA provides a seven-year period of marketing exclusivity to the first sponsor who obtains marketing approval for a designated orphan drug.
ODD qualifies the drug's sponsor for various development incentives, including tax credits for qualified clinical testing and relief of filing fees. Additionally, the ODA provides a seven-year period of marketing exclusivity to the first sponsor who obtains marketing approval for a designated orphan drug.
Field research collaborations have been conducted in the past by members of the scientific strategy team (“SST”) of Jaguar’s predecessor company Shaman Pharmaceuticals, who are also members of the ETI SST, yielded possible applications for a compound called alstonine.
Field research collaborations have been conducted in the past by members of the scientific strategy team (“SST”) of Jaguar’s predecessor company Shaman Pharmaceuticals, who are also members of the ETI SST, and have yielded possible applications for a compound called alstonine.
The results of the study were published in October 2022 and showed that prophylaxis with crofelemer resulted in substantial reduction of higher grade diarrhea compared to the standard-of-care control group patients.
The results of the study were published in October 2022 and showed that prophylaxis with crofelemer resulted in a substantial reduction of higher-grade diarrhea compared to the standard-of-care control group patients.
Crofelemer also demonstrated significant improvement in the proportion of “responder” dogs, and there was a trend for fewer neratinib dose reductions in crofelemer treatment groups when compared to the control group.
Crofelemer also demonstrated significant improvement in the proportion of “responder” dogs, and there was a trend for fewer neratinib dose reductions in crofelemer treatment groups compared to the control group.
As a result, the coverage determination process will require Napo to provide scientific and clinical support for the use of Napo’s products to each payer separately and will be a time consuming process.
As a result, the coverage determination process will require Napo to provide scientific and clinical support for the use of Napo’s products to each payer separately, and it will be a time-consuming process.
Napo completed its requisite preclinical and formulation activities to support the Investigational New Drug (IND) application for its second-generation, plant-based oral prescription drug product, NP-300, for its clinical development for the symptomatic relief and treatment of moderate-to-severe diarrhea, with or without concomitant antimicrobial therapy, from bacterial, viral and parasitic infections including Vibrio cholerae , the bacterium that causes cholera.
Napo completed its requisite preclinical and formulation activities to support the IND application for its second-generation, plant-based oral prescription drug product, NP-300, for its clinical development for the symptomatic relief and treatment of moderate-to-severe diarrhea, with or without concomitant antimicrobial therapy, from bacterial, viral and parasitic infections including Vibrio cholerae, the bacterium that causes cholera.
In July 2014, BioMarin announced that it had sold a priority review voucher to Sanofi and Regeneron for $67.5 million. (https://investors.biomarin.com/2014-07-30-BioMarin-Sells-Priority-Review-Voucher-for-67-5-Million). ​ 12 Table of Contents The following diagram illustrates the mechanism of action of crofelemer, which normalizes chloride ion secretion and fluid content of the gut to improve stool consistency.
In July 2014, BioMarin announced that it had sold a priority review voucher to Sanofi and Regeneron for $67.5 million. (https://investors.biomarin.com/2014-07-30-BioMarin-Sells-Priority-Review-Voucher-for-67-5-Million). ​ 11 Table of Contents The following diagram illustrates the mechanism of action of crofelemer, which normalizes chloride ion secretion and fluid content of the gut to improve stool consistency.
Conditional marketing authorizations are valid for one year and can be renewed annually. Once a conditional marketing authorization has been granted, the marketing authorization holder must fulfil specific obligations within defined timelines. These obligations could include completing ongoing or new studies or collecting additional data to confirm the medicine's benefit-risk balance remains positive.
Conditional marketing authorizations are valid for one year and can be renewed annually. Once a conditional marketing authorization has been granted, the marketing authorization holder must fulfill specific obligations within defined timelines. These obligations could include completing ongoing or new studies or collecting additional data to confirm the medicine's benefit-risk balance remains positive.
As announced October 26, 2022, the results of the HALT-D trial were published in the peer reviewed journal Breast Cancer Research and Treatment.
As announced on October 26, 2022, the results of the HALT-D trial were published in the peer-reviewed journal Breast Cancer Research and Treatment.
Alstonine is derived from a plant used by traditional healers in Nigeria, and has demonstrated a potential novel mechanism of action for the treatment of difficult to manage conditions such as schizophrenia. The ETI SST consists of leading and globally renowned ethnobotanists, physicians, and pharmacologists as well as experts in the fields of natural product chemistry and neuropharmacology.
Alstonine is derived from a plant used by traditional healers in Nigeria and has demonstrated a potential novel mechanism of action for the treatment of difficult-to-manage conditions such as schizophrenia. The ETI SST consists of leading and globally renowned ethnobotanists, physicians, pharmacologists, and experts in natural product chemistry and neuropharmacology.
This approval was on the basis of the drug’s safety and efficacy in reducing the number of weekly and daily watery stools in patients and improvement of stool consistency, from unformed to formed stools, over a 24-week treatment period. Unlike other available diarrhea remedies, crofelemer does not act by inhibiting intestinal motility.
This approval was on the basis of the drug’s safety and efficacy in reducing the number of weekly and daily watery stools in patients and improving stool consistency, from unformed to formed stools, over a 24-week treatment period. Unlike other available diarrhea remedies, crofelemer does not act by inhibiting intestinal motility.
As previously announced, it has been reported that patients with cancer related diarrhea (CRD) were 40% more likely to discontinue the chemotherapy or targeted therapy than patients without CRD. The persistence of index cancer therapy and time to switch were also lower for patients with CRD. Strategies to control CRD and continue cancer therapy are urgently needed 2 .
As previously announced, it has been reported that patients with cancer-related diarrhea (“CRD”) were 40% more likely to discontinue chemotherapy or targeted therapy than patients without CRD. The persistence of index cancer therapy and the time to switch were also lower for patients with CRD. Strategies to control CRD and continue cancer therapy are urgently needed.
Our goal is to have de risked the program as much as we believe 14 Table of Contents we possibly can, by the time we start devoting significant funds to a clinical trial, in particular the regulatory pathway. We believe this approach will lead to better long-term outcomes for our products in development.
Our goal is to have de risked the program as much as we believe we possibly can, by the 13 Table of Contents time we start devoting significant funds to a clinical trial, in particular the regulatory pathway. We believe this approach will lead to better long-term outcomes for our products in development.
Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending New Drug Applications (“NDAs”), withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
Failure to comply with the applicable US requirements at any time during the product development process, approval process, or after approval may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending New Drug Applications (“NDAs”), withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
We believe the novel mechanism of action of crofelemer may have considerable potential to manage the severe secretory loss of electrolytes and fluid resulting in dehydration. There are currently no therapies for CDD except parenteral nutrition. Thus, crofelemer may reduce the associated morbidity and mortality of CDD and lessen the need for parenteral nutrition (“PN”).
We believe the novel mechanism of action of crofelemer may have considerable potential to manage the severe secretory loss of electrolytes and fluid resulting in dehydration. There are currently no therapies for MVID except parenteral nutrition. Thus, crofelemer may reduce the associated morbidity and mortality of MVID and lessen the need for parenteral nutrition (“PN”).
However, crofelemer patients demonstrated significantly better outcomes compared to control group patients across a number of key secondary endpoints including reductions in the incidence and severity of diarrhea in cycle 2 based on Investigator and Patient Reported Outcomes (see Jaguar Health's November 19, 2021 press release).
However, crofelemer patients demonstrated significantly better outcomes compared to control group patients across a number of key secondary endpoints, including reductions in the incidence and severity of diarrhea in cycle two based on Investigator and Patient Reported Outcomes (see Jaguar Health's November 19, 2021 press release).
Napo has a U.S. patent for the treatment of CID caused by neratinib with crofelemer and a related continuation application also directed to treating CID effectively filed on March 9, 2018, as well as multiple pending national stage applications outside the US also directed to treating CID with crofelemer effectively filed June 19, 2020.
Napo has a US patent for the treatment of CID caused by neratinib with crofelemer and a related continuation application also directed to treating CID effectively filed on March 9, 2018, as well as multiple pending national stage applications outside the US also directed to treating CID with crofelemer effectively filed June 19, 2020.
The Federal Food Drug and Cosmetic Act defines food as “articles used for food or drink for man or other animals and articles used as components of any such article.” Animal foods are not subject to pre-market approval and are designed to provide a nutritive purpose to the animals that receive them.
The Federal Food Drug and Cosmetic Act defines food as “articles used for food or drinks for man or other animals and articles used as components of any such article.” Animal foods are not subject to pre-market approval and are designed to provide a nutritive purpose to the animals that receive them.
Diarrhea has been reported as one of the most common side effects of TKIs and may result in cancer therapy drug holidays or reductions from therapeutic dose, potentially impacting patient outcomes. Diarrhea is also a common side effect of some approved CDK 4/6 inhibitors.
Diarrhea has been reported as one of the most common side effects of TKIs and may result in cancer therapy drug holidays or reductions from therapeutic doses, potentially impacting patient outcomes. Diarrhea is also a common side effect of some approved CDK 4/6 inhibitors.
Findings from studies have indicated that patients with CRD had nearly 2.9 times higher all-cause total cost of care than patients without CRD after adjusting for covariates. Thus, prophylaxis of CRD is expected to result in a significant reduction in cancer-treatment cost 4 .
Findings from studies have indicated that patients with CRD had nearly 2.9 times higher all-cause total cost of care than patients without CRD after adjusting for covariates. Thus, prophylaxis of CRD is expected to result in a significant reduction in cancer treatment costs.
Initially, this is valid for 5 years. It can then be renewed for unlimited validity. As for any medicine, if new data show that the medicine’s benefits no longer outweigh its risks, EMA can take regulatory action, such as suspending or revoking the marketing authorization.
Initially, this is valid for five years. It can then be renewed for unlimited validity. As for any medicine, if new data show that the medicine’s benefits no longer outweigh its risks, EMA can take regulatory action, such as suspending or revoking the marketing authorization.
A complete response letter must contain a statement of specific items that prevent the FDA from approving the application and will also contain conditions that must be met in order to secure final approval of the NDA and may require additional clinical or pre-clinical testing in order for FDA to reconsider the application.
A complete response letter must contain a statement of specific items that prevent the FDA from approving the application and will also contain conditions that must be met to secure final approval of the NDA and may require additional clinical or pre-clinical testing for the FDA to reconsider the application.
Napo also owns issued patents in Brazil, India, and Russia, and a pending application in Venezuela that also cover methods of manufacturing proanthocyanidin polymers isolated from Croton spp. or Calophyllum spp., including crofelemer, with terms at least until January 17, 2032.
Napo also owns issued patents in Brazil, India, and Russia, and a pending application in Venezuela that also covers methods of manufacturing proanthocyanidin polymers isolated from Croton spp. or Calophyllum spp., including crofelemer, with terms at least until January 17, 2032.
The U.S. federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, receiving or providing any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.
The US federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, receiving, or providing any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs.
To the best of our knowledge, no drugs have been approved in the US or rest of the world (ROW) for the reduction of parenteral support with a concomitant reduction in the high stool volume and diarrhea in SBS patients. Diarrhea predominant irritable bowel syndrome .
To the best of our knowledge, no drugs have been approved in the US or the rest of the world (ROW) to reduce parenteral support with a concomitant reduction in the high stool volume and diarrhea in SBS patients. Diarrhea predominant irritable bowel syndrome .
In addition, Napo has two patent families each with pending applications in United States, Australia, Canada, China, Europe, Israel, Jordan, Japan and the Gulf States directed to the treatments of SBS and CDD, respectively, and each filed on May 31, 2018.
In addition, Napo has two patent families, each with pending applications in the US, Australia, Canada, China, Europe, Israel, Jordan, Japan, and the Gulf States, directed to the treatments of SBS and CDD, respectively, and each filed on May 31, 2018.
Napo also has pending International applications to “Methods and Compositions For Treating Post-Acute Infection Gastrointestinal Disorders” filed November 23, 2021. For methods of manufacturing proanthocyanidin polymers isolated from Croton spp. or Calophyllum spp., including crofelemer, Napo owns issued patents in India, South Africa, and Eurasia with terms at least until August 26, 2029.
Napo also has pending international applications to “Methods and Compositions for Treating Post-Acute Infection Gastrointestinal Disorders,” filed November 23, 2021. For methods of manufacturing proanthocyanidin polymers isolated from Croton spp. or Calophyllum spp., including crofelemer, Napo owns issued patents in India, South Africa, and Eurasia with terms at least until August 26, 2029.
Mytesi (crofelemer) is a novel, first-in-class anti-secretory antidiarrheal drug which has a normalizing effect to restore the electrolyte and fluid balance in the gut and lumen, and this mechanism of action has the potential to benefit multiple disorders. Clinical trials demonstrated that nearly 80% of Mytesi users experienced an improvement in their diarrhea over a four-week period.
Mytesi (crofelemer) is a novel, first-in-class anti-secretory antidiarrheal drug that has a normalizing effect of restoring the electrolyte and fluid balance in the gut and lumen, and this mechanism of action has the potential to benefit multiple disorders. Clinical trials demonstrated that nearly 80% of Mytesi users experienced an improvement in their diarrhea over a four-week period.
Although it is possible that we may enter into additional corporate partnering relationships related to Mytesi, our intention would be to retain all or co-commercialization and promotional rights in the U.S., so that we do not become primarily a royalty collecting organization, and we are opposed to entering into any Mytesi partnering relationship that would require splitting indications.
Although it is possible that we may enter into additional corporate partnering relationships related to Mytesi, our intention would be to retain all or co-commercialization and promotional rights in the US so that we do not become primarily a royalty collecting organization, and we are opposed to entering into any Mytesi partnering relationship that would require splitting indications.
Additionally, the intent standard under the U.S. federal Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, the ACA, to a stricter standard such that a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Additionally, the intent standard under the US federal Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, the ACA, to a stricter standard such that a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
These programs are only put in place if the medicine is expected to help patients with life-threatening, long-lasting or seriously debilitating illnesses, which cannot be treated satisfactorily with any currently authorized medicine.
These programs are only put in place if the medicine is expected to help patients with life-threatening, long-lasting, or seriously debilitating illnesses that cannot be treated satisfactorily with any currently authorized medicine.
In addition, NP-300 is in development for symptomatic relief and treatment of moderate-to-severe diarrhea, with or without concomitant antimicrobial therapy, from bacterial, viral and parasitic infections including Vibrio cholerae , the bacterium that causes cholera. 10 Table of Contents Napo Prescription Drug Product Candidates ​ Product Candidates ​ Indication Completed Milestones Current Phase of Development Anticipated Near-Term Milestones* Mytesi CTD • Initiated pivotal Phase 3 clinical trial in October 2020 ​ Phase 3 • Target trial enrollment of 256 patients expected to complete in Q2 2023 Mytesi IBS-D • Two Phase 2 studies completed Phase 2 • Potential business development opportunities Mytesi Chronic idiopathic diarrhea • Clinical POC study initiated at The University of Texas Health Science Center at Houston (“UTH”) Phase 2 POC study • Top line results expected in 2023 Mytesi Functional diarrhea • Initiated clinical study at Beth Israel Deaconess Medical Center, Harvard Medical School, Boston Phase 2 POC study • Enrollment ongoing Crofelemer powder for oral solution* Rare disease indication: SBS with intestinal failure in adults • ODD for SBS granted by FDA and EMA Clinical POC study • IIT POC study in 2023 Crofelemer powder for oral solution* Rare disease indication: Pediatric MVID, a CDD condition • ODD for MVID granted by FDA and EMA IND stage • Initiate clinical study in 2023 NP-300* Second-generation antidiarrheal drug for infectious diarrhea including from Vibrio cholerae , the bacterium that causes cholera • FDA activated Company’s IND: Q3 2022 Phase I • Initiating Phase 1 trial ​ ​ ​ *Clinical trials are funding dependent Estimated Size of Mytesi Target Markets We believe the medical need for Mytesi is significant, compelling, and unmet, and that doctors are looking for a drug product with a mechanism of action that is distinct from the options currently available to resolve diarrhea.
In addition, NP-300 is in development for symptomatic relief and treatment of moderate-to-severe diarrhea, with or without concomitant antimicrobial therapy, from bacterial, viral, and parasitic infections, including Vibrio cholerae , the bacterium that causes cholera. 9 Table of Contents Napo Prescription Drug Product Candidates ​ Product Candidates ​ Indication Completed Milestones Current Phase of Development Anticipated Near-Term Milestones* Mytesi CTD • Initiated pivotal Phase 3 clinical trial in October 2020 ​ Phase 3 • Awaiting unblinding Mytesi IBS-D • Two Phase 2 studies completed Phase 2 • Potential business development opportunities Mytesi Chronic idiopathic diarrhea • Clinical POC study initiated at The University of Texas Health Science Center at Houston (“UTH”) Phase 2 POC study • Top line results expected in 2023 Mytesi Functional diarrhea • Initiated clinical study at Beth Israel Deaconess Medical Center, Harvard Medical School, Boston Phase 2 POC study • Enrollment ongoing Crofelemer powder for oral solution* Rare disease indication: SBS with intestinal failure in adults • ODD for SBS granted by FDA and EMA Clinical POC study • IIT POC study in 2024 Crofelemer powder for oral solution* Rare disease indication: Pediatric MVID, a CDD condition • ODD for MVID granted by FDA and EMA IND stage • Initiating clinical study in 2024 NP-300* Second-generation antidiarrheal drug for infectious diarrhea including from Vibrio cholerae , the bacterium that causes cholera • FDA activated Company’s IND: Q3 2022 Phase I • Initiating Phase 1 trial ​ ​ ​ *Clinical trials are funding dependent Estimated Size of Mytesi Target Markets We believe the medical need for Mytesi is significant, compelling, and unmet, and that doctors are looking for a drug product with a mechanism of action that is distinct from the options currently available to resolve diarrhea.
As previously announced results from a dog study of crofelemer and an irreversible pan-HER2+ tyrosine kinase inhibitor (TKI), neratinib, provide further scientific support for the evaluation of crofelemer in providing symptomatic relief of watery diarrhea in patients receiving a targeted cancer therapy drug like neratinib with or without cycle chemotherapy, without the use of loperamide, an antimotility drug.
As previously announced, results from a dog study of crofelemer and an irreversible pan-HER2+TKI, neratinib, provide further scientific support for the evaluation of crofelemer in providing symptomatic relief of watery diarrhea in patients receiving a targeted cancer therapy drug like neratinib with or without cycle chemotherapy, without the use of loperamide, an antimotility drug.
According to the Centers for Disease Control and Prevention of the U.S. Department of Health & Human Services, an estimated 1.3 to 4 million people around the world get cholera each year and 21,000 to 143,000 people die from it. The infection is often mild or without symptoms but can sometimes be severe.
