Rafael : Amendment to Annual Report (Form 10-K/A)

About this update from Rafael Holdings, Inc.

[{"type":"text","content":" UNITED STATES \n SECURITIES AND EXCHANGE COMMISSION \n Washington, D.C. 20549 \n FORM 10-K/A Amendment No. 1 \n ☒ Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934\n \n \n for the year ended July 31, 2024.\n \n \n \n or\n \n \n \n ☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.\n \n \n \n Commission File Number: 000-55863\n RAFAEL HOLDINGS, INC. \n (Exact name of registrant as specified in its charter)\n Delaware 82-2296593 \n \n (State or other jurisdiction of\n \n \n incorporation or organization) \n \n \n (I.R.S. Employer\n \n \n Identification No.)\n \n 520 Broad Street, Newark, New Jersey 07102 \n (Address of principal executive offices, zip code)\n (212) 658-1450 \n (Registrant's telephone number, including area code)\n \n \n \n Securities registered pursuant to Section 12(b) of the Act:\n Title of each class \n Trading Symbol \n Name of each exchange on which registered \n Class B common stock, par value $0.01 per share\n \n \n RFL\n \n \n New York Stock Exchange \n \n \n \n Securities registered pursuant to section 12(g) of the Act: None\n \n \n \n Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒\n \n \n \n Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒\n \n \n \n Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐\n \n \n \n Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐\n \n \n \n Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of \"large accelerated filer,\" \"accelerated filer,\" \"smaller reporting company,\" and \"emerging growth company\" in Rule 12b-2 of the Exchange Act.\n Large accelerated filer ☐ \n Accelerated filer ☐ \n Non-accelerated filer ☒ \n Smaller reporting company ☒ \n Emerging growth company ☐ \n If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐\n Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐\n \n \n \n If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.☐\n \n \n \n Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐\n Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ \n The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant, based on the closing price on January 31, 2024 (the last business day of the registrant's most recently completed second fiscal quarter) of the Class B common stock of $1.81 per share, as reported on the New York Stock Exchange, was approximately $34.4 million.\n \n \n \n The number of shares outstanding of the registrant's common stock as of November 5, 2024 was:\n Class A common stock, par value $0.01 per share: \n 787,163 shares\n Class B common stock, par value $0.01 per share: \n 23,886,987 shares \n Rafael Holdings, Inc. (the \"Company\") is filing this Amendment No. 1 on Form 10-K/A (this \"Amendment No. 1\") to amend the Company's Annual Report on Form 10-K for the year ended July 31, 2024, which was initially filed with the U.S. Securities and Exchange Commission (the \"SEC\") on November 7, 2024 (the \"Original Form 10-K\"). The purpose of this Amendment No. 1 is to amend the disclosures in the Original Form 10-K in response to SEC comments recently received by the Company thereon as follows: Item 1. \"Business\", Item 1A. \"Risk Factors\", Item 7. \"Management's Discussion and Analysis of Financial Condition and Results of Operations\", Item 8. \"Financial Statements and Supplementary Data\" and Exhibits. Except as described above, this Amendment No. 1 does not amend, modify, or otherwise update any other information in the Original Form 10-K nor does it reflect events occurring after the filing of the Original Form10-K except as where it is explicitly noted. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Form 10-K and the Company's other filings with the SEC. \n RAFAEL HOLDINGS, INC. \n Annual Report on Form 10-K Forward-Looking Information and Factors that May Affect Future Results \n ii\n Part I \n Item 1. Business. \n 1\n Item 1A. Risk Factors. \n 26\n Item 1B. Unresolved Staff Comments. \n 97\n Item 1C. Cybersecurity \n 97\n Item 2. Properties. \n 98\n Item 3. Legal Proceedings. \n 98\n Item 4. Mine Safety Disclosures. \n 98\n Part II \n Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. \n 99\n Item 6. [Reserved]. \n 99\n Item 7A. Quantitative and Qualitative Disclosures about Market Risk. \n 100\n Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. \n 100\n Item 8. Financial Statements and Supplementary Data. \n 109\n Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. \n 109\n Item 9A. Controls and Procedures. \n 109\n Item 9B. Other Information. \n 109\n Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. \n 109\n Part III \n Item 10. Directors, Executive Officers and Corporate Governance. \n 110\n Item 11. Executive Compensation. \n 110\n Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. \n 110\n Item 13. Certain Relationships and Related Transactions, and Director Independence. \n 110\n Item 14. Principal Accounting Fees and Services. \n 110\n Part IV \n Item 15. Exhibits, Financial Statement Schedules. \n 111\n Item 16. Form 10-K Summary \n 112\n Signatures \n 113\n \n i\n \n This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that contain the words \"believes,\" \"anticipates,\" \"expects,\" \"plans,\" \"intends\" and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I \"Risk Factors\" in this Annual Report. The forward-looking statements are made as of the date of this Annual Report, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our reports on Forms 10-Q and 8-K.\n Our business, operating results or financial condition could be materially adversely affected by any of the following risks associated with any one of our businesses, as well as the other risks highlighted elsewhere in this document. The trading price of our common stock could decline due to any of these risks. Note that references to \"our\", \"us\", \"we\", \"the Company\", etc. used in each risk factor below refers to the business about which such risk factor is provided. \n Our business is subject to numerous risks as described in Item 1A. Risk Factors. Some of these risks include:\n ● We have limited resources and could find it difficult to raise additional capital. \n ● Our future success may depend on the results of Cyclo Therapeutics' Phase III trial for Trappsol ® Cyclo™. If Cyclo is unable to gain regulatory approval or commercialize its product candidates or experiences significant delays in doing so, our business will be materially harmed. \n ● Preclinical and clinical drug development is a lengthy and expensive process, with an uncertain outcome. Our and the Pharmaceutical Companies' preclinical and clinical programs may experience delays or may never advance, which would adversely affect the ability to obtain regulatory approvals or commercialize product candidates on a timely basis or at all, which could have an adverse effect on our business. \n ● We and the companies in which we hold interests may expend our and their limited resources to pursue a particular product candidate or an indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success. ● Results of preclinical studies and early clinical trials may not be predictive of results of future preclinical studies or clinical trials. \n ● The companies in which we hold interests face substantial competition, and if competitors develop and market technologies or products more rapidly than those companies do or that are more effective, safer or less expensive than the product candidates that those companies develop, our commercial opportunities will be negatively impacted. \n ● Rafael Medical Devices' 510(k)-cleared device or device candidates may fail to meet the applicable special controls (performance standards), the general controls provisions or the Quality System regulation or other requirements or applicable laws and regulations enforced by FDA, may cause significant adverse events, toxicities or other undesirable side effects when used alone or in combination with other approved or cleared devices or investigational or approved drugs that may result in a safety profile that could prevent regulatory approval or result in withdrawal of any clearance or approval, prevent market acceptance, limit their commercial potential, result in significant negative consequences, or trigger potential product liability claims. ● We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business and that of the companies in which we hold interests effectively. \n ● \n We may not be able to consummate any investment, business combination or other transaction. \n ● We are controlled by our principal stockholder, which limits the ability of other stockholders to affect the management of the Company. \n ● \n If we or the companies in which we hold interests are unable to adequately maintain or protect our proprietary technology and product candidates and device candidates and services, if the scope of the patent protection obtained is not sufficiently broad, or if the terms of patents are insufficient to protect product candidates, device candidates, services or technologies for an adequate amount of time, competitors could develop and commercialize technology and products similar or identical to that technology or those product candidates, device candidates and services, and our ability to successfully commercialize technology or product candidates, device candidates or services may be materially impaired. \n ● \n The Exchange Ratio used in the Merger with Cyclo will be determined in accordance with a formula and is not yet knowable. The actual Exchange Ratio could be materially different than currently anticipated. \n As used in this Annual Report, unless the context otherwise requires, the terms the \"Company,\" \"Rafael Holdings,\" \"we,\" \"us,\" and \"our\" refer to Rafael Holdings, Inc., a Delaware corporation, and its subsidiaries, collectively. Each reference to a fiscal year in this Annual Report refers to the fiscal year ending in the calendar year indicated (for example, fiscal 2024 refers to the fiscal year ended July 31, 2024). \n \n ii\n \n Item 1. Business. \n OVERVIEW \n Rafael Holdings, Inc. (\"Rafael Holdings\", \"Rafael\", \"we\" or the \"Company\") is a holding company with interests in clinical and early-stage pharmaceutical companies (the \"Pharmaceutical Companies\"), including an investment in (and planned merger with) Cyclo Therapeutics Inc. (Nasdaq: CYTH), (\"Cyclo Therapeutics\" or \"Cyclo\"), a clinical stage biotechnology company dedicated to developing Trappsol® Cyclo™, which is being evaluated in clinical trials for the potential treatment of Niemann-Pick Disease Type C1 (\"NPC1\"), a rare, fatal and progressive genetic disorder, a majority equity interest in LipoMedix Pharmaceuticals Ltd. (\"LipoMedix\"), a clinical stage pharmaceutical