According to the Centers for Disease Control and Prevention of the US Department of Health & Human Services, an estimated 1.3 to 4 million people around the world get cholera each year, and 21,000 to 143,000 people die from it. The infection is often mild or without symptoms but can sometimes be severe.
We will continue to seek partnerships outside the United States for the above indications while focusing on development and commercial access in the United States directly. We are also focused on investigating NP-300 for various gastrointestinal indications. NP-300 is a proprietary Jaguar pharmaceutical product, a standardized botanical extract distinct from crofelemer, also sustainably derived from the Croton lechleri tree.
We will continue to seek partnerships outside the US for the above indications while focusing on development and commercial access in the US directly. We are also focused on investigating NP-300 for various gastrointestinal indications. NP-300 is a proprietary Jaguar pharmaceutical product, a standardized botanical extract distinct from crofelemer, also sustainably derived from the Croton lechleri tree.
In addition, advertising and promotion of animal health products is controlled by regulations in many countries. These rules generally restrict advertising and promotion to those claims and uses that have been reviewed and approved by the applicable agency.
In addition, advertising and promotion of animal health products are controlled by regulations in many countries. These rules generally restrict advertising and promotion to those claims and uses that have been reviewed and approved by the applicable agency.
EMA's Committee for Medicinal products for Human Use (“CHMP”) or Committee for Medicinal products for Veterinary Use (“CVMP”) carry out a scientific assessment of the application and give a recommendation on whether the medicine should be marketed or not. However, under EU law EMA has no authority to actually permit marketing in the different EU countries.
EMA's Committee for Medicinal products for Human Use (“CHMP”) or Committee for Medicinal products for Veterinary Use (“CVMP”) carry out a scientific assessment of the application and give a recommendation on whether the medicine should be marketed or not. However, under EU law EMA has no authority to actually permit 21 Table of Contents marketing in the different EU countries.
European Union new chemical entity exclusivity In the EU, new chemical entities, sometimes referred to as new active substances, qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity.
European Union's new chemical entity exclusivity In the EU, new chemical entities, sometimes referred to as new active substances, qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity.
Violations of the civil False Claims Act can result in very significant monetary penalties and treble damages. Several pharmaceutical and other healthcare companies have been prosecuted under these laws for, among other things, allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product.
Violations of the Civil False Claims Act can result in very significant monetary penalties and triple damages. Several pharmaceutical and other healthcare companies have been prosecuted under these laws for, among other things, allegedly providing free products to customers with the expectation that the customers would bill federal programs for the product.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations, including the Final HIPAA Omnibus Rule, published on January 25, 2013, impose specified requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their respective implementing regulations, including the Final HIPAA 29 Table of Contents Omnibus Rule, published on January 25, 2013, impose specified requirements relating to privacy, security, and transmission of individually identifiable health information held by covered entities and their business associates.
Napo grants license to Napo Therapeutics On August 2021, Napo signed a license agreement with Napo Therapeutics to study, develop, manufacture, and commercialize Napo’s plant-based crofelemer and NP-300 drug product candidates in the European Union (excluding Russia) and in specified non-EU countries in Europe for specific indications, which rights and obligations were assumed by the combined company formed by the merger of Napo EU S.p.A. with Dragon SPAC (the combined company uses the Napo Therapeutics name).
Napo grants license to Napo Therapeutics In August 2021, Napo signed a license agreement with Napo Therapeutics to study, develop, manufacture, and commercialize Napo’s plant-based crofelemer and NP-300 drug product candidates in the European Union (excluding Russia) and in specified non-EU countries in Europe for specific indications, which rights and obligations were assumed by the combined company formed by the merger of Napo EU S.p.A. with Dragon SPAC (the combined 16 Table of Contents company uses the Napo Therapeutics name).
Healthcare Laws In addition to FDA restrictions on marketing of pharmaceutical and biological products, other U.S. federal and state healthcare regulatory laws restrict business practices in the pharmaceutical industry, which include, but are not limited to, state and federal anti-kickback, false claims, data privacy and security and physician payment and drug pricing transparency laws.
Other US Healthcare Laws In addition to FDA restrictions on the marketing of pharmaceutical and biological products, other US federal and state healthcare regulatory laws restrict business practices in the pharmaceutical industry, which include, but are not limited to, state and federal anti-kickback, false claims, data privacy and security and physician payment and drug pricing transparency laws.
EMA Grants The EMA does not offer research grants for sponsors of orphan medicines, but funding is available from the European Commission and other sources: ● Horizon 2020, the EU Framework Programme for Research and Innovation; ● E-Rare, a transnational project for research programs on rare diseases. ● Grants are also available for sponsors considering research in the United States or Japan: ● United States: Food and Drug Administration: Orphan products grants program ● Japan: National Institute of Biomedical Innovation: Services to promote development of medicinal products for rare diseases 25 Table of Contents Incentives in Member States Details on incentives available for designated orphan medicines in EU Member States are available in the European Commission's Inventory of Union and Member State incentives to support research into, and the development and availability of, orphan medicinal products.
EMA Grants The EMA does not offer research grants for sponsors of orphan medicines, but funding is available from the European Commission and other sources: ● Horizon 2020, the EU Framework Programme for Research and Innovation; ● E-Rare, a transnational project for research programs on rare diseases ● Grants are also available for sponsors considering research in the US or Japan: ● US: Food and Drug Administration: Orphan products grants program ● Japan: National Institute of Biomedical Innovation: Services to promote development of medicinal products for rare diseases Incentives in Member States Details on incentives available for designated orphan medicines in EU Member States are available in the European Commission's Inventory of Union and Member State incentives to support research into and the development and availability of orphan medicinal products.
CDD is a group of rare, chronic intestinal channel diseases, with onset in early infancy, that are characterized by severe, lifelong diarrhea and a lifelong need for nutritional intake either parenterally or with a feeding tube. CDD is related to specific genetic defects inherited as autosomal recessive traits.
CDDs are a group of rare, chronic intestinal channel diseases, with onset in early infancy, that are characterized by severe, lifelong diarrhea and a lifelong need for nutritional intake either parenterally or with a feeding tube. CDDs are related to specific genetic defects inherited as autosomal recessive traits.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

161 edited+4 added−10 removed169 unchanged
Biggest changeThe termination of either of these contracts would result in a disruption to product development and our business will be harmed. ● We are dependent upon third-party contract manufacturers, both for the supply of the active pharmaceutical ingredient in Mytesi and Canalevia-CA1, as well as for the supply of finished products for commercialization. ● If we are unable to establish sales capabilities on our own or through third parties, we may not be able to market and sell our current or future human products and product candidates, if approved, and generate product or other revenue. ● We will need to increase the size of our organization and may not successfully manage such growth. ● Canalevia-CA1 and, our animal health prescription drug product candidates, may be marketed in the United States only in the target animals and for the indications for which they are approved, and if we want to expand the approved animals or indications, it will need to obtain additional approvals, which may not be granted. ● The misuse or extra-label use of Mytesi, Canalevia, and our human or animal prescription drug product candidates if approved by regulatory authorities, may harm our reputation or result in financial or other damages. ● We may be unable to obtain, or obtain on a timely basis, a renewal of conditional approval for Canalevia-CA1, or to eventually obtain full regulatory approval of Canalevia-CA1, which would harm our operating results. ● We may not maintain the benefits associated with MUMS designation, including market exclusivity. ● The market for our human and animal products, and the gastrointestinal health market as a whole, is uncertain and may be smaller than we anticipate, which could lead to lower revenue and harm our operating results. ● Insurance coverage for Mytesi for its current approved indication could decrease or end, or Mytesi might not receive insurance coverage for any approved follow-on indications, which could lead to lower revenue and harm our operating results. ● We may engage in future acquisitions that increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities and subject us to other risks. ● Certain of the countries in which we plan to commercialize our products in the future are developing countries, some of which have potentially unstable political and economic climates. ● Fluctuations in the exchange rate of foreign currencies could result in currency transactions losses. ● Laws and regulations governing global trade compliance could adversely impact our business. ● There are other gastrointestinal-focused human pharmaceutical companies, and we face competition in the marketplaces in which we operate or plan to operate. ● Our obligations to Streeterville are secured by a security interest in all of Napo’s NP-300 assets, so if we default on those obligations, Streeterville could foreclose on our assets. ● Our royalty interests require us to make minimum royalty payments, even if we do not sell a sufficient amount of products to cover the amount of such payments, which may strain our cash resources. ● Failure in our information technology systems, including by cyber-attacks or other data security incidents, could significantly disrupt our operations. ● Global macroeconomic conditions may negatively affect us and may magnify certain risks that affect our business. ● Unfavorable global economic conditions could adversely affect our business, financial condition, or results 37 Table of Contents of operations. ● Substantially all of our revenue for recent periods has been received from three customers. ● The Company’s ability to attract and retain qualified members of our board of directors may be impacted due to new state laws, including recently enacted gender quotas. ● Evolving expectations around corporate responsibility practices, specifically related to environmental, social and governance (“ESG”) matters, may expose us to reputational and other risks. ​ Risks Related to Our Intellectual Property ● We cannot be certain that our patent strategy will be effective to protect against competition ● Obtaining and maintaining our 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. ● Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, which would be costly, time-consuming and, if successfully asserted against us, delay or prevent the development and commercialization of our current or future products and product candidates. ● Our proprietary position depends upon the botanical guidance of our drug approval and patents that are formulation or method-of-use patents, which do not prevent a competitor from using the same human or animal drug for another use. ● We may be involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful, and third parties may challenge the validity or enforceability of our patents and they may be successful. ● If we are unable to prevent disclosure of our trade secrets or other confidential information to third parties, our competitive position may be impaired. ● Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products. ● We may not be able to protect our intellectual property rights throughout the world, which could impair our business. ● Our business could be harmed if we fail to obtain certain registered trademarks in the United States or in other countries. ● We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties. ● Even if we receive any of the required regulatory approvals for our current or future prescription drug product candidates and non-prescription products, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. ● Any of our current or future prescription drug product candidates or non-prescription products may cause or contribute to adverse medical events that we would be required to report to regulatory authorities and, if we fail to do so, we could be subject to sanctions that would harm our business. ● Legislative or regulatory reforms with respect to animal health may make it more difficult and costly for us to obtain regulatory clearance or approval of any of our current or future product candidates and to produce, market, and distribute our products after clearance or approval is obtained. ● We believe that our non-prescription products are not subject to regulation by regulatory agencies in the United States, but there is a risk that regulatory bodies may disagree with our interpretation, or may redefine the scope of their regulatory reach in the future, which would result in additional expense and could delay or prevent the commercialization of these products. ● Even if we receive the required regulatory approvals for our current or future prescription drug product candidates and non-prescription products, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense ​ Risks Related to Our Common Stock ● Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our common stock. ● If our shares become subject to the penny stock rules, it would become more difficult to trade our shares. 38 Table of Contents ● The price of our common stock could be subject to volatility related or unrelated to our operations, and purchasers of our common stock could incur substantial losses. ● A possible “short squeeze” due to a sudden increase in demand of our common stock that largely exceeds supply may lead to further price volatility in our common stock. ● You may not be able to resell our common stock when you wish to sell them or at a price that you consider attractive or satisfactory. ● If securities or industry analysts do not publish research or reports about our company, or if they issue adverse or misleading opinions regarding us or our stock, our stock price and trading volume could decline. ● You may be diluted by conversions of outstanding shares of non-voting common stock, exercises of outstanding options and warrants and issuances of securities pursuant to our ATM Agreement. ● Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management. ● Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees. ● We do not intend to pay dividends on our common stock, and your ability to achieve a return on your investment will depend on appreciation in the market price of our common stock. ● The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. ● We are a smaller reporting company and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors. ​ Risks Related to Our Business ​ We have a limited operating history, expect to incur further losses as we grow and may be unable to achieve or sustain profitability. ​ Since the consummation of our merger with Napo Pharmaceuticals Inc. in 2017, our operations have been primarily focused on research, development and the ongoing commercialization of our lead prescription drug product, Mytesi, which is approved by the U.S.
Biggest changeThe termination of either of these contracts would result in a disruption to product development and harm our business. ● We are dependent upon third-party contract manufacturers, both for the supply of the active pharmaceutical ingredient in Mytesi and Canalevia-CA1, as well as for the supply of finished products for commercialization. ● If we are unable to establish sales capabilities on our own or through third parties, we may not be able to market and sell our current or future human products and product candidates, if approved, and generate product or other revenue. 35 Table of Contents ● We will need to increase the size of our organization and may not successfully manage such growth. ● Canalevia-CA1 and our animal health prescription drug product candidates may be marketed in the US only in the target animals and for the indications for which they are approved, and if we want to expand the approved animals or indications, it will need to obtain additional approvals, which may not be granted. ● The misuse or extra-label use of Mytesi, Canalevia, and our human or animal prescription drug product candidates, if approved by regulatory authorities, may harm our reputation or result in financial or other damages. ● We may be unable to obtain, or obtain on a timely basis, a renewal of conditional approval for Canalevia-CA1 or to eventually obtain full regulatory approval of Canalevia-CA1, which would harm our operating results. ● We may not maintain the benefits associated with MUMS designation, including market exclusivity. ● The market for our human and animal products, and the gastrointestinal health market as a whole, is uncertain and may be smaller than we anticipate, which could lead to lower revenue and harm our operating results. ● Insurance coverage for Mytesi for its current approved indication could decrease or end, or Mytesi might not receive insurance coverage for any approved follow-on indications, which could lead to lower revenue and harm our operating results. ● We may engage in future acquisitions that increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks. ● Certain of the countries in which we plan to commercialize our products in the future are developing countries, some of which have potentially unstable political and economic climates. ● Fluctuations in the exchange rate of foreign currencies could result in currency transaction losses. ● Laws and regulations governing global trade compliance could adversely impact our business. ● There are other gastrointestinal-focused human pharmaceutical companies, and we face competition in the marketplaces in which we operate or plan to operate. ● Our obligations to Streeterville are secured by a security interest in all of Napo’s NP-300 assets, so if we default on those obligations, Streeterville could foreclose on our assets. ● Our royalty interests require us to make minimum royalty payments, even if we do not sell a sufficient amount of products to cover the amount of such payments, which may strain our cash resources. ● Failure in our information technology systems, including by cyber-attacks or other data security incidents, could significantly disrupt our operations. ● Global macroeconomic conditions may negatively affect us and may magnify certain risks that affect our business. ● Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations. ● Substantially all of our revenue for recent periods has been received from two customers. ● The Company’s ability to attract and retain qualified members of our board of directors may be impacted due to new state laws, including recently enacted gender quotas. ● Evolving expectations around corporate responsibility practices, specifically related to environmental, social, and governance (“ESG”) matters, may expose us to reputational and other risks. ● The growing use of artificial intelligence (“AI”) systems to automate processes, analyze data, and support decision-making poses inherent risks. ​ Risks Related to Our Intellectual Property ● We cannot be certain that our patent strategy will be effective in protecting against competition. ● Obtaining and maintaining our patent protection depends on compliance with various procedural requirements, 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. ● Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, which would be costly and time-consuming and, if successfully asserted against us, delay or prevent the development and commercialization of our current or future products and product candidates. 36 Table of Contents ● Our proprietary position depends upon the botanical guidance of our drug approval and patents that are formulation or method-of-use patents, which do not prevent a competitor from using the same human or animal drug for another use. ● We may be involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming, and unsuccessful, and third parties may challenge the validity or enforceability of our patents, and they may be successful. ● If we are unable to prevent disclosure of our trade secrets or other confidential information to third parties, our competitive position may be impaired. ● Changes in US patent law could diminish the value of patents in general, thereby impairing our ability to protect our products. ● We may not be able to protect our intellectual property rights throughout the world, which could impair our business. ● Our business could be harmed if we fail to obtain certain registered trademarks in the US or in other countries. ● We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential third-party information. ● Even if we receive any of the required regulatory approvals for our current or future prescription drug product candidates and non-prescription products, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expenses. ● Any of our current or future prescription drug product candidates or non-prescription products may cause or contribute to adverse medical events that we would be required to report to regulatory authorities and if we fail to do so, we could be subject to sanctions that would harm our business. ● Legislative or regulatory reforms with respect to animal health may make it more difficult and costly for us to obtain regulatory clearance or approval for any of our current or future product candidates and to produce, market, and distribute our products after clearance or approval is obtained. ● We believe that our non-prescription products are not subject to regulation by regulatory agencies in the US, but there is a risk that regulatory bodies may disagree with our interpretation or may redefine the scope of their regulatory reach in the future, which would result in additional expense and could delay or prevent the commercialization of these products. ● Even if we receive the required regulatory approvals for our current or future prescription drug product candidates and non-prescription products, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expenses. ​ Risks Related to Our Common Stock ● Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our common stock. ● If our shares become subject to the penny stock rules, it would become more difficult to trade our shares. ● The price of our common stock could be subject to volatility related or unrelated to our operations, and purchasers of our common stock could incur substantial losses. ● A possible “short squeeze” due to a sudden increase in demand for our common stock that largely exceeds supply may lead to further price volatility in our common stock. ● You may be unable to resell our common stock when you wish to sell it or at a price that you consider attractive or satisfactory. ● If securities or industry analysts do not publish research or reports about our company, or if they issue adverse or misleading opinions regarding us or our stock, our stock price and trading volume could decline. ● You may be diluted by conversions of outstanding shares of non-voting common stock, exercises of outstanding options and warrants, and issuances of securities pursuant to our ATM Agreement. ● Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management. ● Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees. 37 Table of Contents ● We do not intend to pay dividends on our common stock, and your ability to achieve a return on your investment will depend on appreciation in the market price of our common stock. ● The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs, and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. ● We are a smaller reporting company, and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors. ​ Risks Related to Our Business ​ We have a limited operating history, expect to incur further losses as we grow, and may be unable to achieve or sustain profitability. ​ Since the consummation of our merger with Napo Pharmaceuticals Inc. in 2017, our operations have been primarily focused on research, development, and the ongoing commercialization of our lead prescription drug product, Mytesi, which the FDA approves for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy.
In some instances, we may be unable to further develop these potential products because of perceived regulatory and commercial risks.
In some instances, we may be unable to develop these potential products further because of perceived regulatory and commercial risks.
Our pivotal trials may fail to show the desired safety or efficacy of our prescription drug product candidates despite promising initial data or the results in previous human or animal studies conducted by others. Success of a prescription drug product candidate in prior animal studies, or in the treatment of humans, does not ensure success in subsequent studies.
Our pivotal trials may fail to show the desired safety or efficacy of our prescription drug product candidates despite promising initial data or the results in previous human or animal studies conducted by others. The success of a prescription drug product candidate in prior animal studies or in the treatment of humans does not ensure success in subsequent studies.
If the CROs conducting our studies do not comply with their contractual duties or obligations, or if they experience work stoppages, do not meet expected deadlines, or if the quality or accuracy of the data they obtain is compromised, we may need to secure new arrangements with alternative CROs, which could be difficult and costly.