company, Barer Institute Inc. (\"Barer\"), a wholly-owned preclinical cancer metabolism research operation, and a majority interest in Cornerstone Pharmaceuticals, Inc. (\"Cornerstone\"), formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company. We also hold a majority interest in Rafael Medical Devices, LLC. (\"Rafael Medical Devices\"), an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries with its first product being a video endoscopic carpal tunnel release system, and a majority interest in Day Three Labs, Inc. (\"Day Three\"), a company which empowers third-party manufacturers to reimagine their existing cannabis offerings enabling them to bring to market better, cleaner, more precise and predictable versions by utilizing Day Three's technology and innovation like Unlokt™. Day Three and Rafael Medical Devices, together with the Pharmaceutical Companies, represent our \"Portfolio Companies\"). In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer. The decision was taken to reduce spending as the Company focuses on exploring strategic opportunities. Since then, the Company has sought partners for programs at Farber and has entered into a license agreement for one of its technologies. The Company's primary focus is to expand our investment portfolio through opportunistic and strategic investments including therapeutics, which address high unmet medical needs. Upon closing of the planned merger with Cyclo, the Company intends to focus its efforts on making Trappsol ® Cyclo™ its lead clinical program. \n Historically, the Company owned real estate assets. In 2020, the Company sold an office building located in Piscataway, New Jersey and, on August 22, 2022, the Company sold the building at 520 Broad Street in Newark, New Jersey that serves as headquarters for the Company and several tenants and an associated public garage (the \"520 Property\"). As of July 31, 2024 , the Company holds a portion of a commercial building in Jerusalem, Israel as its sole remaining owned real estate asset. \n In May 2023, the Company first invested in Cyclo Therapeutics. Cyclo is a clinical-stage biotechnology company that develops cyclodextrin-based products for the potential treatment of neurodegenerative diseases. Cyclo's lead drug candidate is Trappsol® Cyclo™ (hydroxypropyl beta cyclodextrin), a treatment for Niemann-Pick Disease, type C1 (\"NPC1\"). NPC1 is a rare and fatal autosomal recessive genetic disease resulting in disrupted cholesterol metabolism that impacts the brain, lungs, liver, spleen, and other organs. In January 2017 the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC1. Initial patient enrollment in the U.S. Phase I study commenced in September 2017, and in May 2020 Cyclo announced Top Line data demonstrating Trappsol® Cyclo™ was well tolerated in this study. Cyclo is currently conducting a Phase III Clinical Trial Evaluating Trappsol ® Cyclo™ in Pediatric and Adult Patients with Niemann-Pick Disease, Type C1. See Notes 11 and 12 to the Consolidated Financial Statements for more information on the Company's investments in Cyclo. \n As discussed in more detail below, on August 21, 2024, the Company entered into a merger agreement with Cyclo. In the event the merger is consummated, the Company intends to fund the TransportNPC phase III clinical trial, evaluating Trappsol® Cyclo™ in Niemann Pick C, to its interim analysis in the middle of 2025 and focus its efforts on Trappsol ® Cyclo™ as its lead clinical program. At that point, the Company will make a determination as to whether or not to file an NDA for Trappsol® Cyclo™.\n LipoMedix is a clinical stage Israeli company focused on the development of Promitil ® , a product candidate that is a liposomal delivery system for a prodrug of mitomycin C (MMC). The prodrug is called Mitomycin-C Lipidic Prodrug, also known as MLP, and it is a precursor chemical to MMC that is converted to MMC inside the body. As of October 31, 2024, Rafael's ownership interest in LipoMedix was approximately 95%. LipoMedix has completed various clinical trials of Promitil ® including a Phase 1A (as a single agent in solid tumors), a Phase 1B (as a single agent and in combination with capecitabine and/or bevacizumab in colorectal cancer), and a Phase 1B in combination with radiation therapy. In each of these trials, the primary endpoints included tolerability and determination of maximum tolerated dose (MTD). MTD was determined for each trial, and the most common adverse events (AEs) of clinical significance were thrombocytopenia and fatigue. Management plans for both of these AEs have been incorporated into ongoing development. While these studies have been completed, LipoMedix is now focused on a Phase 2 study of Promitil ® as a single agent in refractory patients with ovarian or pancreatic cancer harboring BRCA and similar mutations. This is the only ongoing study of Promitil ® . To date, more than 150 patients have been treated with Promitil ® across these clinical trials and under compassionate use. All trials of Promitil ® have been conducted in Israel. \n In 2019, the Company established Barer, a preclinical cancer metabolism research operation, to focus on developing a pipeline of novel therapeutic compounds, including compounds designed to regulate cancer metabolism with potentially broader application in other indications beyond cancer. Barer has been comprised of scientists and academic advisors that are experts in cancer metabolism, chemistry, and drug development. In addition to its own internal discovery efforts, Barer pursued collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions. Barer's majority owned subsidiary, Farber Partners, LLC (\"Farber\"), was formed around one such agreement with Princeton University's Office of Technology Licensing (\"Princeton\") for technology from the laboratory of Professor Joshua Rabinowitz, in the Department of Chemistry, Princeton University, for an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program. In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer Institute. Since then, the Company has sought partners for Farber programs and has entered into a license agreement for one of its technologies.\n \n 1\n \n The Company owns a 37.5% equity interest, which was, until March 13, 2024 (the date of the RP Finance Consolidation, as described below), accounted for under the equity method, in RP Finance LLC (\"RP Finance\"), an entity in which an entity associated with members of the family of Howard Jonas (Executive Chairman, Chairman of the Board, and controlling stockholder of Rafael) holds an additional 37.5% equity interest, which holds debt and equity investments in Cornerstone. In October 2021, Cornerstone announced that Avenger 500, its company sponsored, multicenter, randomized Phase III study for Devimistat in pancreatic cancer, did not meet its primary or secondary endpoints, and that the company was stopping its company sponsored, multicentered, randomized, ARMADA 2000 Phase III study for Devimistat in relapsed and refractory Acute Myeloid Leukemia based upon a recommendation it received from its independent data monitoring committee to stop the trial due to a determination that the trial would unlikely achieve its primary endpoint. The Avenger 500 study was conducted in over 70 clinical trial sites in six different countries and the ARMADA 2000 study was conducted in over 50 clinical trial sites in nine different countries. The clinical trial data from these trials were shared with the FDA and the other health authorities of the countries in which these trials were conducted. Due to the foregoing, RP Finance fully impaired its then debt and equity investments in Cornerstone. \n On March 13, 2024, Cornerstone consummated a restructuring of its outstanding debt and equity interests (the \"Cornerstone Restructuring\"). As a result of the Cornerstone Restructuring, Rafael became a 67% owner of the issued and outstanding common stock of Cornerstone (the \"Cornerstone Acquisition\"), and Cornerstone became a consolidated subsidiary of Rafael. The Cornerstone Acquisition is accounted for as an acquisition of a variable interest entity that is not a business in accordance with U.S. GAAP. The Company was determined to be the accounting acquirer for financial reporting purposes. See Note 3 to the Consolidated Financial Statements for additional information regarding the transaction. In conjunction with the Cornerstone Restructuring and Cornerstone Acquisition, the Company reassessed its relationship with RP Finance, and as a result determined that RP Finance is still a variable interest entity and that the Company became the primary beneficiary of RP Finance as the Company now holds the ability to control repayment of the RP Finance Line of Credit which directly impacts RP Finance's economic performance. Therefore, following the Cornerstone Restructuring and Cornerstone Acquisition, the Company consolidated RP Finance (the \"RP Finance Consolidation\"). See Note 3 to the Consolidated Financial Statements f or additional information on the Consolidation.\n In May 2021, the Company formed Rafael Medical Devices, an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries. In August 2023, the Company raised $925,000 from third parties in exchange for 31.6% ownership of Rafael Medical Devices. \n In April 2023, the Company first invested in Day Three, a company which empowers third-party manufacturers to reimagine their existing cannabis offerings enabling them to bring to market better, cleaner, more precise and predictable versions by utilizing Day Three's technology and innovation like Unlokt™. In January 2024, the Company entered into a series of transactions with Day Three and certain shareholders, acquiring a controlling interest of Day Three, which is now a consolidated subsidiary of the Company (the \"Day Three Acquisition\").\n \n \n \n Financial information by segment is presented in Note 23 in the Notes to our Consolidated Financial Statements in Item 8 of this Annual Report.\n \n \n \n Our headquarters are located at 520 Broad Street, Newark, New Jersey 07102. The main telephone number at our headquarters is (212) 658-1450 and our corporate web site's home page is www.rafaelholdings.com.\n \n \n \n We make available free of charge our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, and all beneficial ownership reports on Forms 3, 4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity through the investor relations page of our web site ( https://rafaeholdings.irpass.com) as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. Our web site also contains information not incorporated into this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission.\n RECENT DEVELOPMENTS \n On August 21, 2024, the Company entered into an Agreement and Plan of Merger (the \"Merger Agreement\"), by and among: Rafael; Tandem Therapeutics, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (\"First Merger Sub\"); Tandem Therapeutics, LLC, a Nevada limited liability company and a wholly-owned subsidiary of Rafael (\"Second Merger Sub\" and together with First Merger Sub, the \"Merger Subs\"); and Cyclo Therapeutics, Inc., a Nevada corporation (\"Cyclo\"). The Merger Agreement requires approval of Cyclo's stockholders and the issuance of the Company's Class B Common Stock, $0.01 par value per share (\"Rafael Class B Common Stock\") in the merger requires approval by Rafael's stockholders. Upon such approvals and satisfaction or waiver of all other conditions set forth in the Merger Agreement and the effectiveness of a registration statement on Form S-4 to register the shares of the Company's Class B Common Stock to be issued in the merger based on an exchange ratio (an illustration of which is set forth as Schedule 5 to the Merger Agreement) valuing Cyclo shares at $.95 per share and the Company at its cash value combined with the value of its marketable securities and certain other investments less current liabilities (of the Company on an unconsolidated basis), the merger will be consummated.\n \n 2\n \n BUSINESS DESCRIPTION \n We work to advance the pipeline development of our Portfolio Companies, including Cyclo Therapeutics, LipoMedix, Barer, Rafael Medical Devices, Cornerstone and Day Three Labs. We also further seek to expand our portfolio through opportunistic and strategic investments including therapeutics which address high unmet medical needs. Historically, the Company owned real estate assets. In 2020, the Company sold an office building located in Piscataway, New Jersey and in August 2022, the Company sold the 520 Property. Currently, the Company holds a portion a commercial building in Jerusalem, Israel as its remaining real estate asset.\n Portfolio Companies \n Overview \n We are a company with interests in clinical and early-stage pharmaceutical companies including an investment in Cyclo Therapeutics, a clinical stage biotechnology company dedicated to developing Trappsol® Cyclo™, which is being evaluated in clinical trials for the potential treatment of Niemann-Pick Disease Type C1 (\"NPC1\"), a rare, fatal and progressive genetic disorder, a majority equity interest in LipoMedix, a clinical stage pharmaceutical company, Barer, a wholly-owned preclinical cancer metabolism research operation, and a majority interest in Cornerstone, a cancer metabolism-based therapeutics company. We also hold a majority interest in Rafael Medical Devices, an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries, and a majority interest in Day Three, a company which empowers third-party manufacturers to reimagine their existing cannabis offerings enabling them to bring to market better, cleaner, more precise and predictable versions by utilizing Day Three's technology and innovation like Unlokt™. In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer. The decision was taken to reduce spending as the Company focuses on exploring strategic opportunities. The Company's primary focus is to expand our investment portfolio through opportunistic and strategic investments including therapeutics, which address high unmet medical needs. Cyclo Therapeutics Inc. \n Cyclo is a clinical -stage biotechnology company that develops cyclodextrin-based products for the potential treatment of neurodegenerative diseases. Cyclo filed a Type II Drug Master File with the U.S. Food and Drug Administration (\"FDA\") in 2014 for its lead drug candidate, Trappsol® Cyclo™ (hydroxypropyl beta cyclodextrin) as a treatment for Niemann-Pick Disease, Type C1 (\"NPC1\"). NPC1 is a rare and fatal autosomal recessive genetic disease resulting in disrupted cholesterol metabolism that impacts the brain, lungs, liver, spleen, and other organs. In 2015, Cyclo launched an International Clinical Program for Trappsol® Cyclo™ as a potential treatment for NPC1. In 2016, Cyclo filed an Investigational New Drug application (\"IND\") with the FDA, which described its Phase I clinical plans for a randomized, double blind, parallel group study at a single clinical site in the U.S. The Phase I study evaluated the safety and pharmacokinetics of Trappsol® Cyclo™ along with markers of cholesterol metabolism and markers of NPC1 during a 12-week treatment period of intravenous administration of Trappsol® Cyclo™ every two weeks to participants 18 years of age and older. FDA authorized the IND to move forward in September 2016, and in January 2017 the FDA granted Fast Track designation to Trappsol® Cyclo™ for the potential treatment of NPC1. Initial patient enrollment in the U.S. Phase I study commenced in September 2017, and, in May 2020, Cyclo announced Top Line data showing Trappsol® Cyclo™ was well tolerated in this study.\n \n \n \n Cyclo has also completed a Phase I/II clinical study authorized by European regulatory bodies with clinical trial centers in the United Kingdom, Sweden, and in Israel. The Phase I/II study evaluated the safety, tolerability and efficacy of Trappsol® Cyclo™ through a range of clinical outcomes, including neurologic, respiratory, and measurements of cholesterol metabolism and markers of NPC1. Consistent with the 12-week phase 1 study (single US site), the European/Israel study administered Trappsol® Cyclo™ intravenously to NPC1 patients every two weeks in a double-blind, randomized trial, but differs in that the study period was for 48 weeks (24 doses). In March of 2021, Cyclo announced that 100% of patients who completed the trial (9 out of 12) improved or remained stable, and 89% met the efficacy outcome measure of improvement in at least two domains of the 17-domain NPC1 severity scale. Cyclo did not conduct a Phase II trial in the U.S. they relied on the data obtained from our Phase I/II trial abroad to support the commencement of our Phase III trial.\n \n \n \n In February 2020, Cyclo had a face-to-face \"Type C\" meeting with the FDA with respect to the initiation of a pivotal Phase III clinical trial of Trappsol® Cyclo™ based on the clinical data obtained to date. At that meeting, Cyclo also discussed with the FDA submitting a New Drug Application (\"NDA\") under Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act for the treatment of NPC1 in pediatric and adult patients with Trappsol® Cyclo™. A similar request was submitted to the European Medicines Agency (\"EMA\") in February 2020, seeking scientific advice and protocol assistance from the EMA for proceeding with a Phase III clinical trial in Europe. In October 2020, Cyclo received a \"Study May Proceed\" notification from the FDA with respect to the proposed Phase III clinical trial, and in June of 2021, Cyclo commenced enrollment in TransportNPC, a pivotal Phase III study of Trappsol® Cyclo™ for the treatment of NPC1. In May 2024, Cyclo enrolled the last of the 104 patients in the Phase III study.\n \n 3\n \n On May 17, 2010, the FDA designated Trappsol® Cyclo™ as an orphan drug for the treatment of NPC1, which, if Trappsol® Cyclo™ were to be approved for that orphan-designated indication, would provide Cyclo with the exclusive right to sell Trappsol® Cyclo™ for the treatment of NPC1 for seven years following FDA drug approval. In April 2015, Cyclo also obtained Orphan Drug Designation for Trappsol® Cyclo™ in Europe, which will provide Cyclo with 10 years of market exclusivity in Europe following regulatory approval, which period will be extended to 12 years upon acceptance by the EMA's Pediatric Committee of Cyclo's pediatric investigation plan (PIP) demonstrating that Trappsol® Cyclo™ addresses the pediatric population. On January 12, 2017, Cyclo received Fast Track Designation from the FDA, and on December 1, 2017, the FDA designated NPC1 a Rare Pediatric Disease.\n \n \n \n Cyclo also continues to operate its legacy fine chemical business, consisting of the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs.\n \n \n \n Cyclo's core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the potential treatment of disease.\n Global Phase III Clinical Study (TransportNPC) \n Cyclo's ongoing Phase III clinical trial (CTD-TCNPC-301), TransportNPC, is a prospective, randomized, double-blind, placebo controlled therapeutic study for up to 93 patients age three and older with confirmed diagnosis of NPC1. The objective of this study is to evaluate the safety, tolerability and efficacy of 2000 mg/kg doses of Trappsol ® Cyclo™ (hydroxypropyl betacyclodextrin) administered intravenously by slow infusion every two weeks as compared to placebo. Patients will be randomized to receive Trappsol ® Cyclo™ or placebo at a 2:1 ratio. The study duration is 96 weeks, with an unblinded interim analysis at 48 weeks. An open-label extension of up to 96 weeks follows the interventional study. Patients whose disease progression worsens by two levels in the Clinical Global Impression of Severity scale over 12 weeks, starting at week 36, may be moved to open label treatment. Efficacy will be measured at week 48 and week 96 by a composite score of major disease features. A sub-study is ongoing and being conducted outside of the U.S. for up to 12 patients age 0 - 3 years who may be asymptomatic. Outcomes for the sub-study are safety, clinical and caregiver impression of disease. In May 2024, Cyclo enrolled the last of the 104 patients in the Phase III study. Interim results from the study are expected during the first half of 2025.\n European and Israeli Phase I/II Clinical Study \n Cyclo completed a Phase I/II clinical study in Europe, the United Kingdom and Sweden. This study evaluated the safety, tolerability and efficacy of Trappsol ® Cyclo™ through a range of clinical outcomes, including neurologic, and respiratory, in addition to measurements of cholesterol metabolism and markers of NPC1, in three dose groups (1500 mg/kg, 2000 mg/kg and 2500 mg/kg). The first patient was dosed in this study in July 2017, and in February 2020, Cyclo announced completion of enrollment of 12 patients in this study. The efficacy outcome measures and results from this study are as follows:\n Efficacy Outcome Measure 1 : At least a one-point reduction (or improvement) in two or more of the 17 domains measured under the Niemann-Pick Disease Type C (\"NPC\") Clinical Severity Scale.\n Results :\n \n \n ●\n \n \n Six of seven patients met this endpoint (86% of those who completed).\n \n \n ●\n \n \n Improvements seen in swallow, ambulation, ability to manage seizures, saccadic eye movements, fine motor skills, and cognition. (Individual patient profiles differed, i.e., patients improved differently.)\n \n \n ●\n \n \n Patients not receiving any intervention beyond standard of care would be expected to worsen in total score by 1.5 points over one year.