If the CROs conducting our studies do not comply with their contractual duties or obligations, if they experience work stoppages, do not meet expected deadlines, or if the quality or accuracy of the data they obtain is compromised, we may need to secure new arrangements with alternative CROs, which could be difficult and costly.
Any safety or efficacy concerns, or recalls, withdrawals or suspensions of sales of our products could harm our reputation and business, regardless of whether such concerns or actions are justified. ​ Future federal and state legislation may result in increased exposure to product liability claims, which could result in substantial losses. ​ Under current federal and state laws, companion and production animals are generally considered to be the personal property of their owners and, as such, the owners’ recovery for product liability claims involving their companion and production animals may be limited to the replacement value of the animal.
Any safety or efficacy concerns, recalls, withdrawals, or suspensions of sales of our products could harm our reputation and business, regardless of whether such concerns or actions are justified. ​ Future federal and state legislation may result in increased exposure to product liability claims, which could result in substantial losses. ​ Under current federal and state laws, companion and production animals are generally considered to be the personal property of their owners and as such, the owners’ recovery for product liability claims involving their companion and production animals may be limited to the replacement value of the animal.
The countries from which we obtain CPL could change their laws and regulations regarding the export of the natural products or impose or increase taxes or duties payable by exporters of such products. Restrictions could be imposed on the harvesting of the natural products or additional requirements could be implemented for the replanting and regeneration of the raw material.
The countries from which we obtain CPL could change their laws and regulations regarding the export of natural products or impose or increase taxes or duties payable by exporters of such products. Restrictions could be imposed on the harvesting of the natural products, or additional requirements could be implemented for the replanting and regeneration of the raw material.
To receive a renewal from FDA, the Company must show active progress toward proving “substantial evidence of effectiveness” for full approval. ​ If FDA grants all four annual renewals, the Company has up to four-and-a-half years to develop and submit the necessary data to complete the effectiveness requirement.
To receive a renewal from FDA, the Company must show active progress toward proving “substantial evidence of effectiveness” for full approval. ​ If the FDA grants all four annual renewals, the Company has up to four-and-a-half years to develop and submit the necessary data to complete the effectiveness requirement.
The Company would then be required to stop marketing the drug because it would be considered to be unapproved. ​ If the Company submits the necessary information before the four-and-a-half-year deadline, the conditional approval period runs another six months, for a total of five years, while FDA reviews the application for full approval.
The Company would then be required to stop marketing the drug because it would be considered to be unapproved. ​ If the Company submits the necessary information before the four-and-a-half-year deadline, the conditional approval period runs another six months, for a total of five years, while the FDA reviews the application for full approval.
Mytesi is currently covered on Medicaid in all 50 states. However, the nature or extent of coverage for Mytesi by any of these plans or programs could change or be terminated, or Mytesi might not receive insurance coverage for any approved follow-on indications.
Mytesi is currently covered by Medicaid in all 50 states. However, the nature or extent of coverage for Mytesi by any of these plans or programs could change or be terminated, or Mytesi might not receive insurance coverage for any approved follow-on indications.
It is uncertain how long these effects will last or whether economic and financial trends will worsen or improve. Changes in economic conditions and supply chain constraints and steps taken by governments and central banks could lead to higher inflation than previously experienced or expected, which could, in turn, lead to an increase in costs.
It is uncertain how long these effects will last or whether economic and financial trends will worsen or improve. Changes in economic conditions, supply chain constraints, and steps taken by governments and central banks could lead to higher inflation than previously experienced or expected, which could, in turn, lead to an increase in costs.
A reduction in the availability or extent of reimbursement from government and/or private payer healthcare programs could have a material adverse effect on the sales of our products, our business and results of operations. ​ Current economic conditions may adversely affect the ability of our distributors, customers, suppliers and service providers to obtain the liquidity required to pay for our products or to buy necessary inventory or raw materials and to perform their obligations under agreements with us, which could disrupt our operations, and could negatively impact our business and cash flow.
A reduction in the availability or extent of reimbursement from government and/or private payer healthcare programs could have a material adverse effect on the sales of our products, our business, and the results of our operations. ​ Current economic conditions may adversely affect the ability of our distributors, customers, suppliers, and service providers to obtain the liquidity required to pay for our products or to buy necessary inventory or raw materials and to perform their obligations under agreements with us, which could disrupt our operations, and could negatively impact our business and cash flow.
Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally is entitled to the patent on an invention regardless of whether another inventor had made the invention earlier.
Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application is generally entitled to the patent on an invention regardless of whether another inventor had made the invention earlier.
The USPTO developed regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first-to-file provisions, became effective on March 16, 2013.
The USPTO developed regulations and procedures to govern the administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first-to-file provisions, became effective on March 16, 2013.
If we fail to maintain the patents and patent applications covering our prescription drug products, prescription drug product candidates and non-prescription products, our competitors might be able to enter the market, which would harm our business. ​ Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, which would be costly, time-consuming and, if successfully asserted against us, delay or prevent the development and commercialization of our current or future products and product candidates. ​ Our research, development and commercialization activities may infringe or otherwise violate or be claimed to infringe or otherwise violate patents owned or controlled by other parties.
If we fail to maintain the patents and patent applications covering our prescription drug products, prescription drug product candidates, and non-prescription products, our competitors might be able to enter the market, which would harm our business. ​ Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, which would be costly and time-consuming and, if successfully asserted against us, delay or prevent the development and commercialization of our current or future products and product candidates. ​ Our research, development, and commercialization activities may infringe, otherwise violate, or be claimed to infringe or otherwise violate patents owned or controlled by other parties.
In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. ​ To the extent we become subject to future third-party claims against us or our collaborators, we could incur substantial expenses and, if any such claims are successful, we could be liable to pay substantial damages, including treble damages and attorney’s fees if we or our collaborators are found to be willfully infringing a third party’s patents.
In addition, third parties may obtain patents in the future and claim that the use of our technologies infringes upon these patents. ​ To the extent we become subject to future third-party claims against us or our collaborators, we could incur substantial expenses, and if any such claims are successful, we could be liable to pay substantial damages, including treble damages and attorney’s fees if we or our collaborators are found to be willfully infringing a third-party’s patents.
Any of these events could harm our business and prospects. ​ Our proprietary position depends upon the botanical guidance of our drug approval and patents that are formulation or method-of-use patents, which do not prevent a competitor from using the same human or animal drug for another use. ​ Composition-of-matter patents on the API in prescription drug products are generally considered to be the strongest form of intellectual property protection because such patents provide protection without regard to any particular method of use or manufacture or formulation of the API used.
Any of these events could harm our business and prospects. ​ Our proprietary position depends upon the botanical guidance of our drug approval and patents that are formulation or method-of-use patents, which do not prevent a competitor from using the same human or animal drug for another use. ​ Composition-of-matter patents on the API in prescription drug products are generally considered to be the strongest form of intellectual property protection because such patents provide protection without regard to any particular method of use, manufacture, or formulation of the API used.
Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the USPTO, or made a materially misleading statement, during prosecution.
Grounds for an unenforceability assertion could be an allegation that someone connected with the prosecution of the patent withheld relevant material information from the USPTO or made a materially misleading statement during prosecution.
We may also fail to appreciate that we have become aware of a reportable adverse event, especially if such event is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products.
We may also fail to appreciate that we have become aware of a reportable adverse event, especially if such an event is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products.
However, in many instances, the Federal Trade Commission will exercise primary or concurrent jurisdiction with FDA on non-prescription products as to post marketing claims made regarding the product.
However, in many instances, the Federal Trade Commission will exercise primary or concurrent jurisdiction with the FDA on non-prescription products as to post-marketing claims made regarding the product.
There is no intent to make our non-prescription products a component of an animal food, either directly or indirectly. A feed additive is a product that is added to a feed for any reason including the top dressing of an already prepared feed.
There is no intent to make our non-prescription products a component of animal food, either directly or indirectly. A feed additive is a product that is added to a feed for any reason, including the top dressing of an already prepared feed.
Should the FDA assert regulatory authority over our non-prescription products, we would take commercially reasonable steps to address the FDA’s concerns, potentially including but not limited to, seeking registration for such products, reformulating such products to further distance such products from regulatory control, or ceasing sale of such products.
Should the FDA assert regulatory authority over our non-prescription products, we would take commercially reasonable steps to address the FDA’s concerns, potentially including but not limited to seeking registration for such products, reformulating such products to further distance such products from regulatory control, or ceasing the sale of such products.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would harm our business.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, and we may not achieve or sustain profitability, which would harm our business.
All share amounts and warrant or option exercise prices contained in this report reflect that adjustment. Additionally, in 2020, the SEC approved a Nasdaq rule change to expedite delisting of securities of companies that have had one or more reverse stock splits with a cumulative ratio of one for 250 or more shares over the prior two-year period.
All share amounts and warrant or option exercise prices contained in this report reflect that adjustment. Additionally, in 2020, the SEC approved a Nasdaq rule change to expedite the delisting of securities of companies that have had one or more reverse stock splits with a cumulative ratio of one for 250 or more shares over the prior two-year period.
We do not influence or control the reporting of these analysts. If one or more of the analysts who do cover us downgrade or provide a negative outlook on our company or our industry, or the stock of any of our competitors, the price of our common stock could decline.
We do not influence or control the reporting of these analysts. If one or more of the analysts who do cover us downgrade or provide a negative outlook on our company, our industry, or the stock of any of our competitors, the price of our common stock could decline.
These provisions to include the following: ​ ● a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; ​ ● no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ​ ● the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; ​ ● the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could adversely affect the rights of our common stockholders or be used to deter a possible acquisition of our company; ​ ● the ability of our board of directors to alter our bylaws without obtaining stockholder approval; ​ ● the required approval of the holders of at least 75% of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our third amended and restated certificate of incorporation regarding the election and removal of directors; ​ ● a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; ​ ● the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and ​ ● advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. ​ These provisions could inhibit or prevent possible transactions that some stockholders may consider attractive. ​ We are also subject to the anti-takeover provisions contained in Section 203 of the Delaware General Corporation Law.
These provisions include the following: ​ ● a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; ​ ● no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ​ ● the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; ​ ● the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could adversely affect the rights of our common stockholders or be used to deter a possible acquisition of our company; ​ ● the ability of our board of directors to alter our bylaws without obtaining stockholder approval; ​ ● the required approval of the holders of at least 75% of the shares entitled to vote at an election of directors to adopt, amend, or repeal our bylaws or repeal the provisions of our third amended and restated certificate of incorporation regarding the election and removal of directors; ​ ● a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; ​ ● the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president, or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and ​ ● advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. ​ These provisions could inhibit or prevent possible transactions that some stockholders may consider attractive. ​ We are also subject to the anti-takeover provisions contained in Section 203 of the Delaware General Corporation Law.
We cannot be certain that necessary approvals will be received for planned Mytesi or Canalevia-CA1 follow-on indications or that these product candidates will be successfully commercialized, either by us or any of our partners. ● If we are not successful in identifying, licensing, developing and commercializing additional product candidates and products, our ability to expand our business and achieve our strategic objectives could be impaired. ● Mytesi faces significant competition from other pharmaceutical companies, both for its currently approved indication and for planned follow-on indications, and our operating results will suffer if we fail to compete effectively. ● We may be unable to obtain, or obtain on a timely basis, regulatory approval for our existing or future human or animal prescription drug product candidates under applicable regulatory requirements, which would harm our operating results. ● The results of our earlier studies of Mytesi may not be predictive of the results in any future clinical trials and species-specific formulation studies, respectively, and we may not be successful in our efforts to develop or commercialize line extensions of Mytesi. ● Development of prescription drug products is inherently expensive, time-consuming and uncertain, and any delay or discontinuance of our current or future pivotal trials would harm our business and prospects. ● We will partially rely on third parties to conduct our development activities.
We cannot be certain that necessary approvals will be received for planned Mytesi or Canalevia-CA1 follow-on indications or that these product candidates will be successfully commercialized by us or any of our partners. ● If we are not successful in identifying, licensing, developing, and commercializing additional product candidates and products, our ability to expand our business and achieve our strategic objectives could be impaired. ● Mytesi faces significant competition from other pharmaceutical companies, both for its currently approved indication and for planned follow-on indications, and our operating results will suffer if we fail to compete effectively. ● We may be unable to obtain, or obtain on a timely basis, regulatory approval for our existing or future human or animal prescription drug product candidates under applicable regulatory requirements, which would harm our operating results. ● The results of our earlier studies of Mytesi may not be predictive of the results in any future clinical trials and species-specific formulation studies, respectively, and we may not be successful in our efforts to develop or commercialize line extensions of Mytesi. ● Development of prescription drug products is inherently expensive, time-consuming, and uncertain, and any delay or discontinuance of our current or future pivotal trials would harm our business and prospects. ● We will partially rely on third parties to conduct our development activities.
Because the outcome of our development activities and commercialization efforts is inherently uncertain, the actual amounts necessary to successfully complete the development and commercialization of our current or future products and product candidates may be greater than we anticipate. ​ Because we anticipate incurring significant costs for the foreseeable future, if we are not successful in broadly commercializing any of our current or future products or product candidates or raising additional funding to pursue our research and development efforts, we may never realize the benefit of our development efforts and our business may be harmed. ​ In the event that we conduct clinical trials for new indications and new products, we will need to raise substantial additional capital in the future and we may be unable to raise such funds when needed and on acceptable terms, which would force to limit new indications and new product development. ​ We are forecasting continued losses and negative cash flows as we continue to fund our operating and marketing activities and research and development programs, and to complete the development of all the current products in our pipeline, or any additional products we may identify.
Because the outcome of our development activities and commercialization efforts is inherently uncertain, the actual amounts necessary to successfully complete the development and commercialization of our current or future products and product candidates may be greater than we anticipate. ​ Because we anticipate incurring significant costs for the foreseeable future, if we are not successful in broadly commercializing any of our current or future products or product candidates or raising additional funding to pursue our research and development efforts, we may never realize the benefit of our development efforts and our business may be harmed. ​ In the event that we conduct clinical trials for new indications and new products, we will need to raise substantial additional capital in the future, and we may be unable to raise such funds when needed and on acceptable terms, which would force us to limit new indications and new product development. ​ We are forecasting continued losses and negative cash flows as we continue to fund our operating and marketing activities and research and development programs and to complete the development of all the current products in our pipeline or any additional products we may identify.
The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our patents and any other patents that issue, all of which could harm our business and financial condition. ​ Obtaining and maintaining our 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. ​ Periodic maintenance and annuity fees on any issued patent and, in certain jurisdictions, pending applications, are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent.
The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our patents and any other patents that are issued, all of which could harm our business and financial condition. ​ Obtaining and maintaining our patent protection depends on compliance with various procedural requirements, 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. ​ Periodic maintenance and annuity fees on any issued patent and, in certain jurisdictions, pending applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent.
Under Section 203, a corporation generally may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, the board of directors has approved the transaction. ​ ​ 69 Table of Contents Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees. ​ Our amended and restated bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, (iv) any action asserting a claim that is governed by the internal affairs doctrine or (v) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws.
Under Section 203, a corporation generally may not engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, the board of directors has approved the transaction. ​ 66 Table of Contents Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees. ​ Our amended and restated bylaws provide that unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, (iv) any action asserting a claim that is governed by the internal affairs doctrine or (v) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws.
Moreover, if we are not able to comply with the requirements of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources. ​ We are a smaller reporting company and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors. ​ We are a smaller reporting company (“SRC”) and a non-accelerated filer, which allows us to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not SRCs or non-accelerated filers, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in our Annual Report and our periodic reports and proxy statements and providing only two years of audited financial statements in our Annual Report and our periodic reports.
Moreover, if we are not able to comply with the requirements of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources. ​ We are a smaller reporting company and the reduced reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors. ​ We are a smaller reporting company (“SRC”) and a non-accelerated filer, which allows us to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not SRCs or non-accelerated filers, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in our Annual Report and our periodic reports and proxy statements and providing only two years of audited financial statements in our Annual Report and our periodic reports.
Indena has never manufactured either such ingredient to commercial scale. Glenmark is the current manufacturer of crofelemer, the active API in Canalevia-CA1 and Mytesi. As announced in October of 2015, we have entered into an agreement with Patheon, a provider of drug development and delivery solutions, under which Patheon provides enteric-coated tablets to us for use in humans and animals.
Indena has never manufactured either such ingredient on a commercial scale. Glenmark is the current manufacturer of crofelemer, the active API in Canalevia-CA1 and Mytesi. As announced in October 2015, we have entered into an agreement with Patheon, a provider of drug development and delivery solutions, under which Patheon provides enteric-coated tablets to us for use in humans and animals.
Failure to gain agreement from the FDA on a timely basis could adversely affect our commercial supply of product. ​ Lastly, if we obtain conditional approval for our current or future drug product candidates, this conditional approval is renewable annually for five years and may be withdrawn or terminated under certain circumstances either during or at the end of the five-year period.
Failure to gain agreement from the FDA on a timely basis could adversely affect our commercial supply of products. ​ Lastly, if we obtain conditional approval for our current or future drug product candidates, this conditional approval is renewable annually for five years and may be withdrawn or terminated under certain circumstances either during or at the end of the five-year period.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, public announcements of the results of hearings, motions, or other interim proceedings or developments could be made public.
However, there can be no assurance that our policies and procedures will prevent us from violating these regulations in every transaction in which we may engage, or that any businesses that we may acquire have complied with such regulations, and such a violation could adversely affect our reputation, business, financial condition, results of operations and cash flows. ​ There are other gastrointestinal-focused human pharmaceutical companies, and we face competition in the marketplaces in which we operate or plan to operate. ​ Our commercial success in the human drug arena remains dependent on maintaining or establishing a competitive position in the market for the current, approved specialty indication of Mytesi as well as for planned Mytesi follow-on indications.
However, there can be no assurance that our policies and procedures will prevent us from violating these regulations in every transaction in which we may engage or that any businesses that we may acquire have complied with such regulations, and such a violation could adversely affect our reputation, business, financial condition, results of operations and cash flows. ​ There are other gastrointestinal-focused human pharmaceutical companies, and we face competition in the marketplaces in which we operate or plan to operate. ​ Our commercial success in the human drug arena remains dependent on maintaining or establishing a competitive position in the market for the currently approved specialty indication of Mytesi as well as for planned Mytesi follow-on indications.
Even if we successfully identify potential products, we may still fail to yield products for development and commercialization for many reasons, including the following: ​ ● competitors may develop alternatives that render our potential products obsolete; ​ ● an outside party may develop a cure for any disease state that is the target indication for any of our planned or approved drug products; ​ ● potential products we seek to develop may be covered by third-party patents or other exclusive rights; ​ ● a potential product may on further study be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; ​ ● a potential product may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and ​ ● a potential product may not be accepted as safe and effective by physicians, veterinarians, patients, animal owners, key opinion leaders and other decision-makers in the gastrointestinal health market, as applicable. ​ While we are developing specific formulations, including flavors, methods of administration, new patents and other strategies with respect to our current potential products, we may be unable to prevent competitors from developing substantially similar products and bringing those products to market earlier than we can.
Even if we successfully identify potential products, we may still fail to yield products for development and commercialization for many reasons, including the following: ​ ● competitors may develop alternatives that render our potential products obsolete; ​ ● an outside party may develop a cure for any disease state that is the target indication for any of our planned or approved drug products; ​ 41 Table of Contents ● potential products we seek to develop may be covered by third-party patents or other exclusive rights; ​ ● a potential product may, on further study, be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; ​ ● a potential product may not be capable of being produced in commercial quantities at an acceptable cost or at all; and ​ ● a potential product may not be accepted as safe and effective by physicians, veterinarians, patients, animal owners, key opinion leaders, and other decision-makers in the gastrointestinal health market, as applicable. ​ While we are developing specific formulations, including flavors, methods of administration, new patents, and other strategies with respect to our current potential products, we may be unable to prevent competitors from developing substantially similar products and bringing those products to market earlier than we can.
Further, even if we are successful in the ongoing commercialization of Mytesi and Canalevia, we may not achieve commercial success. ● Human and animal gastrointestinal health products are subject to unanticipated post-approval safety or efficacy concerns, which may harm our business and reputation. ● Future federal and state legislation may result in increased exposure to product liability claims, which could result in substantial losses. ● If we fail to retain current members of our senior management, or to identify, attract, integrate and retain additional key personnel, our business will be harmed. ● We are dependent on two suppliers for the raw material used to produce the active pharmaceutical ingredient in Mytesi and Canalevia.
Further, even if we are successful in the ongoing commercialization of Mytesi and Canalevia, we may not achieve commercial success. ● Human and animal gastrointestinal health products are subject to unanticipated post-approval safety or efficacy concerns, which may harm our business and reputation. ● Future federal and state legislation may result in increased exposure to product liability claims, which could result in substantial losses. ● If we fail to retain current members of our senior management or to identify, attract, integrate, and retain additional key personnel, our business will be harmed. ● We are dependent on two suppliers for the raw material used to produce the active pharmaceutical ingredients in Mytesi and Canalevia.
Factors that may have contributed to such volatility include, but are not limited to, those discussed previously in this “Risk Factors” section of this report and others, such as: ​ ● delays in the commercialization of Mytesi, Canalevia-CA1, or our other current or future prescription drug product candidates and non-prescription products; ​ ● any delays in, or suspension or failure of, our current and future studies; ​ ● announcements of regulatory approval or disapproval of any of our current or future product candidates or of regulatory actions affecting our company or our industry; ​ ● manufacturing and supply issues that affect product candidate or product supply for our studies or commercialization efforts; ​ ● quarterly variations in our results of operations or those of our competitors; ​ ● changes in our earnings estimates or recommendations by securities analysts; ​ ● the payment of licensing fees or royalties in shares of our common stock; ​ ● announcements by us or our competitors of new prescription drug products or product candidates or non-prescription products, significant contracts, commercial relationships, acquisitions or capital commitments; ​ ● announcements relating to future development or license agreements including termination of such agreements; ​ ● adverse developments with respect to our intellectual property rights or those of our principal collaborators; ​ 66 Table of Contents ● commencement of litigation involving us or our competitors; ​ ● any major changes in our board of directors or management; ​ ● new legislation in the United States relating to the prescription, sale, distribution or pricing of gastrointestinal health products; ​ ● product liability claims, other litigation or public concern about the safety of our prescription drug product or product candidates and non-prescription products or any such future products; ​ ● market conditions in the human or animal industry, in general, or in the gastrointestinal health sector, in particular, including performance of our competitors; ​ ● future issuances of shares of common stock or other securities; ​ ● uncertainties related to COVID-19; ​ ● general economic conditions in the United States and abroad; and ​ ● market speculation regarding ​ In addition, the stock market, in general, or the market for stocks in our industry, in particular, may experience broad market fluctuations, which may adversely affect the market price or liquidity of our common stock.
Factors that may have contributed to such volatility include but are not limited to, those discussed previously in this “Risk Factors” section of this report and others, such as: ​ ● delays in the commercialization of Mytesi, Canalevia-CA1, or our other current or future prescription drug product candidates and non-prescription products; ​ ● any delays in, or suspension or failure of, our current and future studies; ​ 63 Table of Contents ● announcements of regulatory approval or disapproval of any of our current or future product candidates or of regulatory actions affecting our company or our industry; ​ ● manufacturing and supply issues that affect product candidate or product supply for our studies or commercialization efforts; ​ ● quarterly variations in our results of operations or those of our competitors; ​ ● changes in our earnings estimates or recommendations by securities analysts; ​ ● the payment of licensing fees or royalties in shares of our common stock; ​ ● announcements by us or our competitors of new prescription drug products or product candidates or non-prescription products, significant contracts, commercial relationships, acquisitions or capital commitments; ​ ● announcements relating to future development or license agreements including termination of such agreements; ​ ● adverse developments with respect to our intellectual property rights or those of our principal collaborators; ​ ● commencement of litigation involving us or our competitors; ​ ● any major changes in our board of directors or management; ​ ● new legislation in the US relating to the prescription, sale, distribution or pricing of gastrointestinal health products; ​ ● product liability claims, other litigation or public concern about the safety of our prescription drug product or product candidates and non-prescription products or any such future products; ​ ● market conditions in the human or animal industry, in general, or in the gastrointestinal health sector, in particular, including performance of our competitors; ​ ● future issuances of shares of common stock or other securities; ​ ● uncertainties related to COVID-19; ​ ● general economic conditions in the US and abroad; and ​ ● market speculation regarding ​ In addition, the stock market, in general, or the market for stocks in our industry, in particular, may experience broad market fluctuations, which may adversely affect the market price or liquidity of our common stock.
The occurrence of a cyber-security attack or incident could result in business interruptions from the disruption of our information technology systems, or negative publicity resulting in reputational damage with our stockholders and other stakeholders and/or increased costs to prevent, respond to or mitigate cybersecurity events.
The occurrence of a cyber-security attack or incident could result in business interruptions from the disruption of our information technology systems or negative publicity resulting in reputational damage to our stockholders and other stakeholders and/or increased costs to prevent, respond to, or mitigate cybersecurity events.
Even if we were successful in defending against any such claims, such litigation could result in substantial cost and be a distraction to our management and employees. ​ Even if we receive any of the required regulatory approvals for our current or future prescription drug product candidates and non-prescription products, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense and delays. ​ If the FDA or any other regulatory body approves any of our current or future prescription drug product candidates, or if necessary, our non-prescription products, the manufacturing processes, clinical development, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product may be subject to extensive and ongoing regulatory requirements.
Even if we were successful in defending against any such claims, such litigation could result in substantial cost and be a distraction to our management and employees. ​ Even if we receive any of the required regulatory approvals for our current or future prescription drug product candidates and non-prescription products, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expenses and delays. ​ If the FDA or any other regulatory body approves any of our current or future prescription drug product candidates, or if necessary, our non-prescription products, the manufacturing processes, clinical development, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product may be subject to extensive and ongoing regulatory requirements.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our contract manufacturers or manufacturing processes, or failure to comply with regulatory requirements, are reportable events to the FDA and may result in, among other things: ​ ● restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, revised labeling, or voluntary or involuntary product recalls; ​ ● additional clinical studies, fines, warning letters or holds on target animal studies; ​ ● refusal by the FDA, or other regulators to approve pending applications or supplements to approved 61 Table of Contents applications filed by us or our strategic collaborators related to the unknown problems, or suspension or revocation of the problematic product’s license approvals; ​ ● product seizure or detention, or refusal to permit the import or export of products; and ​ ● injunctions and/or the imposition of civil or criminal penalties. ​ The FDA or other regulatory agency’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates or require certain changes to the labeling or additional clinical work concerning safety and efficacy of the product candidates.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our contract manufacturers or manufacturing processes, or failure to comply with regulatory requirements, are reportable events to the FDA and may result in, among other things: ​ ● restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, revised labeling, or voluntary or involuntary product recalls; ​ ● additional clinical studies, fines, warning letters or holds on target animal studies; ​ ● refusal by the FDA, or other regulators to approve pending applications or supplements to approved applications filed by us or our strategic collaborators related to the unknown problems, or suspension or revocation of the problematic product’s license approvals; ​ ● product seizure or detention, or refusal to permit the import or export of products; and ​ ● injunctions and/or the imposition of civil or criminal penalties. ​ The FDA or other regulatory agency’s policies may change, and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates or require certain changes to the labeling or additional clinical work concerning the safety and efficacy of the product candidates.
Market acceptance of Mytesi, Canalevia, and any of our other products depends on a number of factors, including: ​ ● the safety of our products as demonstrated in our target animal studies; ​ ● the indications for which our products are approved or marketed; ​ ● the potential and perceived advantages over alternative treatments or products, including generic medicines and competing products currently prescribed by physicians or veterinarians, as applicable, and, in the case of animal products, products approved for use in humans that are used extra-label in animals; ​ ● the acceptance by physicians, veterinarians, companion animal owners, as applicable, of our products as safe and effective; ​ ● the cost in relation to alternative treatments and willingness on the part of physicians, veterinarians, patients and animal owners, as applicable, to pay for our products; ​ ● the prevalence and severity of any adverse side effects of our products; ​ ● the relative convenience and ease of administration of our products; and ​ ● the effectiveness of our sales, marketing and distribution efforts. ​ Any failure by Mytesi or Canalevia to achieve market acceptance or commercial success would harm our financial condition and results of operations. ​ 46 Table of Contents Human and animal gastrointestinal health products are subject to unanticipated post-approval safety or efficacy concerns, which may harm our business and reputation. ​ The success of our commercialization efforts will depend upon the perceived safety and effectiveness of human and animal gastrointestinal health products, in general, and of our products, in particular.
Market acceptance of Mytesi, Canalevia, and any of our other products depends on a number of factors, including: ​ ● the safety of our products as demonstrated in our target animal studies; ​ ● the indications for which our products are approved or marketed; ​ ● the potential and perceived advantages over alternative treatments or products, including generic medicines and competing products currently prescribed by physicians or veterinarians, as applicable, and, in the case of animal products, products approved for use in humans that are used extra-label in animals; ​ ● the acceptance by physicians, veterinarians, and companion animal owners, as applicable, of our products as safe and effective; ​ ● the cost in relation to alternative treatments and willingness on the part of physicians, veterinarians, patients, and animal owners, as applicable, to pay for our products; ​ ● the prevalence and severity of any adverse side effects of our products; ​ ● the relative convenience and ease of administration of our products; and ​ ● the effectiveness of our sales, marketing, and distribution efforts. ​ Any failure by Mytesi or Canalevia to achieve market acceptance or commercial success would harm our financial condition and the results of operations. ​ Human and animal gastrointestinal health products are subject to unanticipated post-approval safety or efficacy concerns, which may harm our business and reputation. ​ The success of our commercialization efforts will depend upon the perceived safety and effectiveness of human and animal gastrointestinal health products, in general, and of our products, in particular.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our contract manufacturers or manufacturing processes, or failure to comply with regulatory requirements, are reportable events to the FDA and may result in, among other things: ​ ● restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, revised labeling, or voluntary or involuntary product recalls; ​ ● additional clinical studies fines, warning letters or holds on studies; ​ ● refusal by the FDA, or other regulators to approve pending applications or supplements to approved applications filed by Napo or Napo’s strategic collaborators related to the unknown problems, or suspension or revocation of the problematic product’s license approvals; ​ ● product seizure or detention, or refusal to permit the import or export of products; and ​ ● injunctions or the imposition of civil or criminal penalties. 64 Table of Contents ​ The FDA or other regulatory agency’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates or require certain changes to the labeling or require additional clinical work concerning safety and efficacy of the product candidates.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our contract manufacturers or manufacturing processes, or failure to comply with regulatory requirements, are reportable events to the FDA and may result in, among other things: ​ ● restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, revised labeling, or voluntary or involuntary product recalls; ​ ● additional clinical studies fines, warning letters or holds on studies; ​ ● refusal by the FDA, or other regulators to approve pending applications or supplements to approved applications filed by Napo or Napo’s strategic collaborators related to the unknown problems or suspension or revocation of the problematic product’s license approvals; ​ ● product seizure or detention, or refusal to permit the import or export of products; and ​ ● injunctions or the imposition of civil or criminal penalties. ​ The FDA or other regulatory agency’s policies may change, and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates, require certain labeling changes, or require additional clinical work concerning the safety and efficacy of the product candidates.
Anyone or more of such factors could directly or indirectly cause the Company’s actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, results of operations and stock price.
Any or more of such factors could directly or indirectly cause the Company’s actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, results of operations, and stock price.
Therefore, even if our studies and other development activities are completed as planned, the results may not be sufficient to obtain a required regulatory approval for a product candidate. ​ Regulatory authorities can delay, limit or deny approval of any of our prescription drug product candidates for many reasons, including: ​ ● if they disagree with our interpretation of data from our pivotal studies or other development efforts; ​ ● if we are unable to demonstrate to their satisfaction that our product candidate is safe and effective for the target indication and, if applicable, in the target species; ​ ● if they require additional studies or change their approval policies or regulations; ​ ● if they do not approve the formulation, labeling or the specifications of our current and future product candidates; and ​ ● if they do not approve the manufacturing processes of our third-party contract manufacturers. ​ Further, even if we receive a required approval, such approval maybe for a more limited indication than we originally requested, and the regulatory authority may not approve the labeling that we believe is necessary or desirable for successful commercialization. ​ 44 Table of Contents Any delay or failure in obtaining any necessary regulatory approval for the intended indications of our human or animal product candidates would delay or prevent commercialization of such product candidates and would harm our business and our operating results. ​ The results of our earlier studies of Mytesi may not be predictive of the results in any future clinical trials and species-specific formulation studies, respectively, and we may not be successful in our efforts to develop or commercialize line extensions of Mytesi. ​ Our human and animal product pipeline includes a number of potential indications of Mytesi, our lead prescription product.
Therefore, even if our studies and other development activities are completed as planned, the results may not be sufficient to obtain the required regulatory approval for a product candidate. ​ Regulatory authorities can delay, limit, or deny approval of any of our prescription drug product candidates for many reasons, including: ​ ● if they disagree with our interpretation of data from our pivotal studies or other development efforts; ​ ● if we are unable to demonstrate to their satisfaction that our product candidate is safe and effective for the target indication and, if applicable, in the target species; ​ ● if they require additional studies or change their approval policies or regulations; ​ ● if they do not approve the formulation, labeling, or specifications of our current and future product candidates; and ​ ● if they do not approve the manufacturing processes of our third-party contract manufacturers. ​ Further, even if we receive the required approval, such approval may be for a more limited indication than we originally requested, and the regulatory authority may not approve the labeling that we believe is necessary or desirable for successful commercialization. ​ Any delay or failure in obtaining any necessary regulatory approval for the intended indications of our human or animal product candidates would delay or prevent the commercialization of such product candidates and would harm our business and our operating results. ​ The results of our earlier studies of Mytesi may not be predictive of the results in any future clinical trials and species-specific formulation studies, respectively, and we may not be successful in our efforts to develop or commercialize line extensions of Mytesi. ​ Our human and animal product pipeline includes a number of potential indications of Mytesi, our lead prescription product.
We do not know whether our current or planned pivotal trials for any of our product candidates will begin or conclude on time, and they may be delayed or discontinued for a variety of reasons, including if we are unable to: ​ ● address any safety concerns that arise during the course of the studies; ​ ● complete the studies due to deviations from the study protocols or the occurrence of adverse events; ​ ● add new study sites; ​ ● address any conflicts with new or existing laws or regulations; or ​ ● reach agreement on acceptable terms with study sites, which can be subject to extensive negotiation and may vary significantly among different sites. ​ Further, we may not be successful in developing new indications for Mytesi and Canalevia-CA1, and Neonorm may be subject to the same regulatory regime as prescription drug products in jurisdictions outside the United States.
We do not know whether our current or planned pivotal trials for any of our product candidates will begin or conclude on time, and they may be delayed or discontinued for a variety of reasons, including if we are unable to: ​ ● address any safety concerns that arise during the course of the studies; ​ ● complete the studies due to deviations from the study protocols or the occurrence of adverse events; ​ ● add new study sites; ​ ● address any conflicts with new or existing laws or regulations; or ​ ● reach agreement on acceptable terms with study sites, which can be subject to extensive negotiation and may vary significantly among different sites. ​ Further, we may not be successful in developing new indications for Mytesi and Canalevia-CA1, and Neonorm may be subject to the same regulatory regime as prescription drug products in jurisdictions outside the US.
These royalty interests require us to make minimum royalty payments beginning 2021, even if we do not sell a sufficient amount of product to cover such payments, which may strain our cash resources.
These royalty interests require us to make minimum royalty payments beginning in 2021, even if we do not sell a sufficient amount of product to cover such payments, which may strain our cash resources.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile and may decline. ​ ​ ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​ ITEM 2.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile and may decline. ​ ​ ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​
We may also seek from time to 40 Table of Contents time to raise additional capital based upon favorable market conditions or strategic considerations such as potential acquisitions or potential license arrangements. ​ Our future capital requirements depend on many factors, including, but not limited to: ​ ● the scope, progress, results and costs of researching and developing our current and future prescription drug product candidates and non-prescription products; ​ ● the timing of, and the costs involved in, obtaining any regulatory approvals for our current and any future products; ​ ● the number and characteristics of the products we pursue; ​ ● the cost of manufacturing our current and future products and any products we successfully commercialize; ​ ● the cost of commercialization activities for Mytesi and Canalevia, if approved, including sales, marketing and distribution costs; ​ ● the expenses needed to attract and retain skilled personnel; ​ ● the costs associated with being a public company; ​ ● our ability to establish and maintain strategic collaborations, distribution or other arrangements and the financial terms of such agreements; and ​ ● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing possible patent claims, including litigation costs and the outcome of any such litigation. ​ General economic conditions, both inside and outside the U.S., including heightened inflation, capital market volatility, interest rate and currency rate fluctuations, and economic slowdown or recession as well as the COVID-19 pandemic, including the evolution of new and existing variants of COVID-19, and geopolitical events, including civil or political unrest (such as the ongoing war between Ukraine and Russia), have resulted in a significant disruption of global financial markets.