\n Efficacy Outcome Measure 2 : Change from baseline in \"Global Impression of Disease\" at 48 weeks.\n Results :\n \n \n ●\n \n \n Using the Clinician's Global Impression of Improvement scale, five of seven patients who completed the trial improved, and the other 2 patients stabilized . \n ● \n Five of seven improved in at least one of these features: walking, speaking, swallowing, fine motor or cognition. These five features are determined by NPC1 patients and their caregivers to be the most important for quality of life. A composite in improvement in these five features will be the primary outcome measure for our pivotal Phase III trial. \n \n 4\n \n Additional Data :\n \n \n ●\n \n \n As a group, the first seven patients to complete the clinical trial meet the outcome measures for the study.\n \n \n ●\n \n \n Trappsol ® Cyclo™ was well tolerated.\n \n \n ●\n \n \n Trappsol ® Cyclo™ was shown to cross the blood brain barrier.\n \n \n ●\n \n \n Successive administration of Trappsol® Cyclo™ decreased tau levels.\n ● \n Trappsol® Cyclo™ was seen to suggest improvements in neurological features of NPC1, including ataxia, and quality of life for patients. \n ●\n \n \n Based on data provided, Cyclo selected the 2000 mg/kg dose for its pivotal Phase III trial.\n US Phase I Clinical Study \n In September 2016, the FDA authorized Cyclo to proceed with Cyclo's Phase I clinical plans for a randomized, double blind, parallel group study in the U.S. The Phase I study evaluated the safety of Trappsol® Cyclo™ along with markers of cholesterol metabolism and markers of NPC1 during a 14-week treatment period of intravenous administration of Trappsol® Cyclo™ every two weeks to participants 18 years of age and older in two dose groups (1500 mg/kg and 2500 mg/kg). Enrollment in this study was completed in October 2019, and in May 2020 Cyclo announced Top Line data showing favorable tolerability profile for Trappsol® Cyclo™ in this study. Additional date from this study includes the following data:\n \n \n ●\n \n \n Liver biopsies and biochemical data on cholesterol homeostasis indicated that Trappsol® Cyclo™ removes trapped cholesterol from liver cells and impacts cholesterol homeostasis.\n ● \n Tau decreased after seven doses in a majority of patients. LipoMedix \n LipoMedix is a clinical stage Israeli company focused on the development of Promitil ® , a product candidate that is a liposomal delivery system for a prodrug, MLP, of mitomycin C (MMC) that is converted inside the body to MMC. As of July 31, 2024, the Company's ownership interest in LipoMedix was approximately 95%. As needed, the Company provides funding to LipoMedix through intercompany promissory notes which are used to support research and development activities. \n About Promitil®: \n LipoMedix was established to advance the pharmaceutical and clinical development of a patented prodrug of mitomycin-C (MMC) and its delivery in liposomes to cancer cells. This proprietary molecule, known as Promitil - Pegylated Liposomal Mitomycin-C Lipidic Prodrug (PL-MLP) - is designed to overcome the toxicity associated with the clinical use of mitomycin-C and turns it into a targeted, anticancer therapeutic that could potentially be a treatment for a variety of cancers with high unmet need. The inventor and scientific founder, of LipoMedix is Alberto Gabizon, M.D., Ph.D., of the Hebrew University - Shaare Zedek Medical Center, Israel. He is the co-inventor and co-developer of Doxil® (pegylated liposomal doxorubicin), a successful and widely used anticancer product based on a similar drug development strategy. Prof. Gabizon is one of the few scientists intimately familiar with the successful development and commercialization process of liposomal drugs. \n Promitil® is designed for the targeted delivery of MMC in a proprietary prodrug form. Promitil® confers tumor targeting due to the enhanced permeability and retention effect (EPR) of liposomes. Once in the tumor cells, the prodrug is converted to the active drug (MMC) by thiolytic agents abundantly present in tumor tissues, and MMC induces DNA cross-linking leading to tumor cell death. In preclinical studies, Promitil® inhibited cancer cell growth in animal models (pancreatic, colorectal, stomach, breast, ovarian, melanoma, bladder), including multidrug resistant tumors, as monotherapy as well as in combination with radiotherapy and/or approved cancer drugs. \n \n 5\n \n LipoMedix has completed 3 clinical studies with Promitil® including:\n \n \n ●\n \n \n Phase 1A, a dose escalation study of Promitil in patients with advanced cancers. (Golan T, Grenader T, Ohana P, Amitay Y, Shmeeda H, La-Beck NM, Tahover E, Berger R, Gabizon A. Pegylated liposomal mitomycin C prodrug enhances tolerance of mitomycin C: a phase 1 study in advanced solid tumor patients. Cancer Medicine. 2015;4(10):1472-83.)\n \n \n ●\n \n \n Phase IB in advanced colorectal cancer patients with Promitil as single agent and in combination with capecitabine and/or bevacizumab. (Gabizon A, Tahover E, Golan T, Geva R, Perets R, Amitay Y, Shmeeda H, Ohana P. Pharmacokinetics of mitomycin-c lipidic prodrug entrapped in liposomes and clinical correlations in metastatic colorectal cancer patients. Invest New Drugs. 2020;38(5):1411-1420.)\n ● \n Phase 1B of Promitil-based chemo-radiotherapy in patients with advanced cancers. (Sapir E, Pfeffer R, Wygoda M, Purim O, Levy A, Corn B, Amitay Y, Ohana P, Gabizon A. Pegylated Liposomal Mitomycin C Lipidic Prodrug in Combination with External Beam Radiation Therapy in Patients with Advanced Cancer: A Phase 1 Study. Int J Radiat Oncol. 2023; Volume 2023.) \n Over 150 patients have been treated with Promitil® as a single agent or in combination with other anticancer drugs or radiotherapy between the three clinical trials conducted in Israel and compassionate use, also carried out in Israel. Promitil® was given by intravenous infusion once every 3 or 4 weeks and appears to be tolerated at a dose up to 2 mg/kg. Except for fatigue and mild myelosuppression, in particular, thrombocytopenia, no other toxicities such as skin irritation, mouth ulcers, neuropathic pain, diarrhea, or hair loss were reported. Promitil® was stable in plasma with a half-life of approximately 20 hours (vs 40-50 minutes for naked MMC). \n Next Steps for Clinical Development: \n Homologous recombination (HR) is an evolutionarily conserved process for repairing DNA double-strand breaks with high fidelity, and the BRCA1 and BRCA2 proteins play essential roles in this process. Patients harboring germline mutations in the BRCA1 and/or BRCA2 genes have significantly increased life-time risk of developing breast, ovarian cancer, pancreatic, and prostate cancer. Tumors with BRCA mutations are susceptible to platinum-based chemotherapy and hypersensitive to agents that inhibit poly (ADP-ribose) polymerase (PARP). However, despite their initial anti-tumor activity, multiple resistance mechanisms have been described and the development of resistance limits the clinical utility of platinum based and PARP inhibitor (PARPi) therapies. Overall, it remains a challenge in treating cancers associated with deleterious tumor mutations in HR, such as BRCA1, BRCA2, and PALB2 (Partner and Localizer of BRCA2). \n Preclinical studies have been conducted utilizing MMC for BRCA2 mutant tumors. MMC has also been utilized in heavily pretreated ovarian cancer patients with BRCA1 mutations and a patient with advanced, gemcitabine-resistant, pancreatic cancer who had a PALB2 gene mutation. Pancreatic ductal adenocarcinoma (PDAC) continues to be one of the most lethal malignant neoplasms, with a 5-year survival rate of only 5%. Surgery is considered the sole potentially curative treatment; however, only 20% of patients diagnosed with PDAC are candidates for surgery at the time of diagnosis and is frequently followed by recurrence and therapeutic resistance. Despite advances made in the development of systemic combination chemotherapies in the last two decades, progress in improving survival outcomes in patients with PDAC is stagnant. \n Based on the reported use of MMC in BRCA and PALB2 mutated tumors, LipoMedix believes that Promitil® could offer a therapeutic option for patients with pancreatic cancer. Thus, a clinical trial is ongoing to evaluate the safety, tolerability, and efficacy of Promitil® in cancer patients who have deleterious tumor mutations in HR related genes, such as BRCA1, BRCA2, or PALB2, across six hospitals in Israel. This is the only trial currently ongoing for Promitil® and decisions on future development of the product and the pipeline will be based on the results from this trial. \n Promitil®-based pipeline products: \n In addition to Promitil®, LipoMedix has other pre-clinical Promitil®-based drug candidates with potentially important applications that would be pursued further in development if Promitil® were successful in the clinic: \n ● \n Folate-targeted Promitil® (Promi-Fol), aimed at local treatment (intravesical) of superficial bladder cancer. Decorating Promitil® with folate ligands is designed to exploit the frequent overexpression of folate receptors in urothelial cancers for selective and enhanced delivery of Promitil® to cancer cells. Promi-Fol could be developed for bladder instillation as a local treatment of the growing elderly patient population with superficial bladder cancer (Patil Y, et al.: \"Targeting of pegylated liposomal mitomycin-C prodrug to the folate receptor of cancer cells: Intracellular activation and enhanced cytotoxicity.\" Journal of Controlled Release, 225:87-95, 2016). A patent application to cover the use of Promi-Fol was granted in May 2020 by the European Patent Office. We are currently not pursuing further work with Promi-Fol, and it may receive further development funding and effort in the event of clinical success for Promitil®. \n ● \n Promi-Dox, a dual drug liposome with MLP and doxorubicin targeting a potential basket of tumors (Gabizon et al., \"Liposome co-encapsulation of anti-cancer agents for pharmacological optimization of nanomedicine-based combination chemotherapy.\" Cancer Drug Resistance, 4:463-484, 2021). There are several possible cancer settings with substantial patient numbers and significant unmet need where Promi-Dox potentially could be utilized. This formulation requires further product development. A patent application covering the formulation of Promi-Dox has been granted by the USPTO. We are currently not pursuing further work with Promi-Dox, and it may receive further development funding and effort in the event of clinical success for Promitil®. \n \n 6\n Farber \n Farber, a majority owned subsidiary of Barer, was formed around an agreement with Princeton University's Office of Technology Licensing for technology from the laboratory of Professor Joshua Rabinowitz, in the Department of Chemistry, Princeton University, for an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program. In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer and Farber. Since then, the Company has sought partners for Farber programs and has entered into a license agreement for one of its technologies.