We may also seek from time to time to raise additional capital based upon favorable market conditions or strategic considerations such as potential acquisitions or potential license arrangements. ​ Our future capital requirements depend on many factors, including, but not limited to: ​ ● the scope, progress, results and costs of researching and developing our current and future prescription drug product candidates and non-prescription products; ​ ● the timing of, and the costs involved in, obtaining any regulatory approvals for our current and any future products; ​ ● the number and characteristics of the products we pursue; ​ ● the cost of manufacturing our current and future products and any products we successfully commercialize; ​ ● the cost of commercialization activities for Mytesi and Canalevia, if approved, including sales, marketing and distribution costs; ​ ● the expenses needed to attract and retain skilled personnel; ​ 39 Table of Contents ● the costs associated with being a public company; ​ ● our ability to establish and maintain strategic collaborations, distribution, or other arrangements and the financial terms of such agreements; and ​ ● the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing possible patent claims, including litigation costs and the outcome of any such litigation. ​ General economic conditions, both inside and outside the US, including heightened inflation, capital market volatility, interest rate and currency rate fluctuations, and economic slowdown or recession as well as the COVID-19 pandemic, including the evolution of new and existing variants of COVID-19, and geopolitical events, including civil or political unrest (such as the ongoing war between Ukraine and Russia), have resulted in a significant disruption of global financial markets.
In addition, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense.
In addition, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses, and acquire intangible assets that could result in significant future amortization expenses.
By December 31, 2022, each of these companies must have at least two directors from such underrepresented communities if such company has more than four but fewer than nine directors, or at least three directors from underrepresented communities if the company has nine or more directors. ​ Each of these measures has been challenged in court, and although judges of the California Superior Court ruled that AB 979 and SB 826 violate the California constitution in April 2022 and May 2022, respectively, the Secretary of State of the State of California has appealed such rulings, and the ultimate enforceability of these or similar laws remains uncertain. ​ In addition, the Company is subject to the listing rules from Nasdaq related to board diversity and disclosure, which require all companies listed on Nasdaq’s U.S. exchanges to publicly disclose consistent, transparent diversity statistics regarding their board of directors.
By December 31, 2022, each of these companies must have at least two directors from such underrepresented communities if such company has more than four but fewer than nine directors or at least three directors from underrepresented communities if the company has nine or more directors. ​ Each of these measures has been challenged in court, and although judges of the California Superior Court ruled that AB 979 and SB 826 violate the California constitution in April 2022 and May 2022, respectively, the Secretary of State of the State of California has appealed such rulings, and the ultimate enforceability of these or similar laws remains uncertain. ​ In addition, the Company is subject to the listing rules from Nasdaq related to board diversity and disclosure, which require all companies listed on Nasdaq’s US exchanges to disclose consistent, transparent diversity statistics regarding their board of directors publicly.
If this occurs, our competitors may take advantage of our investment in development and trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case. ​ Even where laws provide protection or we are able to obtain patents, costly and time-consuming litigation may be necessary to enforce and determine the scope of our proprietary rights, and the outcome of such litigation would be uncertain.
If this occurs, our competitors may take advantage of our investment in development and trials by referencing our clinical and preclinical data and launching their product earlier than might otherwise be the case. ​ Even where laws provide protection, or we are able to obtain patents, costly and time-consuming litigation may be necessary to enforce and determine the scope of our proprietary rights, and the outcome of such litigation would be uncertain.
There may be patents already issued of which we are unaware that might be infringed by a product or one of our current or future prescription drug product candidates or non-prescription products.
There may be patents already issued that we are unaware of that might be infringed by a product or one of our current or future prescription drug product candidates or non-prescription products.
Moreover, any actions we may bring to enforce our intellectual property against our competitors could provoke them to bring counterclaims against us, and some of our competitors have substantially greater intellectual property portfolios than we have.
Moreover, any actions we may take to enforce our intellectual property against our competitors could provoke them to bring counterclaims against us, and some of our competitors have substantially greater intellectual property portfolios than we have.
Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
The US Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations.
We will need to continue to invest in developing our internal and third-party sales and distribution network and outreach efforts to key opinion leaders in the gastrointestinal health industry, including physicians and veterinarians as applicable. ​ We are actively identifying additional products for development and commercialization, and will continue to expend substantial resources for the foreseeable future to develop Mytesi, NP-300 and Canalevia-CA1.
We will need to continue to invest in developing our internal and third-party sales and distribution network and outreach efforts to key opinion leaders in the gastrointestinal health industry, including physicians and veterinarians, as applicable. ​ We are actively identifying additional products for development and commercializationand will continue to expend substantial resources for the foreseeable future to develop Mytesi, NP-300, and Canalevia-CA1.
If these third parties do not successfully carry out their contractual duties, we may be unable to obtain regulatory approvals or commercialize our current or future human or animal product candidates on a timely basis, or at all. ​ We will partially rely upon CROs to conduct our toxicology studies and for other development activities.
If these third parties do not successfully carry out their contractual duties, we may be unable to obtain regulatory approvals or commercialize our current or future human or animal product candidates on a timely basis or at all. ​ We will partially rely upon Biostatisticians to conduct our toxicology studies and for other development activities.
If we are unsuccessful 42 Table of Contents or are significantly delayed in commercializing Mytesi, our business and prospects will be harmed and you may lose all or a portion of the value of your investment in our common stock. ​ If we are not successful in identifying, licensing, developing and commercializing additional product candidates and products, our ability to expand our business and achieve our strategic objectives could be impaired. ​ Although a substantial amount of our efforts is focused on the commercial performance of Mytesi and Canalevia-CA1, a key element of our strategy is to identify, develop and commercialize a portfolio of products to serve the gastrointestinal health market.
If we are unsuccessful or are significantly delayed in commercializing Mytesi, our business and prospects will be harmed and you may lose all or a portion of the value of your investment in our common stock. ​ If we are not successful in identifying, licensing, developing and commercializing additional product candidates and products, our ability to expand our business and achieve our strategic objectives could be impaired. ​ Although a substantial amount of our efforts is focused on the commercial performance of Mytesi and Canalevia-CA1, a key element of our strategy is to identify, develop and commercialize a portfolio of products to serve the gastrointestinal health market.
The lack of an active market may also adversely affect our ability to raise capital by selling securities in the future, or impair our ability to license or acquire other product candidates, businesses or technologies using our shares as consideration. ​ 67 Table of Contents If securities or industry analysts do not publish research or reports about our company, or if they issue adverse or misleading opinions regarding us or our stock, our stock price and trading volume could decline. ​ The trading market for our common stock depends in part on the research and reports that industry or financial analysts publish about us or our business.
The lack of an active market may also adversely affect our ability to raise capital by selling securities in the future or impair our ability to license or acquire other product candidates, businesses, or technologies using our shares as consideration. ​ If securities or industry analysts do not publish research or reports about our company, or if they issue adverse or misleading opinions regarding us or our stock, our stock price and trading volume could decline. ​ The trading market for our common stock depends in part on the research and reports that industry or financial analysts publish about us or our business.
If we fail to achieve or maintain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or cease operations. ​ As more fully discussed in Note 1 to our consolidated financial statements, we believe there is substantial doubt about our ability to continue as a going concern as we do not currently have sufficient cash resources to fund our operations through March 20, 2024, or one year from the filing date of our Form 10-K.
If we fail to achieve or maintain profitability, then we may be unable to continue our operations at planned levels and be forced to reduce or cease operations. ​ As more fully discussed in Note 1 to our consolidated financial statements, we believe there is substantial doubt about our ability to continue as a going concern as we do not currently have sufficient cash resources to fund our operations through March 2025, or one year from the filing date of our Form 10-K.
In addition, engaging in sales activities to foreign governments introduces additional compliance risks, including risks specific to anti-bribery regulations, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.K. Bribery Act 2010 and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate.
In addition, engaging in sales activities to foreign governments introduces additional compliance risks, including risks specific to anti-bribery regulations, including the US Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.K. Bribery Act 2010 and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate.
The Federal Food Drug and Cosmetic Act defines food as “articles used for food or drink for man or other animals and articles used as components of any such article.” Animal foods are not subject to pre-market approval and are designed to provide a nutritive purpose to the animals that receive them.
The Federal Food Drug and Cosmetic Act defines food as “articles used for food or drinks for man or other animals and articles used as components of any such article.” Animal foods are not subject to pre-market approval and are designed to provide a nutritive purpose to the animals that receive them.
If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. ​ We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties. ​ We have received confidential and proprietary information from third parties.
If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. ​ 58 Table of Contents We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties. ​ We have received confidential and proprietary information from third parties.
We cannot be certain that pending applications will issue as patents. For those patents that are already issued and even if other patents do successfully issue, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated or held unenforceable.
We cannot be certain that pending applications will be issued as patents. For those patents that are already issued and even if other patents are successfully issued, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, invalidated, or held unenforceable.
Further, the willingness of patients to pay for our products may be less than we anticipate, and may be negatively affected by overall economic conditions. ​ Insurance coverage for Mytesi for its current approved indication could decrease or end, or Mytesi might not receive insurance coverage for any approved follow-on indications, which could lead to lower revenue and harm our operating results. ​ For its current approved indication, Mytesi is currently reimbursed by almost all of commercial and Medicare insurance plans.
Further, the willingness of patients to pay for our products may be less than we anticipate, and may be negatively affected by overall economic conditions. ​ 49 Table of Contents Insurance coverage for Mytesi for its current approved indication could decrease or end, or Mytesi might not receive insurance coverage for any approved follow-on indications, which could lead to lower revenue and harm our operating results. ​ For its current approved indication, Mytesi is currently reimbursed by almost all of commercial and Medicare insurance plans.
Though we endeavor to give reasonable estimates of future revenues and earnings at the time we give such guidance, based on then-current conditions, there is a significant risk that such guidance or outlook will turn out to be, or to have been, incorrect. ​ Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations. ​ Our business, financial condition, results of operations, or prospects could be adversely affected by general conditions in the global economy and in the global financial markets.
Though we endeavor to give reasonable estimates of future revenues and earnings at the time we give such guidance, based on then-current conditions, there is a significant risk that such guidance or outlook will turn out to be, or to have been, incorrect. 52 Table of Contents Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations. ​ Our business, financial condition, results of operations, or prospects could be adversely affected by general conditions in the global economy and in the global financial markets.
If the FDA or other regulatory agencies, such as the USDA, try to regulate our non-prescription products, we could be required to seek regulatory approval for our non-prescription products, which would result in additional expense and could delay or prevent the commercialization of these products. ​ Even if we receive the required regulatory approvals for our current or future prescription drug product candidates and non-prescription products, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. ​ If the FDA or any other regulatory body approves any of our current or future prescription drug product candidates, or if necessary, our non-prescription products, the manufacturing processes, clinical development, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product is subject to extensive and ongoing regulatory requirements.
If the FDA or other regulatory agencies, such as the USDA, try to regulate our non-prescription products, we could be required to seek regulatory approval for our non-prescription products, which would result in additional expense and could delay or prevent the commercialization of these products. ​ 61 Table of Contents Even if we receive the required regulatory approvals for our current or future prescription drug product candidates and non-prescription products, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expenses. ​ If the FDA or any other regulatory body approves any of our current or future prescription drug product candidates, or if necessary, our non-prescription products, the manufacturing processes, clinical development, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product is subject to extensive and ongoing regulatory requirements.
If we are not successful in developing and successfully commercializing these line extension products, we may not be able to grow our revenue and our business may be harmed. ​ Development of prescription drug products is inherently expensive, time-consuming and uncertain, and any delay or discontinuance of our current or future pivotal trials would harm our business and prospects. ​ Development of prescription drug products for human and animal gastrointestinal health remains an inherently lengthy, expensive and uncertain process, and our development activities may not be successful.
If we are not successful in developing and successfully commercializing these line extension products, we may not be able to grow our revenue, and our business may be harmed. ​ 43 Table of Contents Development of prescription drug products is inherently expensive, time-consuming and uncertain, and any delay or discontinuance of our current or future pivotal trials would harm our business and prospects. ​ Development of prescription drug products for human and animal gastrointestinal health remains an inherently lengthy, expensive, and uncertain process, and our development activities may not be successful.
In such event, our studies also may need to be extended, delayed or terminated as a result, or may need to be repeated.
In such an event, our studies may also need to be extended, delayed, or terminated as a result, or may need to be repeated.
If this occurs, a competing generic product could be marketed prior to expiration of our patents listed in the Orange Book, which would harm our business. ​ Third parties may also raise similar validity claims before the USPTO in post-grant proceedings such as ex parte reexaminations, inter partes review, or post-grant review, or oppositions or similar proceedings outside the United States, in parallel with litigation or even outside the context of litigation.
If this occurs, a competing generic product could be marketed prior to the expiration of our patents listed in the Orange Book, which would harm our business. ​ Third parties may also raise similar validity claims before the USPTO in post-grant proceedings such as ex parte reexaminations, inter partes review, or post-grant review, or oppositions or similar proceedings outside the US, in parallel with litigation or even outside the context of litigation.
Any of these events could harm our reputation and our operating results. ​ ​ 50 Table of Contents We may be unable to obtain, or obtain on a timely basis, a renewal of conditional approval for Canalevia-CA1, or to eventually obtain full regulatory approval of Canalevia-CA1, which would harm our operating results. ​ On December 21, 2021, the FDA conditionally approved Canalevia-CA1 (crofelemer delayed-release tablets) for the treatment of CID in dogs under application number 141-552.
Any of these events could harm our reputation and our operating results. ​ We may be unable to obtain, or obtain on a timely basis, a renewal of conditional approval for Canalevia-CA1 or to eventually obtain full regulatory approval of Canalevia-CA1, which would harm our operating results. ​ On December 21, 2021, the FDA conditionally approved Canalevia-CA1 (crofelemer delayed-release tablets) for the treatment of CID in dogs under application number 141-552.
Conte founded Napo in 2001 and was the current interim chief executive officer of Napo and a member of Napo’s board of directors prior to the Merger. While at Napo, certain members of our management team, including Ms. Conte and Dr. King, continued the development of crofelemer.
Conte founded Napo in 2001 and was Napo's interim chief executive officer and a member of its board of directors prior to the merger. While at Napo, certain members of our management team, including Ms. Conte and Dr. King, continued the development of crofelemer.
If we fail to expand and enhance our operational, financial and management systems in conjunction with our potential future growth, it could harm our business and operating results. ​ Canalevia-CA1 and our animal health prescription drug product candidates, if approved, may be marketed in the United States only in the target animals and for the indications for which they are approved, and if we want to expand the approved animals or indications, it will need to obtain additional approvals, which may not be granted. ​ We may market or advertise Canalevia-CA1 and our animal health prescription drug product candidates that are approved by regulatory authorities only in the specific species and for treatment of the specific indications for which they were approved, which could limit use of the products by veterinarians and animal owners.
If we fail to expand and enhance our operational, financial, and management systems in conjunction with our potential future growth, it could harm our business and operating results. ​ Canalevia-CA1 and our animal health prescription drug product candidates, if approved, may be marketed in the US only in the target animals and for the indications for which they are approved, and if we want to expand the approved animals or indications, it will need to obtain additional approvals, which may not be granted. ​ We may market or advertise Canalevia-CA1 and our animal health prescription drug product candidates approved by regulatory authorities only in the specific species and for treatment of the specific indications for which they were approved, which could limit the use of the products by veterinarians and animal owners.
Unanticipated safety or efficacy concerns can subsequently arise with respect to approved prescription drug products, such as Mytesi, or non-prescription products, such as Neonorm, which may result in product recalls or withdrawals or suspension of sales, as well as product liability and other claims.
Unanticipated safety or efficacy concerns can subsequently arise with respect to approved prescription drugs products, such as Mytesi, or non-prescription products, such as Neonorm, which may result in product recalls or withdrawals or suspension of sales, as well as product liability and other claims.
If these third parties do not successfully carry out their contractual duties, we may be unable to obtain regulatory approvals or commercialize our current or future human or animal product candidates on a timely basis, or at all. ● Even if we obtain regulatory approval for planned follow-on indications of crofelemer, Canalevia or our 36 Table of Contents other product candidates, they may never achieve market acceptance.
If these third parties do not successfully carry out their contractual duties, we may be unable to obtain regulatory approvals or commercialize our current or future human or animal product candidates on a timely basis or at all. ● Even if we obtain regulatory approval for planned follow-on indications of crofelemer, Canalevia, or our other product candidates, they may never achieve market acceptance.
For example, as a result of the outbreak in 2020 of SARS-CoV-2, the virus that causes COVID-19, that originated in Wuhan, China and then spread globally, our suppliers and contract manufacturer could be disrupted by worker absenteeism, quarantines, or other travel or health-related restrictions or could incur increased costs associated with ensuring the safety and health of their personnel.
For example, as a result of the outbreak in 2020 of SARS-CoV-2, the virus that causes COVID-19, which originated in Wuhan, China, and then spread globally, our suppliers and contract manufacturers could be disrupted by worker absenteeism, quarantines, or other travel or health-related restrictions or could incur increased costs associated with ensuring the safety and health of their personnel.
Further, if we encounter delays in our development efforts, the period of time during which we could market any of our current or future product candidates or products under any patent protection we obtain would be reduced. ​ 58 Table of Contents Given the amount of time required for the development, testing and regulatory review of new product candidates or products, patents protecting such candidates might expire before or shortly after such product candidates or products are commercialized.
Further, if we encounter delays in our development efforts, the period of time during which we could market any of our current or future product candidates or products under any patent protection we obtain would be reduced. ​ Given the amount of time required for the development, testing, and regulatory review of new product candidates or products, patents protecting such candidates might expire before or shortly after such product candidates or products are commercialized.
There can be no assurance that we will be able to maintain compliance or, if we fall out of compliance, regain compliance with any deficiency, or if we implement an option that regains our compliance, maintain compliance thereafter. ​ 65 Table of Contents If our shares become subject to the penny stock rules, it would become more difficult to trade our shares. ​ The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.
There can be no assurance that we will be able to maintain compliance or, if we fall out of compliance, regain compliance with any deficiency, or if we implement an option that regains our compliance, maintain compliance thereafter. ​ If our shares become subject to the penny stock rules, it would become more difficult to trade our shares. ​ The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.
During the ongoing commercialization of Mytesi for its currently approved indication, and during the future commercialization of Mytesi for any planned follow-on indications, if such follow-on indications receive regulatory approval, we expect to compete with major pharmaceutical and biotechnology companies that operate in the gastrointestinal space, such as Takeda Pharmaceuticals, Allergan, Inc., Ironwood Pharmaceuticals, Inc., Synergy Pharmaceuticals Inc., Sebela Pharmaceuticals, Inc. and Salix Pharmaceuticals. ​ 43 Table of Contents Many of our competitors and potential competitors in the human gastrointestinal space have substantially more financial, technical and human resources and greater ability to lower costs of manufacturing and sales and marketing than we do.
During the ongoing commercialization of Mytesi for its currently approved indication and during the future commercialization of Mytesi for any planned follow-on indications, if such follow-on indications receive regulatory approval, we expect to compete with major pharmaceutical and biotechnology companies that operate in the gastrointestinal space, such as Takeda Pharmaceuticals, Allergan, Inc., Ironwood Pharmaceuticals, Inc., Synergy Pharmaceuticals Inc., Sebela Pharmaceuticals, Inc., and Salix Pharmaceuticals. ​ Many of our competitors and potential competitors in the human gastrointestinal space have substantially more financial, technical, and human resources and a greater ability to lower manufacturing costs, sales and marketing costs than we do.
While we currently have product liability insurance, such insurance may not be sufficient to cover any future product liability claims against us. ​ ​ 47 Table of Contents If we fail to retain current members of our senior management, or to identify, attract, integrate and retain additional key personnel, our business will be harmed. ​ Our success depends on our continued ability to attract, retain and motivate highly qualified management and scientific personnel.
While we currently have product liability insurance, such insurance may not be sufficient to cover any future product liability claims against us. ​ If we fail to retain current members of our senior management or to identify, attract, integrate, and retain additional key personnel, our business will be harmed. ​ Our success depends on our continued ability to attract, retain, and motivate highly qualified management and scientific personnel.
These risks may be elevated with respect to our interactions with third parties with substantial operations in countries where current economic conditions are the most severe, particularly where such third parties are themselves exposed to sovereign risk from business interactions directly with fiscally challenged government payers. ​ At the same time, significant changes and volatility in the financial markets, in the consumer and business environment, in the competitive landscape and in the global political and security landscape make it increasingly 54 Table of Contents difficult for us to predict our revenues and earnings into the future.
These risks may be elevated with respect to our interactions with third parties with substantial operations in countries where current economic conditions are the most severe, particularly where such third parties are themselves exposed to sovereign risk from business interactions directly with fiscally challenged government payers. ​ At the same time, significant changes and volatility in the financial markets, in the consumer and business environment, in the competitive landscape, and in the global political and security landscape make it increasingly difficult for us to predict our revenues and earnings into the future.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not currently subject to any material legal proceedings. ​ ITEM 4. MINE SAFETY DISCLOSURE Not applicable. ​ 71 Table of Contents PART II
Biggest changeWe are not currently subject to any material legal proceedings. ​ ITEM 4. MINE SAFETY DISCLOSURE Not applicable. ​ 69 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−4 removed3 unchanged
Biggest changeOther than equity securities issued in transactions disclosed above and on our Current Report on Form 8-K filed with the SEC on August 18, 2022, August 23, 2022 and August 30, 2022, there were no unregistered sales of equity securities during the period.
Biggest changeOther than equity securities issued in transactions disclosed above and on our Current Report on Form 8-K filed with the SEC on October 5, 2023, there were no unregistered sales of equity securities during the period. Refer to Item 15. Subsequent Events for subsequent sales of unregistered securities.
These figures do not reflect the beneficial ownership or shares held in nominee name, nor do they include holders of any RSUs. Dividend Policy We have never paid any cash dividends on our common stock to date.
These figures do not reflect the beneficial ownership or shares held in the nominee's name nor include holders of any RSUs. Dividend Policy We have never paid any cash dividends on our common stock to date.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on The Nasdaq Capital Market under the symbol “JAGX.” Holders As of March 24, 2023, there were approximately 18 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on The Nasdaq Capital Market under the symbol “JAGX.” Holders As of April 1, 2025, there were approximately 22 stockholders of record of our common stock.
Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us.
Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business, or other relationships, to information about us. ​ ITEM 6. SELECTED FINANCIAL DATA Not Applicable. ​
Removed
Recent Sales of Unregistered Securities On September 1, 2022, the Company entered into an agreement, dated September 1, 2022, with Corporate Profile LLC, pursuant to which the Company agreed to issue 560 shares of the Company’s common stock to Corporate Profile LLC as partial consideration for investor relations services, which shares are issuable in three tranches: 160 shares were issued on September 26, 2022, 200 shares were issued on December 1, 2022 and 200 shares will be issued on April 1, 2023.
Added
Recent Sales of Unregistered Securities On December 28, 2023, pursuant to that certain exchange agreement dated December 28, 2023, the Company issued 4,875,000 shares of the Company’s common stock to Iliad Research and Trading, L.P. in exchange for a $785,362.50 reduction in the outstanding balance of the royalty interest held by Iliad Research and Trading, L.P.
Removed
The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act, Regulation D or Regulation S promulgated thereunder as transactions by an issuer not involving a public offering.
Removed
The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.
Removed
Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us. ​

Item 7. Management's Discussion & Analysis

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

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Biggest changeFor additional information relating to these and other accounting policies, see Note 2 to the consolidated financial statements, appearing elsewhere in this report. 77 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes the Company’s results of operations with respect to the items set forth in such table for the years ended December 31, 2022 and 2021 together with the change in such items in dollars and as a percentage. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ ​ (in thousands) 2022 2021 Variance Variance % ​ Product revenue $ 11,956 ​ $ 4,335 ​ $ 7,621 175.8 % Operating Expenses ​ ​ ​ ​ Cost of product revenue 2,019 ​ 2,333 ​ (314) (13.5) % Research and development 17,647 ​ 15,079 ​ 2,568 17.0 % Sales and marketing 8,837 ​ 8,894 ​ (57) (0.6) % General and administrative 17,868 ​ 17,103 ​ 765 4.5 % Series 3 warrants inducement expense ​ — ​ ​ 1,462 ​ ​ (1,462) ​ (100.0) % ELOC warrants inducement expense ​ — ​ ​ 172 ​ ​ (172) ​ (100.0) % Total operating expenses 46,371 ​ 45,043 ​ 1,328 2.9 % Loss from operations (34,415) ​ (40,708) ​ 6,293 (15.5) % Interest expense (12,723) ​ (8,421) ​ (4,302) 51.1 % Loss on extinguishment of debt (2,187) ​ (753) ​ (1,434) 190.4 % Change in fair value of financial instruments and hybrid instrument designated at Fair Value Option (20) ​ (1,953) ​ 1,933 (99.0) % Other income (expense) 950 ​ (765) ​ 1,715 (224.2) % Loss before income tax (48,395) ​ (52,600) ​ 4,205 (8.0) % Income tax expense ​ — ​ ​ — ​ ​ — ​ 100.0 % Net loss ​ (48,395) ​ ​ (52,600) ​ ​ 4,205 ​ (8.0) % Net loss attributable to noncontrolling interest ​ (941) ​ ​ (5) ​ ​ (936) ​ 18,720 % Net loss attributable to common stockholders $ (47,454) ​ $ (52,595) ​ $ 5,141 ​ (9.8) % ​ Revenue Product revenue We transitioned from selling to the wholesalers that resell the product to retail pharmacies to the closed Specialty Pharmacy distribution networks throughout the year 2021 and we fully transitioned in the fourth quarter of the same year.
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table summarizes the Company’s results of operations with respect to the items set forth in such table for the years ended December 31, 2023 and 2022 together with the change in such items in dollars and as a percentage. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ ​ (in thousands) 2023 2022 Variance Variance % ​ Product revenue, net ​ $ 9,761 ​ $ 11,956 ​ $ (2,195) (18.4) % Operating Expenses ​ ​ ​ ​ ​ Cost of product revenue ​ 2,037 ​ 2,019 ​ 18 0.9 % Research and development ​ 18,596 ​ 17,647 ​ 949 5.4 % Sales and marketing ​ 6,460 ​ 8,837 ​ (2,377) (26.9) % General and administrative ​ 16,588 ​ 17,868 ​ (1,280) (7.2) % Impairment loss on intangible assets ​ ​ 371 ​ ​ — ​ ​ 371 ​ 100.0 % Total operating expenses ​ 44,052 ​ 46,371 ​ (2,319) (5.0) % Loss from operations ​ (34,291) ​ (34,415) ​ 124 (0.4) % Interest expense ​ (6,382) ​ (12,723) ​ 6,341 (49.8) % Change in fair value of freestanding and hybrid financial instruments designated at Fair Value Option ​ (5,125) ​ (20) ​ (5,105) 25,525.0 % Gain (loss) on extinguishment of debt ​ 3,697 ​ (2,187) ​ 5,884 (269.0) % Other income ​ 200 ​ 950 ​ (750) (78.9) % Loss before income tax ​ (41,901) ​ (48,395) ​ 6,494 (13.4) % Income tax expense ​ ​ — ​ ​ — ​ ​ — ​ 100.0 % Net loss ​ $ (41,901) ​ $ (48,395) ​ $ 6,494 ​ (13.4) % Net loss attributable to noncontrolling interest ​ $ (601) ​ $ (941) ​ $ 340 ​ (36.1) % Net loss attributable to common stockholders ​ $ (41,300) ​ $ (47,454) ​ $ 6,154 ​ (13.0) % ​ 75 Table of Contents Revenue Product revenue Sales discounts were $1.4 million and $1.2 million for the years ended December 31, 2023, and 2022, respectively, an increase of $267,000. ​ Medicaid and AIDS Drug Assistance Program (“ADAP”) rebates accounted for $2.0 million and $1.8 million for the years ended December 31, 2023 and 2022, respectively, an increase of $205,000. ​ Due to the Company’s arrangements, including elements of variable consideration, gross product sales are reduced in order to reflect the expected consideration to arrive at net product sales.
We expect our expenditures will continue to increase as we continue our efforts to develop our products and continue development of our pipeline in the near term. We may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
We expect our expenditures will continue to increase as we continue our efforts to develop our products and continue the development of our pipeline in the near term. We may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
Cash Provided by Financing Activities During the year ended December 31, 2022, net cash provided by financing activities of $23.2 million consisted of $20.5 million in net proceeds from shares issued in an At the Market offering, $4.0 million in net proceeds from notes payable with Streeterville, offset by $1.2 million repayment of insurance financing and $100,000 payment of Tempesta Note.
During the year ended December 31, 2022, net cash provided by financing activities of $23.2 million consisted of $20.5 million in net proceeds from shares issued in an At the Market offering, $4.0 million in net proceeds from notes payable with Streeterville, offset by $1.2 million repayment of insurance financing and $100,000 payment of Tempesta Note. ​
Napo’s marketed drug Mytesi (crofelemer 125 mg delayed-release tablets) is a first-in-class oral botanical drug product approved by the U.S. Food and Drug Administration (“FDA”) for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy. To date, this is the only oral plant-based botanical prescription medicine approved under the FDA’s Botanical Guidance.
Napo’s marketed drug Mytesi (crofelemer 125 mg delayed-release tablets) is a first-in-class oral botanical drug product approved by the US Food and Drug Administration (“FDA”) for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy. To date, this is the only oral plant-based botanical prescription medicine approved under the FDA’s Botanical Guidance.
In January 2023, Jaguar and Filament Health (“Filament”), with funding from One Small Planet, formed the U.S.-based joint venture Magdalena Biosciences, Inc. (“Magdalena”). Magdalena’s focus is on the development of novel, natural prescription medicines derived from plants for mental health indications including, initially, attention-deficit/hyperactivity disorder (“ADHD”) in adults.
In January 2023, Jaguar and Filament Health (“Filament”), with funding from One Small Planet, formed the US-based joint venture Magdalena Biosciences, Inc. (“Magdalena”). Magdalena’s focus is on the development of novel, natural prescription medicines derived from plants for mental health indications including, initially, attention-deficit/hyperactivity disorder (“ADHD”) in adults.
We may also not be successful in entering into partnerships that include payment of upfront licensing fees for our products and product candidates for markets outside the United States, where appropriate. If we do not generate upfront fees from any anticipated arrangements, it would have a negative effect on our operating plan.
We may also not be successful in entering into partnerships that include payment of upfront licensing fees for our products and product candidates for markets outside the US, where appropriate. If we do not generate upfront fees from any anticipated arrangements, it would have a negative effect on our operating plan.
The timing and amount of our research and development expenses will depend largely upon the outcomes of current and future trials for our prescription drug product candidates as well as the related regulatory requirements, the outcomes of current and future species-specific formulation studies for our non-prescription products, manufacturing costs and any costs associated with the advancement of our line extension programs.
The timing and amount of our research and development expenses will depend largely upon the outcomes of current and future trials for our prescription drug product candidates as well as the related regulatory requirements, the outcomes of current and future species-specific formulation studies for our non-prescription products, manufacturing 73 Table of Contents costs and any costs associated with the advancement of our line extension programs.
Napo Therapeutics’ core mission is to provide access to crofelemer in Europe to address significant rare/orphan disease indications, including, initially, two key rare disease target indications: Short bowel syndrome (“SBS”) with intestinal failure and/or congenital diarrheal disorders (“CDD”). Jaguar Animal Health is a tradename of Jaguar Health.
Napo Therapeutics’ core mission is to provide access to crofelemer in Europe to address significant rare/orphan disease indications, including, initially, two key rare disease target indications: Short bowel syndrome (“SBS”) with intestinal failure, rare disease indications of microvillus inclusion disease (“MVID”) and/or congenital diarrheal disorders (“CDD”). Jaguar Animal Health is a tradename of Jaguar Health.
(“Jaguar” or the “Company”) is a commercial stage pharmaceuticals company focused on developing novel, plant-based, sustainably derived prescription medicines for people and animals with gastrointestinal (“GI”) distress, including chronic, debilitating diarrhea. Jaguar Health's wholly owned subsidiary, Napo Pharmaceuticals, Inc. (“Napo”), focuses on developing and commercializing proprietary plant-based human pharmaceuticals from plants harvested responsibly from rainforest areas.
(“Jaguar” or the “Company”) is a commercial stage pharmaceuticals company focused on developing novel, plant-based, sustainably derived prescription medicines for people and animals with gastrointestinal (“GI”) distress, including chronic, debilitating diarrhea. Jaguar Health's wholly owned subsidiary, Napo 70 Table of Contents Pharmaceuticals, Inc. (“Napo”), focuses on developing and commercializing proprietary plant-based human pharmaceuticals from plants harvested responsibly from rainforest areas.
The small number threshold is 74 Table of Contents currently 80,000 for dogs, representing the largest number of dogs that can be affected by a disease or condition over the course of a year and still have the use qualify as a minor use.
The small number threshold is currently 80,000 for dogs, representing the largest number of dogs that can be affected by a disease or condition over the course of a year and still have the use qualify as a minor use.
We do not currently have any marketing or promotional expenses related to Canalevia-CA1, Neonorm Calf or Neonorm Foal for the years ended December 31, 2022 and 2021. 76 Table of Contents We expect sales and marketing expense to increase going forward as we focus on expanding our market access activities and commercial partnerships for the development of follow-on indications of Mytesi and crofelemer.
We do not currently have any marketing or promotional expenses related to Canalevia-CA1, Neonorm Calf or Neonorm Foal for the years ended December 31, 2023 and 2022. We expect sales and marketing expense to increase going forward as we focus on expanding our market access activities and commercial partnerships for the development of follow-on indications of Mytesi and crofelemer.
However, there can be no assurance that additional funding will be available to us on acceptable terms on a timely basis, if at all, or that we will generate sufficient cash from operations to adequately fund operating needs or ultimately achieve profitability.
However, there can be no assurance that additional funding will be available to us on acceptable terms on a 80 Table of Contents timely basis, if at all, or that we will generate sufficient cash from operations to adequately fund operating needs or ultimately achieve profitability.
Returns are accepted for product that will expire within six months or that have expired up to one year after their expiration dates. Estimates for expected returns of expired products are based primarily on an ongoing analysis of our historical return patterns.
Returns are accepted for product that will expire within six months or that have expired up to one year after their expiration dates. Estimates for expected returns of expired products are based primarily on an ongoing analysis of our historical return patterns. See “Results of Operations” below for more detailed discussion on revenues.
Cash Used in Investing Activities During the year ended December 31, 2022, cash used in investing activities was $1.7 million which consisted of cash used in software development activities of $1.6 million and cash used to purchase property and equipment of $77,000. 84 Table of Contents During the year ended December 31, 2021, cash used in investing activities was $6,000 which consisted of cash used to purchase property and equipment.
Cash Used in Investing Activities There are no cash used in investing activities during the year ended December 31, 2023. During the year ended December 31, 2022, cash used in investing activities was $1.7 million which consisted of cash used in software development activities of $1.6 million and cash used to purchase property and equipment of $77,000.
In December 2021 we received conditional approval from the FDA to market Canalevia-CA1 (crofelemer delayed-release tablets), our oral plant-based prescription drug and the only available veterinary drug for the treatment of chemotherapy-induced diarrhea (“CID”) in dogs, and Canalevia-CA1 is now available to multiple leading veterinary distributors in the U.S.
In December 2021 we received conditional approval from the FDA to market Canalevia-CA1 (crofelemer delayed-release tablets), our oral plant-based prescription drug and the only available veterinary drug for the treatment of chemotherapy-induced diarrhea (“CID”) in dogs, and Canalevia-CA1 is now available to multiple leading veterinary distributors in the US Canalevia-CA1 is a tablet that is given orally and can be prescribed for home treatment of CID.
We typically use our employee and infrastructure resources across multiple development programs. We track outsourced development costs by prescription drug product candidate and non-prescription product but do not allocate personnel or other internal costs related to development to specific programs or development compounds.
We track outsourced development costs by prescription drug product candidate and non-prescription product but do not allocate personnel or other internal costs related to development to specific programs or development compounds.
Cash Flows for Year Ended December 31, 2022 compared to the Year Ended December 31, 2021 The following table shows a summary of cash flows for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2022 2021 Total cash used in operating activities ​ $ (33,104) ​ $ (34,970) Total cash used in investing activities ​ ​ (1,675) ​ ​ (6) Total cash provided by financing activities ​ 23,181 ​ 43,937 Effects of foreign exchange rate changes on assets and liabilities ​ 16 ​ — Net (decrease) increase in cash ​ $ (11,582) ​ $ 8,961 ​ Cash Used in Operating Activities During the year ended December 31, 2022, net cash used in operating activities of $33.1 million resulted from our net loss and comprehensive loss of $49.1 million adjusted by amortization of debt issuance costs, debt discount, and non-cash interest expense of $11.8 million, stock-based compensation of $3.3 million, loss on extinguishment of debt of $2.2 million, depreciation and amortization expenses of $2.0 million, shares issued in exchange for services of $823,000, amortization of operating lease right-of-use assets of $311,000, change in fair value of financial instruments and hybrid instruments designated at FVO of $21,000, and net changes in operating assets and liabilities of $4.4 million.
Cash Flows for Year Ended December 31, 2023 compared to the Year Ended December 31, 2022 The following table shows a summary of cash flows for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ (in thousands) 2023 2022 Total cash used in operating activities ​ $ (33,242) ​ $ (33,104) ​ Total cash used in investing activities ​ ​ — ​ ​ (1,675) ​ Total cash provided by financing activities ​ 34,227 ​ 23,181 ​ Effects of foreign exchange rate changes on assets and liabilities ​ 15 ​ 16 ​ Net increase (decrease) in cash ​ $ 1,000 ​ $ (11,582) ​ ​ ​ 81 Table of Contents Cash Used in Operating Activities During the year ended December 31, 2023, net cash used in operating activities of $33.2 million resulted from our net comprehensive loss of $41.9 million adjusted by amortization of debt issuance costs, debt discount, and non-cash interest expense of $13.2 million, Change in fair value of freestanding and hybrid financial instruments designated at FVO of $5.1 million, stock-based compensation of $2.1 million, depreciation and amortization expenses of $2.0 million, amortization of operating lease right-of-use assets of $375,000, impairment loss on intangible asset of $371,000, shares issued in exchange for services of $171,000, share in joint venture’s loss of $51,000, gain on extinguishment of debt $3.7 million, and net changes in operating assets and liabilities of $11.1 million.