\n Cornerstone \n We own our interest in Cornerstone through a 90% equity ownership interest in, and consolidate, Pharma Holdings, LLC Pharma Holdings, LLC (\"Pharma Holdings\"). Pharma Holdings holds 50% of the equity interests in, and consolidates, CS Pharma Holdings, LLC. We serve as the managing member of Pharma Holdings, and Pharma Holdings serves as the managing member of CS Pharma, with broad authority to make all key decisions regarding their respective holdings. Based on our ownership interest in Pharma Holdings, and Pharma Holdings' ownership interest in CS Pharma Holdings, we have an effective 45% equity ownership interest in CS Pharma Holdings, LLC. \n In March of 2024, Cornerstone completed a comprehensive restructuring transaction including, the conversion of the debt under a line of credit agreement and the promissory note held by the Company, the conversion and modification of other Cornerstone debt obligations, the extension of the Cornerstone debt held by RP Finance, a reverse stock split, the conversion of all outstanding preferred stock of Cornerstone into common stock and the adoption of certain governance measures. Subsequent to the restructuring the Company owns 67% of Cornerstone.\n Science and Preclinical: \n Cornerstone's lead development candidate is CPI-613® (devimistat), a stable analog of normally transient, acylated catalytic intermediates of lipoate. The CPI-613® intermediates are designed to disrupt mitochondrial function and thereby decrease the TCA cycle function; thus, CPI-613® (devimistat) misinforms these tumor systems, triggering mitochondrial stress and turning off the cancer cell TCA cycle. CPI-613® is designed to affect tumor metabolism, including disrupting mitochondria and potentially intercalating in cancer cell membranes. The metabolic and mitochondrial stress have been found to trigger apoptotic and necrotic cell death pathways in tumor cells (Zachar et al., J Mol Med, 2011, 89:1137-48; Stuart et al., Cancer Metab. 2014, 2, 4: reviewed in Bingham et al., Expert Rev Clin Pharmacol. 2014, 7:837-46 and Hammoudi et al., Chin J Cancer. 2011, ;30:508-25). These suggest that CPI-613® could be developed as monotherapy and in combination with generalized metabolic stressors like chemotherapy. CPI-613® has been tested with chemotherapy in Cornerstone's Phase 1, 2 & 3 trials to date (Alistar, et al., 2017; Pardee et al., 2018; Philip et al., 2024). \n Clinical Highlights: \n More than 1024 patients have been dosed with CPI-613® (devimistat) to date in 24 ongoing or completed clinical trials.\n Currently, there are two clinical trials enrolling participants in the following programs for which Cornerstone awaits clinical data: \n ●\n \n \n Phase II open-label multi-cohort study evaluating CPI-613® (devimistat) in combination with hydroxychloroquine and 5-fluorouracil or gemcitabine in patients with advanced chemorefractory colorectal, pancreatic, or other solid cancers.\n \n \n ●\n \n \n A Phase I dose-escalation study of CPI-613® (devimistat) in combination with chemoradiation in patients with pancreatic adenocarcinoma.\n \n \n \n In March 2023, Cornerstone purchased all assets and rights of telaglenastat (CB-839), a glutaminase inhibitor, from Calithera Biosciences, Inc. Cornerstone is currently exploring the options to develop telaglenastat in different indications.\n Rafael Medical Devices \n Rafael Medical Devices is a medical device company currently concentrating on developing surgical and procedural devices designed to provide meaningful advantages to patients and healthcare providers in the orthopedic market. Its first product is a video endoscopic carpal tunnel release (\"VECTR\") system. The VECTR System is composed of a handpiece and a proprietary tablet. The handpiece is an arthroscopic unit with an integrated surgical knife. The proprietary tablet is a registered class I medical device that is commercially available. The handpiece is a single-use disposable device that combines the traditional manual surgical knife with an arthroscope all in one. It is fully integrated into a single unit and consists of a functional tip (surgical knife), live-action camera, light, cannula, and cord to connect to the proprietary tablet. The surgical knife can be used to sever tendons, ligaments, or fascia in the joints or limbs and is able to be protracted or retracted via a slide switch on the side of the handpiece. During procedures, surgeons will introduce the device through incisions made in the patient's wrist. Once inside, the camera and light are used to visualize the surgical environment on the proprietary tablet. Once the surgeon has maneuvered the device into the desired location, the blade can be actuated and the ligament can be cut. Once cut, the surgeon will withdraw the blade and remove the device. \n \n 7\n \n On December 11, 2024, Rafael Medical Devices received FDA's substantial equivalence determination for the VECTR System in response to Rafael Medical Devices' 510(k) premarket notification. FDA's clearance of the VECTR System is for use in minimally invasive ligament or fascia release surgeries, such as carpal tunnel release in the wrist and cubital tunnel release in the elbow. The VECTR System has been classified into Class II and is subject to special controls (performance standards) in addition to the general controls provisions of the FD&C Act and the Quality System regulation codified in 21 CFR Part 820 which requires that each manufacturer establish a quality system by which the manufacturer monitors the manufacturing process and maintains records that show compliance with the FDA regulations and the manufacturer's written specifications and procedures relating to each device, as well as other requirements and applicable laws and regulations. Rafael's development of future products will depend upon the success of the VECTR System and Rafael's ability to identify attractive opportunities in the marketplace. \n Rafael Medical Devices has assembled an in-house team with expertise in engineering, device development quality control, and design discovery who have been part of teams that have created successful commercial medical devices in the past. It has begun to expand its expert network of experienced device creators, key opinion leaders, and is working to begin generating a commercial presence.\n \n \n \n Orthopedics comprise a large addressable market. Rafael Medical Devices is seeking to assemble a portfolio of Class I, II and III devices to mitigate risk across a portfolio of devices with overlapping needs and markets. This strategy is designed to minimize supply chain requirements while maximizing market potential.\n Day Three Labs \n Day Three Labs is a technology company focused on creating solutions for increased bioavailability of other third-party manufacturers' hydrophobic compounds, with a specific focus on compounds used as active ingredients in pharmaceutical and food supplement products. Day Three Labs maintains its manufacturing, sales and marketing activities in the United States, and research and development activities in Israel. Day Three Labs' majority-owned subsidiary, Day Three Labs Manufacturing, is dedicated to the commercialization of technology for the cannabis and hemp industries and has developed technological solutions specifically engineered for increased bioavailability of cannabinoids, and Day Three Labs delivers those technologies as a processing service to other third-party manufacturers.\n \n \n \n The Day Three Labs team, as well as that of its subsidiary Day Three Labs Manufacturing, has expertise in drug development, consumer product manufacturing and distribution, and product engineering, including pharmaceutical and food technology development. Day Three Labs as a group is positioning itself to target large addressable markets in the food supplement and pharmaceutical spaces, focusing its research and development on active ingredients with maximum addressable scope.\n Day Three's Unlokt technology is an inclusion complex in which various proteins act as host molecules encapsulating oil to create water soluble solutions for the otherwise hydrophobic liquid. To date, Unlokt has primarily been used in the cannabis space, where Day Three holds various U.S. and foreign patents. \n Unlokt operates in a competitive landscape with other service providers and water-soluble technology providers. Other competitive solutions are nano emulsions, which can include highly artificial components and other unknown chemicals. Unlokt contains only three core ingredients: the oil component, the host protein, and water. \n When applied to cannabis, the Unlokt technology yields an active ingredient that is more easily digestible by the body than unaltered cannabis input on its own. Unlokt provides for both higher bioavailability of the active molecule, as well as a faster uptake time into the system when compared to unaltered cannabis as evidenced by rodent studies done by Day Three. In rodent-based pharmacokinetic trials, Unlokt containing cannabidiol (CBD) reached a time to maximal concentration in 30 minutes, whereas CBD without a water-soluble solution reached maximal concentration in 180 minutes. Unlokt's maximal concentration in this trial was 3.5 times higher than that of CBD without Unlokt. Manufacturing partners have also described Unlokt as having a more palatable taste profile when compared to competitor technologies on the market, a key value add in the industry, although no study has been commissioned on this. \n Day Three partners with third party manufacturers who can license the Unlokt technology for use in their own products, or manufacture the ingredient for resale to others. Many of these partners operate in GMP-certified facilities, and the Unlokt technology fits within the standards of those regulations. \n Research and Development \n Day Three's Israeli subsidiary, Spade Therapeutics, is investigating applications for Unlokt and other technologies for use in pharmaceutical applications. Currently, Spade is leveraging the higher bioavailability benefits of Day Three's processes to develop reformulated versions of FDA-approved cannabis-based therapies. Day Three has also explored licensing its patent portfolio to other pharmaceutical companies to utilize in their own therapies. \n \n 8\n \n OUR STRATEGY \n We are a company with interests in clinical and early-stage Portfolio Companies, through our interests in Cyclo Therapeutics, our majority equity interest in LipoMedix, wholly-owned Barer, majority interests in Rafael Medical Devices and Day Three Labs, and majority interest in Cornerstone. Historically, our focus was on investing in and funding entities to discover and develop novel cancer therapies. More recently, we have expanded our focus to opportunities in the pharmaceutical industry not exclusively focused on cancer therapies, other healthcare-related investments and opportunities outside of biopharma.