During the year ended December 31, 2021, net cash used in operating activities of $35.0 million resulted from our net loss and comprehensive loss of $52.6 million adjusted by amortization of debt discounts, debt issuance costs, and non-cash interest expense of $5.2 million, stock-based compensation of $4.0 million, change in fair value of financial instruments and hybrid instruments designated at FVO of $2.0 million, depreciation and amortization expenses of $1.7 million, Series 3 and ELOC warrants inducement expense of $1.6 million, a loss on extinguishment of debt of $753,000, amortization of operating lease right-of-use assets of $94,000, derecognition of debt discount on settlement of receivables of secured borrowing of $49,000, shares issued in exchange for services of $16,000, and net changes in operating assets and liabilities of $2.3 million.
During the year ended December 31, 2022, net cash used in operating activities of $33.1 million resulted from our net comprehensive loss of $49.1 million adjusted by amortization of debt issuance costs, debt discount, and non-cash interest expense of $11.8 million, stock-based compensation of $3.3 million, loss on extinguishment of debt of $2.2 million, depreciation and amortization expenses of $2.0 million, shares issued in exchange for services of $823,000, amortization of operating lease right-of-use assets of $311,000, change in fair value of hybrid instruments designated at FVO of $21,000, and net changes in operating assets and liabilities of $4.4 million.
The Company’s Canalevia-CA1 (crofelemer delayed-release tablets) drug is the first and only oral plant-based prescription product that is FDA conditionally approved to treat chemotherapy-induced diarrhea (“CID”) in dogs. Crofelemer was granted ODD by the U.S.
The Company’s Canalevia-CA1 (crofelemer delayed-release tablets) drug is the first and only oral plant-based prescription product that is FDA conditionally approved to treat chemotherapy-induced diarrhea (“CID”) in dogs. Crofelemer was granted ODD by the FDA in February 2023 for MVID, an ultrarare CDD condition, and granted ODD for MVID by the European Medicines Agency (“EMA”) in October 2022.
Crofelemer is a novel, first-in-class anti-secretory antidiarrheal drug which has a normalizing effect on electrolyte and fluid balance in the gut, and this mechanism of action has the potential to benefit multiple disorders that cause gastrointestinal distress, including diarrhea and abdominal discomfort.
In the field of animal health, we are continuing limited activities related to developing and commercializing first-in-class gastrointestinal products for dogs, dairy calves and foals. 71 Table of Contents Crofelemer is a novel, first-in-class anti-secretory antidiarrheal drug which has a normalizing effect on electrolyte and fluid balance in the gut, and this mechanism of action has the potential to benefit multiple disorders that cause gastrointestinal distress, including diarrhea and abdominal discomfort.
We have received Minor Use in a Major Species (“MUMS”) designation from the FDA for Canalevia-CA1 to treat CID in dogs. FDA has established a "small number" threshold for minor use in each of the seven major species covered by the MUMS act.
FDA has established a "small number" threshold for minor use in each of the seven major species covered by the MUMS act.
GAAP”) requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the financial statements.
Critical Accounting Policies and Significant Judgments and Estimates The preparation of financial statements in conformity with US generally accepted accounting principles (“US GAAP”) requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the financial statements.
We had cash of $5.5 million as of December 31, 2022 to fund our operating plan through one year from the issuance of these consolidated financial statements.
To date, we have generated only limited revenue, and we may never achieve revenue sufficient to offset our expenses. We had cash of $6.5 million as of December 31, 2023 to fund our operating plan through one year from the issuance of these consolidated financial statements.
Canalevia-CA1 is a tablet that is given orally and can be prescribed for home treatment of CID. Canalevia-CA1 is conditionally approved by the FDA under application number 141-552. Conditional approval allows for commercialization of the product while Jaguar Animal Health continues to collect the substantial evidence of effectiveness required for full approval.
Canalevia-CA1 is conditionally approved by the FDA under application number 141-552. Conditional approval allows for commercialization of the product while Jaguar Animal Health continues to collect the substantial evidence of effectiveness required for full approval. We have received Minor Use in a Major Species (“MUMS”) designation from the FDA for Canalevia-CA1 to treat CID in dogs.
Jaguar is the majority stockholder of Napo Therapeutics S.p.A. (“Napo Therapeutics”), an Italian corporation established by Jaguar in Milan, Italy in 2021 that focuses on expanding crofelemer access in Europe.
Our crofelemer drug product candidate is the subject of the OnTarget study, a pivotal Phase 3 clinical trial for prophylaxis of diarrhea in adult cancer patients receiving targeted therapy. Jaguar is the majority stockholder of Napo Therapeutics S.p.A. (“Napo Therapeutics”), an Italian corporation established by Jaguar in Milan, Italy, in 2021 that focuses on expanding crofelemer access in Europe.
Change in Fair Value of Financial Instruments and Hybrid Instrument Designated at FVO Change in fair value of financial instruments increased $1.9 million from a loss of $2.0 million for the year ended December 31, 2021, to a loss of $21,000 in 2022 primarily due to fair value adjustments in liability classified warrants and notes payable designated at FVO.
Change in Fair Value of Freestanding and Hybrid Financial Instruments Designated at FVO Change in fair value of freestanding and hybrid financial instruments designated at FVO increased by $5.1 million from a loss of $20,000 for the year ended December 31, 2022, to a loss of $5.1 million for the same period in 2023 primarily due to additional freestanding instruments measured at FVO.
As of December 31, 2022, we had total stockholders' deficit of $1.4 million, an accumulated deficit of $266.9 million, an accumulated other comprehensive loss of $680,000 and cash of $5.5 million.
Our net comprehensive losses were $41.9 million and $49.1 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had total stockholders' equity of $4.9 million, an accumulated deficit of $308.2 million, an accumulated other comprehensive loss of $652,000 and cash of $6.5 million.
SBS affects approximately 10,000 to 20,000 people in the U.S., according to the Crohn's & Colitis Foundation, and it is estimated that the population of SBS patients in Europe is approximately the same size.
In August 2023 the FDA activated Napo’s Investigational New Drug (“IND”) application for a new crofelemer powder for oral solution formulation for the treatment of MVID. SBS affects approximately 10,000 to 20,000 people in the US, according to the Crohn's & Colitis Foundation, and it is estimated that the population of SBS patients in Europe is approximately the same size.
This will include efforts to grow the business. Interest Expense Interest expense consists primarily of non-cash and cash interest costs related to our borrowings. Critical Accounting Policies and Significant Judgments and Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S.
This will include efforts to grow the business. Interest Expense Interest expense consists primarily of non-cash and cash interest costs related to our borrowings.
Deductions to reduce gross product sales to net product sales for the years ended December 31, 2022 and 2021 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ December 31, ​ ​ (in thousands) 2022 2021 Variance Variance % Gross product sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mytesi ​ $ 14,804 ​ $ 15,657 ​ $ (853) (5.4) % Canalevia ​ ​ 167 ​ ​ — ​ 167 100.0 % Neonorm ​ ​ 48 ​ ​ 62 ​ (14) (22.6) % Total gross product sales ​ ​ 15,019 ​ ​ 15,719 ​ (700) (4.5) % Medicaid rebates ​ ​ (1,836) ​ ​ (3,484) ​ 1,648 (47.3) % Sales discounts ​ ​ (1,182) ​ ​ (6,268) ​ ​ 5,086 ​ (81.1) % Sales returns ​ ​ (45) ​ ​ (104) ​ ​ 59 ​ (56.7) % Wholesaler fee ​ ​ — ​ ​ (1,528) ​ ​ 1,528 ​ (100.0) % Net product sales ​ $ 11,956 ​ $ 4,335 ​ $ 7,621 175.8 % ​ Our gross product revenues were $15.0 million and $15.7 million for the years ended December 31, 2022 and 2021, respectively.
Deductions to reduce gross product sales to net product sales for the years ended December 31, 2023 and 2022 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ (in thousands) 2023 2022 Variance Variance % Gross product sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mytesi $ 13,435 ​ $ 14,804 ​ $ (1,369) (9.2) % Canalevia ​ 130 ​ ​ 167 ​ (37) (22.2) % Neonorm ​ 42 ​ ​ 48 ​ (6) (12.5) % Total gross product sales ​ 13,607 ​ ​ 15,019 ​ (1,412) (9.4) % Medicaid rebates ​ (2,041) ​ ​ (1,836) ​ (205) 11.2 % Sales discounts ​ (1,449) ​ ​ (1,182) ​ ​ (267) ​ 22.6 % Sales returns ​ (356) ​ ​ (45) ​ ​ (311) ​ 691.1 % Net product sales $ 9,761 ​ $ 11,956 ​ $ (2,195) (18.4) % ​ Our gross product revenues were $13.6 million and $15.0 million for the years ended December 31, 2023 and 2022, respectively.
Clinical and contract manufacturing expense consists primarily of costs to conduct stability, safety and efficacy studies, and manufacturing startup expenses at an outsourced API provider in Italy. It also includes expenses with a third-party provider for the transfer of the Mytesi manufacturing process, and the related feasibility and validation activities.
Research and Development Expense ​ Research and development expenses consist primarily of clinical and contract manufacturing expense, personnel and related benefit expense, stock-based compensation expense, employee travel expense and reforestation expenses. Clinical and contract manufacturing expense consists primarily of costs to conduct stability, safety and efficacy studies, and manufacturing startup expenses at an outsourced API provider in Italy.
During the year ended December 31, 2021, net cash provided by financing activities of $43.9 million consisted of $23.2 million in net proceeds received from shares issued in registered public offering, $11.0 million in net proceeds received from issuance of notes payable, $8.6 million in net proceeds from shares issued in an At the Market offering, $2.0 million in net proceeds received from shares issued on conversion of Series 1, Series 2, and 2019 Bridge Note Warrants, $1.8 million in net proceeds received from shares issued in PIPE financing, $247 million noncontrolling interest, and $3,000 in net proceeds from exercise of stock options, offset by $1.8 million repayment of receivables secured borrowing, $943,000 repayment of insurance financing, $100,000 in principal payments of the notes payable and $35,000 payment of ELOC warrants offering costs.
Cash Provided by Financing Activities During the year ended December 31, 2023, net cash provided by financing activities of $34.2 million consisted of $32.1 million in net proceeds from shares issued in an At the Market offering, $1.2 million net proceeds from issuance of warrants in PIPE financing, investment from non-controlling interest of $1.2 million and $611,000 net proceeds from issuance of preferred shares in PIPE financing, offset by $853,000 repayment of insurance financing, and $100,000 in principal payments of Tampesta Note.
Napo’s pivotal OnTarget Phase 3 clinical trial of crofelemer for prophylaxis of cancer therapy-related diarrhea (“CTD”) was initiated in October 2020 and is ongoing. In the field of animal health, we are continuing limited activities related to developing and commercializing first-in-class gastrointestinal products for dogs, dairy calves and foals.
Napo’s pivotal OnTarget Phase 3 clinical trial of crofelemer for prophylaxis of cancer therapy-related diarrhea (“CTD”) was initiated in October 2020.
See “Results of Operations” below for more detailed discussion on revenues Cost of Revenue Cost of revenue consists of direct drug substance and drug product materials expense, direct labor, distribution fees, royalties and other related expenses associated with the sale of our products. ​ 75 Table of Contents Research and Development Expense Research and development expenses consist primarily of clinical and contract manufacturing expense, personnel and related benefit expense, stock-based compensation expense, employee travel expense and reforestation expenses.
Cost of Revenue Cost of revenue consists of direct drug substance and drug product materials expense, direct labor, distribution fees, royalties and other related expenses associated with the sale of our products.
Liquidity and Capital Resources Sources of Liquidity We have incurred net losses since our inception. For the years ended December 31, 2022 and 2021, we had net losses and comprehensive losses of $49.1 million and $52.6 million, respectively, and we expect to incur additional losses in the near-term future.
For the years ended December 31, 2023 and 2022, we had net losses of $41.9 million and $48.4 million, respectively, and expect to incur additional losses in the near-term future. At December 31, 2023, we had an accumulated deficit of $308.2 million and accumulated comprehensive loss of $652,000.
These figures reflect revenue from the sale of our human drug Mytesi, our animal products branded as Neonorm Calf and Neonorm Foal, and our new animal drug Canalevia that is designed for dogs released only this 2022 amounting to $167,000.
These figures reflect revenue from the sale of our human drug Mytesi, our animal products branded as Neonorm Calf and Neonorm Foal. ​ Our Mytesi product revenues were $13.4 million and $14.8 million for the years ended December 31, 2023 and 2022, respectively.
Sales and marketing expenses for Neonorm products are not significant during 2022 compared to 2021. ​ Cost of Product Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ (in thousands) 2022 2021 Variance Variance % Cost of Product Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Material cost $ 1,011 $ 998 $ 13 1.3 % Direct labor ​ 755 ​ 996 ​ (241) (24.2) % Royalties ​ 54 ​ — ​ 54 100.0 % Distribution fees ​ 15 ​ 199 ​ (184) (92.5) % Other ​ 184 ​ 140 ​ 44 31.4 % Total $ 2,019 $ 2,333 $ (314) (13.5) % ​ The change in cost of product revenue of $314,000 for the year ended December 31, 2022 compared to 2021 was primarily due to: ● Direct labor decreased $241,000 from $996,000 for the year ended December 31, 2021 to $755,000 in 2022, due to decreased resources in manufacturing. ● Distribution fees decreased $184,000 from $199,000 for the year ended December 31, 2021, to $15,000 in 2022 anticipated as cost savings in line with our transition from Title model to Specialty Pharmacy distribution network. 79 Table of Contents ● Royalties increased $54,000 from a zero balance for the year ended December 31, 2021. ● Other costs increased $44,000 from $140,000 for the year ended December 31, 2021 to $184,000 in 2022 mainly consisting of $118,000 less in write-offs of non-conforming inventory, and an increase in equipment maintenance of $9,000 in 2022.
Sales and marketing expenses are not significant during 2023 and during the same period in 2022. ​ Cost of Product Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ (in thousands) 2023 2022 Variance Variance % Cost of Product Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Direct labor ​ $ 1,152 ​ $ 755 ​ $ 397 52.6 % Material cost ​ 885 ​ 1,011 ​ (126) (12.5) % Royalties ​ — ​ 54 ​ (54) (100.0) % Distribution fees ​ (49) ​ 15 ​ (64) (426.7) % Other ​ 49 ​ 184 ​ (135) (73.4) % Total $ 2,037 $ 2,019 $ 18 0.9 % ​ The change in cost of product revenue of $18,000 for the year ended December 31, 2023 compared to 2022 was primarily due to: 76 Table of Contents ● Direct labor increased $397,000 from $755,000 for the year ended December 31, 2022 to $1.2 million in 2023, due to increased resources in testing and manufacturing. ● Material cost decreased by $126,000 from $1.0 million for the year ended December 31, 2022, to $885,000 in 2023 relative to the decrease in net sales. ● Other costs which includes royalties and APIs decreased $135,000 from $184,000 for the year ended December 31, 2022 to $49,000 in 2023 relative to the decrease in net sales.
Financial Operations Overview On a consolidated basis, we have not yet generated enough revenue to date to achieve break-even or positive cash flow, and we expect to continue to incur significant research and development and other expenses. Our net losses and comprehensive losses were $49.1 million and $52.6 million for the years ended December 31, 2022 and 2021, respectively.
Additionally, several of the drug product opportunities in Jaguar’s crofelemer pipeline are backed by Phase 2 and proof of concept evidence from human clinical trials. ​ 72 Table of Contents Financial Operations Overview On a consolidated basis, we have not yet generated enough revenue to date to achieve break-even or positive cash flow, and we expect to continue to incur significant research and development and other expenses.
In accordance with the guidelines of specific European Union countries, publications of POC data from these trials could support early patient access to crofelemer for SBS with intestinal failure or CDD in 2023 through programs in Europe. Early access programs are revenue generating, and reimbursable for participating patients.
In accordance with the guidelines of specific European Union countries, published data from such clinical investigations could support reimbursed early patient access to crofelemer for these debilitating conditions in 2025 while the company pursues approval of crofelemer for SBS and MVID from the EMA and the FDA.
Cash provided by financing activities for the year ended December 31, 2022 were generated from the issuance of an aggregate of 923,164 shares of common stock under the ATM Agreement for total net proceeds of $20.5 million. 83 Table of Contents The Company also raised an additional net proceeds of $17.5 million from the issuance of 10,135,550 shares of common stock under the ATM agreement between January 1, 2023 to March 23, 2023.
Cash provided by financing activities for the year ended December 31, 2023, were generated from the issuance of an aggregate of 54,283,779 shares of common stock under the ATM Agreement for total net proceeds of approximately $32.1 million, issuance of an aggregate 6,850,000 warrants and 137 Series G Convertible Preferred Stock in PIPE financing for a total net proceeds of $1.8 million, and investment from non-controlling interest for a total net proceeds of $1.2 million.
Removed
Our crofelemer drug product candidate is the subject of the OnTarget study, an ongoing pivotal Phase 3 clinical trial for prophylaxis of diarrhea in adult cancer patients receiving targeted therapy. As announced, patient enrollment in OnTarget reached approximately 75% in February 2023, and target trial enrollment of 256 patients is expected to complete in the second quarter of 2023.
Added
Crofelemer was granted ODD for SBS by the EMA in December 2021 and by the FDA in August 2017. In 2024 Jaguar expects results from 5 proof-of-concept studies of crofelemer conducted at least 8 clinical sites, including Cleveland Clinic, on three continents for the rare disease indications of MVID – an ultrarare CDD and SBS.
Removed
FDA in February 2023 for microvillus inclusion disease (“MVID”), a rare CDD condition, and granted ODD for MVID by the European Medicines Agency (“EMA”) in October 2022. Crofelemer was granted ODD for SBS by the EMA in December 2021 and by the FDA in August 2017.
Added
It also includes expenses with a third-party provider for the transfer of the Mytesi manufacturing process, and the related feasibility and validation activities. We typically use our employee and infrastructure resources across multiple development programs.
Removed
The Company is currently supporting investigator-initiated proof-of-concept (“POC”) studies of crofelemer in patients with SBS with intestinal failure or CDD, focused on obtaining POC of reduction of requirements of parenteral support including parenteral nutrition and/or intravenous fluids, throughout 2023.
Added
Change in Fair Value of Financial Instruments and Hybrid Instrument Designated at Fair Value Option Change in fair value of freestanding and hybrid financial instruments designated at Fair Value Option consists of gain or loss recognized related to fair values changes of our instruments designated at FVO. ​ ​ ​ 74 Table of Contents Gain (Loss) on Debt Extinguishment Gain (loss) on debt extinguishment consists of gain or loss incurred related to the exchanges resulting from the extinguishment of our borrowings.
Removed
Napo Therapeutics is initiating efforts to commence clinical development of crofelemer in SBS patients in support of the company’s key focus on leveraging the EMA’s accelerated conditional marketing authorization 73 Table of Contents pathway in Europe for these rare diseases.
Added
For additional information relating to these and other accounting policies, see Note 2 to the consolidated financial statements, appearing elsewhere in this report.
Removed
Additionally, several of the drug product opportunities in Jaguar’s crofelemer pipeline are backed by Phase 2 and proof of concept evidence from human clinical trials.
Added
Our Canalevia product revenues were $130,000 and $167,000 for the years ended December 31, 2023 and 2022, respectively. Our Neonorm product revenues were $42,000 and $48,000 for the years ended December 31, 2023 and 2022, respectively.
Removed
The transition caused a one-time inventory draw-down of Mytesi across our third-party logistics warehouse, wholesalers, distributors, and retail stores.
Added
Research and Development Expense The following table presents the components of research and development (“R&D”) expense for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ (in thousands) 2023 2022 Variance Variance % Research and Development: ​ ​ ​ ​ Clinical and contract manufacturing ​ $ 8,155 ​ $ 8,326 ​ $ (171) (2.1) % Personnel and related benefits ​ ​ 5,815 ​ ​ 5,543 ​ ​ 272 4.9 % Stock-based compensation ​ 1,044 ​ 1,263 ​ ​ (219) (17.3) % Materials expense and tree planting ​ 367 ​ 309 ​ ​ 58 18.8 % Travel and other expenses ​ 326 ​ 122 ​ ​ 204 167.2 % Other ​ 2,889 ​ 2,084 ​ ​ 805 38.6 % Total ​ $ 18,596 ​ $ 17,647 ​ $ 949 5.4 % ​ The change in R&D expense of $949,000 for the year ended December 31, 2023 compared to 2022 was primarily due to: ● Clinical and contract manufacturing expenses decreased $171,000 from $8.3 million for the year ended December 31, 2022 to $8.2 million in 2023 largely due to lower clinical trial activities related to start-up of CTD and other indications, additional CMC manufacturing, consulting and contractors’ expenses, and cholera/lechlemer research expenses. ● Personnel and related benefits increased $272,000 from $5.5 million for the year ended December 31, 2022 to $5.8 million in 2023 largely due an increase in headcount. ● Stock-based compensation expense decreased $219,000 from $1.3 million for the year ended December 31, 2022 to $1.0 million in 2023 primarily due to lower options and RSUs granted during the period as compared to 2022. ● Travel, and other expenses increased by $204 ,000 from $122,000 for the year ended December 31, 2022 to $326,000 in 2023 primarily due to more travel activities associated with the clinical trials. ● Other expenses consisting of consulting, formulation and regulatory fees increased $805,000 from $2.1 million for the year ended December 31, 2022, to $2.9 million in 2023 mainly due to increased CTD activities. ​ 77 Table of Contents Sales and Marketing Expense The following table presents the components of sales and marketing (“S&M”) expense for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ (in thousands) 2023 2022 Variance Variance % Sales and Marketing: ​ ​ ​ ​ Personnel and related benefits ​ $ 3,025 ​ $ 3,415 ​ $ (390) (11.4) % Direct marketing fees and expense ​ ​ 1,903 ​ ​ 3,596 ​ ​ (1,693) (47.1) % Stock-based compensation ​ 152 ​ 267 ​ (115) (43.1) % Other ​ 1,380 ​ 1,559 ​ (179) (11.5) % Total ​ $ 6,460 ​ $ 8,837 ​ $ (2,377) (26.9) % ​ The change in S&M expense of $2.4 million for the year ended December 31, 2023 compared to 2022 was primarily due to: ​ ● Personnel and related benefits decreased $390,000 from $3.4 million for the year ended December 31, 2022 to $3.0 million in 2023 due to decreased sales commission and reduced headcount. ● Direct marketing fees and expense decreased $1.7 million from $3.6 million for the year ended December 31, 2022 to $1.9 million in 2023 due to savings associated with the utilization of a more cost-effective patient support services and other Mytesi marketing initiatives. ● Stock-based compensation benefits decreased $115,000 from $267,000 for the year ended December 31, 2022 to $152,000 in 2023 primarily due to lower options and RSUs granted during the period as compared to 2022. ​ ● Other expenses decreased $179,000 from $1.6 million for the year ended December 31, 2022 to $1.4 million 2023 largely due to lower consulting and contractor services but slightly offset by increased travels for sales and marketing personnel. 78 Table of Contents General and Administrative Expense The following table presents the components of general and administrative (“G&A”) expense for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ (in thousands) 2023 2022 Variance Variance % General and Administrative: ​ ​ ​ ​ Personnel and related benefits ​ $ 5,135 ​ $ 5,582 ​ $ (447) (8.0) % Legal services ​ 2,009 ​ 1,225 ​ 784 64.0 % Public company expense ​ 1,789 ​ 2,692 ​ (903) (33.5) % Stock-based compensation ​ 916 ​ 1,788 ​ (872) (48.8) % Lease expense ​ 877 ​ 629 ​ 248 39.4 % Third-party consulting services ​ ​ 679 ​ ​ 507 ​ ​ 172 ​ 33.9 % Audit, tax and accounting services ​ 537 ​ 454 ​ 83 18.3 % Travel and other expenses ​ 435 ​ 378 ​ 57 15.1 % Other ​ 4,211 ​ 4,613 ​ (402) (8.7) % Total ​ $ 16,588 ​ $ 17,868 ​ $ (1,280) (7.2) % ​ The change in G&A expenses of $1.3 million for the year ended December 31, 2023 compared to 2022 was due primarily to: ● Personnel and related benefits decreased $447,000 from $5.6 million for the year ended December 31, 2022 to $5.1 million in 2023 due to lower headcount and no bonus in 2023. ● Legal services increased $784,000 from $1.2 million for the year ended December 31, 2022 to $2.0 million in 2023 primarily due to increased legal consultations for contracts and agreements and other regulatory filings. ● Public company expenses decreased $903,000 from $2.7 million for the year ended December 31, 2022 to $1.8 million in 2023 due to less investor relations and communications consulting expenses, and decreased expenses related to the annual shareholder meetings. ● Stock-based compensation expense decreased $872,000 from $1.8 million for the year ended December 31, 2022 to $916,000 in 2023 primarily due to lower general and administrative expense incurred for options granted with immediate vesting to existing employees. ● Lease expense increased $248,000 from $629,000 for the year ended December 31, 2022 to $877,000 in 2023, primarily due to additional lease space and increase in fees. ● Third-party consulting services increased $172,000 from $507,000 for the year ended December 31, 2022 to $679,000 in 2023, mostly due to the increase in outsourced accounting transactions. ● Audit, tax and accounting services fees increased $83,000 from $454,000 for the year ended December 31, 2022 to $537,000 in 2023, mostly due to the additional financing and complex accounting transactions for the year. ● Other general and administrative expenses decreased $402,000 from $4.6 million for the year ended December 31, 2022 to $4.2 million in 2023 largely due to lower depreciation and amortization of fixed assets and intangible assets, insurance expenses and other support services. 79 Table of Contents Impairment Loss on Intangible Asset The Company recognized an impairment loss on intangible assets amounting to $371,000 as a result of impairment evaluation to its internal use software costs – registry triggered by experiencing lower-than-anticipated sales growth for Canalevia and Neonorm, its two primary animal health products.
Removed
This significantly contributed to the decrease of $853,000 of Mytesi gross revenue and $1.5 million of wholesaler fees for the year 2022 compared to 2021. ​ Sales discounts were $1.2 million and $6.3 million for the years ended December 31, 2022, and 2021, respectively, a decrease of $5.1 million.
Added
Gain or Loss on Extinguishment of Debt Gain on extinguishment of debt increased by $5.9 million from a loss of $2.2 million for the year ended December 31, 2022 to a gain of $3.7 million for the same period in 2023 due to significant modifications resulting to extinguishment recognition.
Removed
In line with our switch to the closed Specialty Pharmacy distribution network.
Added
Interest Expense, net Interest expense decreased $6.3 million from $12.7 million for the year ended December 31, 2022 to $6.4 million in 2023 primarily due to the election of certain freestanding instruments to be valued at Fair Value Option (“FVO”) upon extinguishment.
Removed
No wholesaler fees were recognized for the year ended December 31, 2022. ​ Medicaid and AIDS Drug Assistance Program (“ADAP”) rebates accounted for $1.8 million and $3.5 million for the years ended December 31, 2022 and 2021, respectively, a decrease of $1.6 million primarily due to the WAC 78 Table of Contents increase implemented by the Company which resulted in higher government rebates from Medicaid, ADAP, public health services programs. ​ Due to the Company’s arrangements, including elements of variable consideration, gross product sales are reduced in order to reflect the expected consideration to arrive at net product sales.
Added
The lower interest expense was offset by a higher loss in change in fair value of financial instruments and hybrid instrument designated at FVO. Liquidity and Capital Resources Sources of Liquidity We have incurred net losses since our inception.
Removed
The majority of the decrease were contributed from the decrease of $853,000 of Mytesi gross revenue for the year 2022 compared to 2021.
Removed
Although Mytesi gross product sales decreased, net product sales increased by $7.6 million for the year 2022 compared to 2021 largely due to the transition from selling to the wholesalers to the closed Specialty Pharmacy distribution networks. ​ Our Neonorm product revenues were $48,000 and $62,000 for the years ended December 31, 2022 and 2021, respectively.
Removed
Research and Development Expense The following table presents the components of research and development (“R&D”) expense for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ (in thousands) 2022 2021 Variance Variance % Research and Development: ​ ​ ​ ​ Clinical and contract manufacturing ​ $ 8,326 ​ $ 6,257 ​ $ 2,069 33.1 % Personnel and related benefits ​ ​ 5,543 ​ ​ 3,954 ​ ​ 1,589 40.2 % Stock-based compensation ​ 1,263 ​ 1,319 ​ ​ (56) (4.2) % Materials expense and tree planting ​ 309 ​ 361 ​ ​ (52) (14.4) % Travel, other expenses ​ 122 ​ 40 ​ ​ 82 205.0 % Other ​ 2,084 ​ 3,148 ​ ​ (1,064) (33.8) % Total ​ $ 17,647 ​ $ 15,079 ​ $ 2,568 17.0 % ​ The change in R&D expense of $2.6 million for the year ended December 31, 2022 compared to 2021 was primarily due to: ● Clinical and contract manufacturing expenses increased $2.1 million from $6.3 million for the year ended December 31, 2021, to $8.3 million in 2022 largely due to increased clinical trial activities related to the start-up of CTD and other indications, additional CMC manufacturing, consulting and contractors’ expenses, and cholera/NP-300 research expenses. ● Personnel and related benefits increased $1.6 million for the year ended December 31, 2022, from $4.0 million in 2021 to $5.5 million in 2022 largely from the additional headcount. ● Other expenses decreased $1.1 million from $3.1 million for the year ended December 31, 2021, to $2.1 million in 2022 mainly due to decreased consulting fees. ​ 80 Table of Contents Sales and Marketing Expense The following table presents the components of sales and marketing (“S&M”) expense for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ (in thousands) 2022 2021 Variance Variance % Sales and Marketing: ​ ​ ​ ​ Direct marketing fees and expense ​ $ 3,596 ​ $ 3,415 ​ $ 181 5.3 % Personnel and related benefits ​ ​ 3,415 ​ ​ 3,916 ​ ​ (501) (12.8) % Stock-based compensation ​ 267 ​ 319 ​ (52) (16.3) % Other ​ 1,559 ​ 1,244 ​ 315 25.3 % Total ​ $ 8,837 ​ $ 8,894 ​ $ (57) (0.6) % ​ The change in S&M expense of $57,000 for the year ended December 31, 2022 compared to 2021 was primarily due to: ​ ● Personnel and related benefits decreased $501,000 from $3.9 million for the year ended December 31, 2021 to $3.4 million in 2022 due to reduction in resources in Commercial Operations and Sales. ● Direct marketing fees and expense increased $181,000 from $3.4 million for the year ended December 31, 2021 to $3.6 million in 2022 due to an increase in marketing programs for Mytesi related to the expanding market access through Specialty Pharmacy channels. ● Other expenses increased $315,000 from $1.2 million for the year ended December 31, 2021 to $1.6 million in 2022 largely due to additional marketing consulting costs.
Removed
General and Administrative Expense The following table presents the components of general and administrative (“G&A”) expense for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ (in thousands) 2022 2021 Variance Variance % General and Administrative: ​ ​ ​ ​ Personnel and related benefits ​ $ 5,582 ​ $ 3,390 ​ $ 2,192 64.7 % Public company expense ​ 2,692 ​ 2,270 ​ 422 18.6 % Stock-based compensation ​ 1,788 ​ 2,336 ​ (548) (23.5) % Legal services ​ 1,225 ​ 2,303 ​ (1,078) (46.8) % Third-party consulting services ​ ​ 507 ​ ​ 859 ​ ​ (352) ​ (41.0) ​ Audit, tax and accounting services ​ 454 ​ 982 ​ (528) (53.8) % Rent and lease expense ​ 629 ​ 282 ​ 347 123.0 % Travel, other expenses ​ 378 ​ 197 ​ 181 91.9 % Other ​ 4,613 ​ 4,484 ​ 129 2.9 % Total ​ $ 17,868 ​ $ 17,103 ​ $ 765 4.5 % ​ The change in G&A expenses of $765,000 for the year ended December 31, 2022 compared to 2021 was due primarily to: ● Personnel and related benefits increased $2.2 million from $3.4 million for the year ended December 31, 2021 to $5.6 million in 2022 due to increased number of hires for the year. 81 Table of Contents ● Legal services decreased $1.1 million from $2.3 million for the year ended December 31, 2021 to $1.2 million in 2022 primarily due to a decrease in fees related to legal proceedings and other regulatory filings. ● Stock-based compensation expense decreased $548,000 from $2.3 million for the year ended December 31, 2021 to $1.8 million in 2022 primarily due to lower expense incurred for options granted with immediate vesting to existing employees. ● Audit, tax and accounting services fees decreased $528,000 from $982,000 for the year ended December 31, 2021 to $454,000 in 2022, mostly due to the decreased audit fees related to complex debt and equity transactions. ● Public company expenses increased $422,000 from $2.3 million for the year ended December 31, 2021 to $2.7 million in 2022 largely attributable to the investor relations and communications consulting expenses, and expenses for the annual stockholder meeting. ● Third-party consulting services decreased $352,000 from $859,000 for the year ended December 31, 2021 to $507,000 in 2022, mostly due to the decrease in outsourced legal and accounting transactions. ● Rent and lease expense increased $347,000 from $282,000 for the year ended December 31, 2021 to $629,000 in 2022 as a result of the transfer to a higher-cost facility and the occupancy of more space, including office space in Italy. ● Travel, other expenses increased $181,000 from $197,000 for the year ended December 31, 2021 to $378,000 in 2022 due to other corporate and investor relations activities. ● Other general and administrative expenses increased $129,000 from $4.5 million for the year ended December 31, 2021 to $4.6 million in 2022 largely due to increase recruitment and insurance expense in 2022.
Removed
Series 3 Warrants Inducement Expense In January 2021, the Company issued 135,416 Series 3 Warrants to a certain investor for the exercise of 135,416 Bridge Note Warrants in accordance with the May 2020 Modification of the 2019 Bridge Note Warrants and Inducement Offer.
Removed
These Series 3 Warrants were valued at $1.5 million using the Black-Scholes-Merton option pricing model on the issuance date. In 2022, the value of Series 3 Warrants Inducement Expense is zero.
Removed
ELOC Warrants Inducement Expense In April 2021, in consideration for Oasis Capital’s entry into the amendment to the March 2020 Equity Line of Credit, the Company issued Oasis Capital a common stock purchase warrant exercisable for 444 shares of common stock with an exercise price per share equal to $420.75 on the date of the amendment.
Removed
These warrants were valued at $172,000 on the issuance date. In 2022, the value of ELOC Warrants Inducement Expense is zero.
Removed
Interest Expense, net Interest expense increased $4.3 million from $8.4 million for the year ended December 31, 2021 to $12.7 million in 2022 primarily due to additional interest expense incurred on royalty interest agreements primarily as result of the change in the timing of payments due to exchanges and a new royalty interest purchase agreement. 82 Table of Contents Loss on Extinguishment of Debt The loss on extinguishment of debt increased $1.4 million from $753,000 for the year ended December 31, 2021 to $2.2 million in 2022 due to the extinguishment loss from the exchange of the outstanding balance of Iliad’s royalty agreements for shares of the Company’s common stock.
Removed
Other income (expenses) Other income (expenses) increased $1.7 million from $765,000 other expense for the year ended December 31, 2021 to $950,000 other income in 2022 due to write-off of extinguished liabilities as a result of legal release and reversal of long outstanding accruals with reasonable uncertainty to not be incurred.
Removed
At December 31, 2022, we had an accumulated deficit of $266.9 million and accumulated comprehensive loss of $680,000. To date, we have generated only limited revenue, and we may never achieve revenue sufficient to offset our expenses. The Company expects to incur substantial losses and negative cash flows in future periods.
Removed
Further, the Company’s future operations, which include the satisfaction of current obligations, are dependent on the success of the Company’s ongoing development and commercialization efforts, as well as securing of additional financing and generating positive cash flows from operations. There is no assurance that the Company will have adequate cash balances to maintain its operations.
Removed
Although the Company plans to finance its operations and cash flow needs through equity and/or debt financing, collaboration arrangements with other entities, license royalty agreements, joint ventures, as well as revenue from future product sales, the Company does not believe its current cash balances are sufficient to funds its operating plan through one year from the issuance of these consolidated financial statements.
Removed
The Company has an immediate need to raise cash. There can be no assurance that additional funding will be available to the Company on acceptable terms, or on a timely basis, if at all, or that the Company will generate sufficient cash from operations to adequately fund operating needs.
Removed
If the Company is unable to obtain an adequate level of financing needed for the long-term development and commercialization of our products, the Company will need to curtail planned activities and reduce costs.
Removed
Doing so will likely have an adverse effect on our ability to execute our business plan; accordingly, there is substantial doubt about the ability of the Company to continue in existence as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Removed
Off-Balance Sheet Arrangements Since inception, we have not engaged in the use of any off-balance sheet arrangements, such as structured finance entities, special purpose entities or variable interest entities. ​ ​

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