\n \n \n \n The focus of our efforts is subject to change with market conditions, results of our internal development efforts, the availability of investment opportunities on acceptable terms, the investment and acquisition opportunities we may pursue, and developments at those targets.\n \n \n \n Our goal within biopharma is to expand our portfolio and develop and bring to market therapeutics which address high unmet medical needs, opportunistic investments, acquisitions and in-licensing of assets.\n \n \n \n We plan to continue to selectively invest in pre-clinical and clinical stage healthcare opportunities, including those in which we already own interests, when determined to be consistent with our goals, and move toward clinical stage programs as research and development results warrant, while being ready to exploit other opportunities that may arise.\n \n \n \n Our internal and external investment decisions will be based on the progress and results of our development and pre-clinical activities and other operational developments, and the availability of targets for investment, acquisition or licensing.\n GOVERNMENT REGULATION AND COMPLIANCE \n Our operations, products, services, and potential future customers and those of our Portfolio Companies are subject to extensive government regulation by the FDA and other federal and state authorities in the United States, as well as comparable authorities in foreign jurisdictions. The global regulatory environment is increasingly stringent, unpredictable, and complex. There is a global trend toward increased regulatory and enforcement activity related to all medical products.\n \n \n \n In the U.S., our product candidates and device candidates are regulated as either drugs or biological products under the Federal Food, Drug and Cosmetic Act, or FFDCA, and the Public Health Service Act, or PHSA, and their implementing regulations, or as medical devices under the FFDCA and its implementing regulations, each as amended and enforced by the FDA. These laws govern the processes by which our product candidates and device candidates would be brought to market. The FDA has enacted extensive regulations that control all aspects of the development, design, performance, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, postmarket surveillance, and import and export of drugs, biological products, and medical devices. In addition, the FDA controls the access of products to market through processes designed to ensure that only products that are safe and effective for their intended use(s) and otherwise meet the applicable requirements of the FFDCA and/or PHSA before they are made available to the public.\n Review And Approval Of Drugs In The United States \n In the United States, the FDA approves and regulates drugs under the FFDCA, and its implementing regulations. The failure to comply with requirements under the FFDCA and other applicable laws at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including refusal by the FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of compliance letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice or other governmental entities.\n \n 9\n \n Each of Cyclo Therapeutics', LipoMedix's, Barer's, and Cornerstone's (collectively referred to as the \"Pharmaceutical Companies\") current product candidates must be approved by the FDA through a New Drug Application, or NDA. An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following:\n \n \n ●\n \n \n completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA's good laboratory practice, or GLP, regulations;\n \n \n ●\n \n \n submission to the FDA of an Investigational New Drug, or IND, application, which must take effect before human clinical trials may begin;\n \n \n ●\n \n \n approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated at each site;\n \n \n ●\n \n \n performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug product for each indication;\n \n \n ●\n \n \n submission of pediatric study plans and generation of data, unless inapplicable or otherwise deferred or waived, that are adequate to assess the safety and effectiveness of the drug candidate for the proposed indication(s) in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is determined to be safe and effective;\n \n \n ●\n \n \n preparation and submission to the FDA of an NDA requesting marketing for one or more proposed indications;\n \n \n ●\n \n \n review by an FDA advisory committee, where appropriate if applicable;\n \n \n ●\n \n \n satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced and packaged to assess compliance with current Good Manufacturing Practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve the product's identity, strength, quality and purity;\n \n \n ●\n \n \n satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCP and the integrity of the clinical data;\n \n \n ●\n \n \n payment of user fees and securing FDA approval of the NDA; and\n \n \n ●\n \n \n compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-approval studies.\n \n \n \n Before an applicant begins testing a compound with potential therapeutic value in humans, the drug candidate enters the preclinical testing stage. Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, and the purity and stability of the drug substance, as well as in vitro and animal studies to assess the potential safety and activity of the drug for initial testing in humans and to establish a rationale for therapeutic use. The conduct of the preclinical tests must comply with federal regulations and requirements including good laboratory practices, or GLP, requirements. The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. An IND is an exemption from the FFDCA that allows an unapproved drug to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer an investigational drug to humans. Such authorization must be secured prior to interstate shipment and administration of any new drug that is not the subject of an approved NDA. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a drug candidate at any time before or during clinical trials due to safety concerns or non-compliance.\n \n \n \n A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND. When a foreign clinical study is conducted under an IND, all FDA IND requirements must be met unless waived. When the foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain FDA regulatory requirements to use the study as support for an IND or subsequent application for regulatory approval. Such studies must be conducted in accordance with GCP, including review and approval by an independent ethics committee, or IEC, and informed consent from subjects. The GCP requirements encompass both ethical and data integrity standards for clinical studies. The FDA's regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical studies, as well as the quality and integrity of the resulting data. They further help ensure that non-IND foreign studies are conducted in a manner comparable to that required for IND studies.\n \n 10\n \n Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include, among other things, the requirement that all research subjects provide their informed consent in writing before their participation in any clinical trial. Clinical trials are conducted under written study protocols detailing, among other things, the objectives of the study, inclusion and exclusion criteria, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND before a clinical trial can begin in the US. In addition, an IRB representing each study site participating in the clinical trial must review and approve the plan for any clinical trial before it commences at each site, and the IRB must conduct continuing review and reapprove the study at least annually. The IRB must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects.\n \n \n \n Human clinical trials are typically conducted in four sequential phases, which may overlap or be combined under certain limited circumstances when authorized in advance by FDA:\n Phase 1 . The drug candidate is initially introduced into a small number of healthy human subjects or, in certain indications such as cancer, patients with the target disease or condition (e.g., cancer) and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness and to determine optimal dosage.\n Phase 2. The drug candidate is administered to a limited number of patients in the target patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for a specific targeted disease, and to determine dosage tolerance and optimal dosage.\n Phase 3 . These clinical trials are commonly referred to as \"pivotal\" studies, which denotes a study or studies that present the pivotal data (but not the only data) that the FDA or other relevant regulatory agency will use to determine whether or not to approve a drug candidate. The investigational drug is administered to an expanded number of patients in the target patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.\n Phase 4 . Post-approval studies may be required to be conducted, or a sponsor may decide on its own to conduct them, in order to collect additional data after initial regulatory approval. These studies are used to gain additional experience and additional safety and/or efficacy data from the treatment of patients in the intended therapeutic indication. Following review by FDA, data from Phase 4 studies can result in the suspension of marketing and/or the withdrawal of approval of the drug for safety or effectiveness reasons.\n \n \n \n Progress reports detailing the results of all clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions; findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug; and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the investigator brochure.\n \n \n \n Concurrent with clinical trials, companies often complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing and packaging the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, purity, and potency of the final drug. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration in that packaging over its shelf life.\n \n \n \n If clinical trials are successful, the next step in the drug development process is the preparation and submission to the FDA of an NDA or BLA, Biologics License Application, following payment of applicable user fees, if any, under PDUFA, the Prescription Drug User Fee Act. The NDA or BLA is the vehicle through which applicants formally propose that the FDA approve a new drug or biologic for marketing and sale in the United States for one or more indications. The results of product development, preclinical studies, and clinical trials, along with detailed descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling, and other relevant information are submitted to the FDA as part of an NDA or BLA requesting approval to market the product. The submission of an NDA or BLA is subject to the payment of substantial user fees; a waiver of such fees may be obtained under certain limited circumstances. For example, products with orphan drug designation are not subject to user fees.\n \n 11\n \n The FDA initially reviews all NDAs and BLAs submitted to identify if there are any deficiencies before it can officially accept the applications for in-depth review, also known as \"filing\" of the NDA or BLA. The FDA may request additional information before deciding whether to accept an NDA or BLA for filing, and the applicant generally must submit the requested information before FDA proceeds. Subject to any additional information requests by FDA, this is generally a 60-day filing period. Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA or BLA.\n \n \n \n After the NDA or BLA submission is accepted for filing, the FDA reviews the NDA or BLA to determine, among other things, whether the proposed product is safe and effective for its intended use, whether the product is being manufactured in accordance with cGMP to assure and preserve the product's identity, strength, quality, and purity, and whether the product has appropriate labeling for its proposed intended use. There generally is a two-tiered system of review times - standard review and priority review - under the FDA's regulations and PDUFA performance goals and procedures. A priority review designation means FDA's current PDUFA goal is to review and take action on 90% of such applications within six months (compared to 10 months under standard review) in addition to the 60-day filing period. During the approval process, the FDA also will determine whether a risk evaluation and mitigation strategy, or REMS, is necessary to assure the safe use of the drug or biologic following its approval. If the FDA concludes that a REMS is needed, the sponsor of the NDA must submit a proposed REMS; the FDA will not approve the NDA without a REMS, if a REMS is deemed to be required.\n \n \n \n Before approving an NDA or BLA, the FDA will typically inspect the facilities at which the product is to be manufactured. These preapproval inspections may cover all facilities associated with an NDA or BLA submission, including drug component manufacturing (e.g., active pharmaceutical ingredients), finished drug product manufacturing, labeling and packaging operations, and control testing laboratories. The FDA will not approve an application unless it determines that the manufacturing processes and all facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA or BLA, the FDA will typically inspect one or more clinical trial sites to assure compliance with GCP.\n \n \n \n The FDA is required to refer an application for a novel drug to an advisory committee or explain why such referral was not made. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions about the approval of the drug.\n \n \n \n On the basis of the FDA's evaluation of the NDA or BLA and accompanying information, including the results of the inspection of the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for a specific indication or indications in accordance with approved labeling. A complete response letter generally outlines the deficiencies in the application and may require the sponsor to undertake substantial additional testing or gather significant additional data and information in order for the FDA to reconsider the application. If a complete response letter is issued, the applicant may either resubmit the application, addressing all of the deficiencies identified in the complete response letter, or withdraw the application. If and when those deficiencies have been addressed to the FDA's satisfaction in a resubmission of the NDA or BLA, the FDA will issue an approval letter. In its current PDUFA performance goals and procedures, the FDA has committed to reviewing and acting on 90% of such resubmissions in two or six months depending on the type of information included and the FDA's classification of the resubmission. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.\n \n \n \n If a product receives regulatory approval, the approval may be limited to a specific disease(s) and dosage(s) or the indication(s) for use or other product labeling may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may require phase 4 testing, which involves post-approval clinical trials designed to further assess a product's safety and/or effectiveness, and also may require testing and surveillance programs to monitor the safety of approved products that have been commercialized.\n Fast track, breakthrough therapy, and priority review designations \n The FDA is authorized to designate certain product candidates for expedited review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition. These programs are fast track designation, breakthrough therapy designation, and priority review designation. Receipt of such a designation does not necessarily mean that a product candidate will receive an expedited approval.\n \n 12\n \n Accelerated approval pathway \n The FDA may grant accelerated approval to a product for a serious or life-threatening condition that provides meaningful therapeutic advantage to patients over existing treatments based upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant accelerated approval for such a condition when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. Products granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted non-accelerated approval. If post-marketing clinical studies fail to verify the anticipated clinical benefit, FDA may withdraw approval.\n Post-Approval Requirements \n Any drug that receives FDA approval is subject to continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, continued adherence to cGMP, periodic reporting, product sampling and distribution, advertising and promotion, and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, by submitting supplemental NDAs, are subject to prior FDA review and approval. 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 containing clinical data.\n \n \n \n In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA review and approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers, packagers or distributors that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.\n \n \n \n Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of manufacturing or distribution or other restrictions. Other potential consequences include, among other things:\n ● \n restrictions on the marketing or manufacturing of the product, shutdown of one or more manufacturing site, suspension of the approval, product recalls, or complete withdrawal of the product from the market;\n ● \n fines, warning letters or holds on post-approval clinical trials;\n ● \n refusal of the FDA to approve pending NDAs or BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product approvals;\n \n \n ●\n \n \n product seizure or detention, or refusal to permit the import or export of products; and/or\n ● \n injunctions or the imposition of civil or criminal penalties.\n \n \n \n The FDA strictly regulates the marketing, labeling, advertising, and promotion of products that are placed on the market. Drugs may be promoted only for the approved indication(s) and in accordance with the provisions of the approved labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting false or misleading promotion and the promotion of off-label uses, which require that promotion is truthful, not misleading, fairly balanced and provides adequate directions for use, and that all claims are substantiated, and which also prohibit the promotion of products for unapproved or \"off-label\" uses and impose other restrictions on labeling, in accordance with FDA guidance on off-label dissemination of information and responding to unsolicited requests for information. A company that is found to have improperly promoted off-label uses or engaged in any other false or misleading promotion may be subject to significant liability and enforcement actions.\n \n 13\n \n In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, and its implementing regulations, as well as the Drug Supply Chain Security Act, or DSCA, and its implementing regulations, which together regulate, among other things, the distribution and tracking and tracing of prescription drugs and prescription drug samples at the federal level, and set minimum standards for the regulation of drug distributors by the states. The PDMA, its implementing regulations, and state laws limit the distribution of prescription pharmaceutical product samples, and the DSCA and its implementing regulations impose requirements to ensure accountability in distribution and to identify, trace and remove counterfeit and other illegitimate or harmful drugs from the market.\n Abbreviated new drug applications for generic drugs \n In 1984, with passage of the Hatch-Waxman Amendments to the FFDCA, Congress established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs that are shown to contain the same active ingredients as, and to be bioequivalent to, drugs previously approved by the FDA pursuant to NDAs. To obtain approval of a generic drug, an applicant must submit an abbreviated new drug application, or ANDA, to the agency. An ANDA is a comprehensive submission that contains, among other things, data and information pertaining to the active pharmaceutical ingredient, bioequivalence, drug product formulation, specifications, and stability of the generic drug, as well as analytical methods, manufacturing process validation data, and quality control procedures. ANDAs are \"abbreviated\" because they generally do not include preclinical and clinical data to demonstrate safety and effectiveness. Instead, in support of such applications, a generic manufacturer may rely on the FDA's prior determination of safety and effectiveness based upon the preclinical and clinical testing previously conducted for a drug product previously approved under an NDA, known as the reference-listed drug, or RLD.\n 505(b)(2) NDAs \n As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA pursuant to an NDA, an applicant may submit an NDA under Section 505(b)(2) of the FFDCA. Section 505(b)(2) was enacted as part of the Hatch-Waxman Amendments and permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by, or for, the applicant. If the 505(b)(2) applicant can establish that reliance on FDA's previous finding of safety and effectiveness of the RLD is scientifically and legally appropriate, it may eliminate the need to conduct certain preclinical or clinical studies of the new product. The FDA may also require companies to perform additional studies or measurements, including clinical trials, to support the change from the previously approved RLD. The FDA may then approve the new product candidate for all, or some, of the label indication(s) for which the RLD has been approved, and/or for any new indication(s) for which approval is sought by the 505(b)(2) applicant.\n Pediatric studies and exclusivity \n Under the Pediatric Research Equity Act, an NDA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the drug candidate for the proposed indication(s) in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is determined to be safe and effective. With enactment in 2012 of the Food and Drug Administration Safety and Innovation Act, or FDASIA, sponsors must also submit pediatric study plans prior to the assessment data. Those plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and any other information required by regulation. The applicant, the FDA, and the FDA's internal review committee must then review the information submitted, consult with each other, and agree upon a final plan. The FDA or the applicant may request an amendment to the plan at any time. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. Additional requirements and procedures relating to waiver requests, deferral requests and requests for extension of deferrals are contained in FDASIA. Unless and until FDA promulgates a regulation stating otherwise, the pediatric data requirements generally do not apply to products with orphan designation. However, in accordance with the FDA Reauthorization Act of 2017, or FDARA, certain orphan designated cancer drugs are no longer exempt from having to conduct pediatric studies. FDARA requires that any original NDA or BLA submitted on or after August 18, 2020, for a new active ingredient, must contain studies of molecularly targeted pediatric cancers, unless a deferral or a waiver is granted, if the drug that is the subject of the application is intended for the treatment of an adult cancer and directed at a molecular target that the FDA determines to be substantially relevant to the growth or progression of a pediatric cancer.\n \n 14\n \n Orphan drug designation and exclusivity \n Under the Orphan Drug Act, the FDA may designate a drug product as an \"orphan drug\" if it is intended to treat a rare disease or condition, generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the United States for treatment of the disease or condition will be recovered from sales of the product. A company must request orphan drug designation before submitting an NDA or BLA for the drug for the rare disease or condition. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use(s). Orphan drug designation does not shorten the PDUFA goal dates for the regulatory review and approval process, although it does convey certain advantages such as tax benefits and exemption from the PDUFA application fee. The first applicant to obtain approval of an orphan drug is eligible for seven years of exclusivity for a drug, or twelve years of exclusivity for a biologic, during which FDA may not approve the same drug for the same approved orphan indication unless the subsequent product is shown to be clinically superior or if the FDA withdraws exclusive approval or revokes orphan drug designation, or if the marketing application (NDA or BLA) for the orphan drug is withdrawn for any reason, or if the holder of the orphan exclusive approval fails to assure a sufficient quantity of the orphan drug.\n Patent term restoration and extension \n A patent claiming a new drug product or its method of use or its method of manufacturing may be eligible for a limited patent term extension, also known as patent term restoration, under the Hatch-Waxman Act, which permits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review process. Patent term extension is generally available only for drug products whose active ingredient has not previously been approved by the FDA. The restoration period granted is typically one-half the time between the effective date of an IND and the submission date of an NDA or BLA, plus the time between the submission date of an NDA or BLA and the ultimate approval date, up to a maximum of five years. Patent term extension cannot be used to extend the remaining term of a patent past a total of 14 years from the product's approval date. Only one patent applicable to an approved drug product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question. A patent that covers multiple drugs for which approval is sought can only be extended in connection with one of the approvals. The United States Patent and Trademark Office, or PTO, reviews and approves the application for any patent term extension in consultation with the FDA upon PTO's determination that the requirements for an extension have been met.\n FDA approval and regulation of companion diagnostics \n If safe and effective use of a therapeutic depends on a diagnostic, a medical device that is often an in vitro diagnostic or IVD, then the FDA generally will require approval or clearance of that diagnostic, known as a companion diagnostic, at the same time that the FDA approves the therapeutic product. In August 2014, the FDA issued final guidance clarifying the requirements that will apply to approval of therapeutic products and in vitro companion diagnostics. According to the guidance, for novel drugs, a candidate IVD companion diagnostic and its corresponding therapeutic should be co-developed and approved or cleared contemporaneously by the FDA for the use indicated in the therapeutic product's labeling. In July 2016, the FDA issued a draft guidance detailing general principles to guide co-development of an in vitro companion diagnostic device with a therapeutic product. In April 2020, the FDA issued final guidance intended to facilitate class labeling on diagnostic tests for oncology therapeutic products, where scientifically appropriate. Review And Approval Or Clearance Of Medical Devices In The United States \n Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a Premarket Notification, or 510(k), FDA approval of a Premarket Approval, or PMA, application, or FDA marketing authorization in response to a De Novo request. Under the FFDCA, medical devices are classified into one of three classes - Class I, Class II or Class III - depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure the device's safety and effectiveness. Devices deemed by the FDA to pose the greatest risks, such as life sustaining, life supporting or some implantable devices, or devices that have a new intended use, or that use advanced technology which is not substantially equivalent to that of a legally marketed device, are generally placed into Class III.\n \n \n \n While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FFDCA requesting permission to commercially distribute the proposed device. The FDA's permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance. Class III devices require approval of a PMA evidencing safety and effectiveness of the device. Certain novel devices of low to moderate risk, for which the FDA can make a risk-based classification of the device into Class I or II, can receive marketing authorization in response to a De Novo request.\n \n 15\n \n To obtain 510(k) clearance, a manufacturer must pay the appropriate device user fee, unless eligible for a waiver or exemption, and submit a 510(k) premarket notification demonstrating to the FDA's satisfaction that the proposed device is at least as safe and effective as, that is, \"substantially equivalent\" to, another legally marketed device that itself does not require PMA approval, or a predicate device. A predicate device is a legally marketed device that is not subject to premarket approval, i.e. , a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process. The sponsor must submit data and information that supports its substantial equivalency claims. The FDA's 510(k) clearance process usually takes from three to twelve months, but often takes longer. FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. In addition, the FDA collects user fees for certain medical device submissions and annual fees for medical device establishments. \n Before the sponsor can market a proposed device that is the subject of a 510(k) premarket notification, the sponsor must receive an order from the FDA finding substantial equivalence and clearing the new device for commercial distribution in the US. If the FDA agrees that the device is substantially equivalent to a lawfully marketed predicate device, it will grant 510(k) clearance to authorize the device for commercialization. If the FDA determines that the device is \"not substantially equivalent,\" the device is automatically designated as a Class III device. The device sponsor then must either fulfill the more rigorous PMA requirements, or the sponsor can submit a De Novo request seeking a risk-based classification determination for the device in accordance with the FDA's De Novo classification process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device. A sponsor also can submit a De Novo classification request directly, without first submitting a 510(k), if the sponsor determines that there is no legally marketed predicate device upon which to base a determination of substantial equivalence.\n \n \n \n After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) clearance or, depending on the modification, PMA approval or De Novo classification. The FDA requires each manufacturer to determine in the first instance whether the proposed change requires submission of a 510(k), a De Novo classification request or a PMA, but the FDA can review any such decision and disagree with a sponsor's determination. If the FDA disagrees with a manufacturer's determination not to seek a new 510(k) or other form of marketing authorization for a modification to a 510(k)-cleared product, the FDA can require the manufacturer to cease marketing and/or request the recall of the modified device until 510(k) clearance or PMA approval is obtained or a De Novo classification is granted.\n \n \n \n The PMA process is more demanding than either the 510(k) premarket notification process or the De Novo classification process and includes stringent clinical investigation and other requirements. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials. All clinical inv...

View stock analysis, news, and events for Rafael Holdings, Inc.