UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM C-TR
UNDER THE SECURITIES ACT OF 1933
? Form C: Offering Statement
? Form C-U: Progress Update
? Form C/A: Amendment to Offering Statement
? Check box if Amendment is material and
investors must reconfirm within five
business days.
? Form C-AR: Annual Report
? Form C-AR/A: Amendment to Annual Report
? Form C-TR: Termination of Reporting
Name of issuer
Hera Health Solutions, Inc.
Legal status of issuer
Form
Corporation
Jurisdiction
of Incorporation/Organization
Delaware
Date of organization
May 22, 2017
Physical address of issuer
11141 Wellshire Ln.
Frisco, TX 75035
Website of issuer
www.herahealthsolutions.com
Current number of employees
4
February 28, 2022
FORM C-TR
Hera Health Solutions Inc.
This Form C-TR (including the cover
page and all exhibits attached hereto, the
"Form C-TR") is being furnished by Hera
Health Solutions Inc., a Delaware
Corporation (the "Company," as well as
references to "we," "us," or "our"), for the
sole purpose of providing certain
information about the Company as required by
the Securities and Exchange Commission
(?SEC?).
No federal or state securities commission or
regulatory authority has passed upon the
accuracy or adequacy of this document. The
U.S. Securities and Exchange Commission does
not pass upon the accuracy or completeness
of any disclosure document or literature.
The Company is filing this Form C-TR
pursuant to Regulation CF (? 227.100 et
seq.) which requires that it must file a
report with the Commission annually and post
the report on its website at
www.herahealthsolutions.com no later than
120 days after the end of each fiscal year
covered by the report. The Company may
terminate its obligations in the future in
accordance with Rule 202(b) of Regulation CF
(? 227.202(b)) by 1) being required to file
reports under Section 13(a) or Section 15(d)
of the Exchange Act of 1934, as amended, 2)
filing at least one annual report pursuant
to Regulation CF and having fewer than 300
holders of record, 3) filing annual reports
for 3 years pursuant to Regulation CF and
having assets equal to or less than
$10,000,000, 4) the repurchase of all the
Securities sold pursuant to Regulation CF by
the Company or another party, or 5) the
liquidation or dissolution of the Company.
The date of this Form C-TR is February 28th,
2022.
THIS FORM C-TR DOES NOT CONSTITUTE AN OFFER
TO PURCHASE OR SELL SECURITIES.
Forward Looking Statement Disclosure
This Form C-TR and any documents
incorporated by reference herein or therein
contain forward-looking statements and are
subject to risks and uncertainties. All
statements other than statements of
historical fact or relating to present facts
or current conditions included in this Form
C-TR are forward-looking statements.
Forward-looking statements give the
Company?s current reasonable expectations
and projections relating to its financial
condition, results of operations, plans,
objectives, future performance and business.
You can identify forward-looking statements
by the fact that they do not relate strictly
to historical or current facts. These
statements may include words such as
"anticipate," "estimate," "expect,"
"project," "plan," "intend," "believe,"
"may," "should," "can have," "likely" and
other words and terms of similar meaning in
connection with any discussion of the timing
or nature of future operating or financial
performance or other events.
The forward-looking statements contained in
this Form C-TR and any documents
incorporated by reference herein or therein
are based on reasonable assumptions the
Company has made in light of its industry
experience, perceptions of historical
trends, current conditions, expected future
developments and other factors it believes
are appropriate under the circumstances. As
you read and consider this Form C-TR, you
should understand that these statements are
not guarantees of performance or results.
They involve risks, uncertainties (many of
which are beyond the Company?s control) and
assumptions. Although the Company believes
that these forward-looking statements are
based on reasonable assumptions, you should
be aware that many factors could affect its
actual operating and financial performance
and cause its performance to differ
materially from the performance anticipated
in the forward-looking statements. Should
one or more of these risks or uncertainties
materialize or should any of these
assumptions prove incorrect or change, the
Company?s actual operating and financial
performance may vary in material respects
from the performance projected in these
forward-looking statements.
Any forward-looking statement made by the
Company in this Form C-TR or any documents
incorporated by reference herein or therein
speaks only as of the date of this Form C-
TR. Factors or events that could cause our
actual operating and financial performance
to differ may emerge from time to time, and
it is not possible for the Company to
predict all of them. The Company undertakes
no obligation to update any forward-looking
statement, whether as a result of new
information, future developments or
otherwise, except as may be required by law.
ONGOING REPORTING
The Company will not file a report
electronically with the Securities &
Exchange Commission annually and post the
report on its website, no later than 120
days after the end of the Company?s fiscal
year.
Once posted, the annual report may be found
on the Company?s website at:
www.herahealthsolutions.com
The Company must continue to comply with the
ongoing reporting requirements until:
(1) the Company is required to file reports
under Section 13(a) or Section 15(d) of the
Exchange Act;
(2) the Company has filed at least three
annual reports pursuant to Regulation CF and
has total assets that do not exceed
$10,000,000;
(3) the Company has filed at least one
annual report pursuant to Regulation CF and
has fewer than 300 holders of record;
(4) the Company or another party repurchases
all of the Securities issued in reliance on
Section 4(a)(6) of the Securities Act,
including any payment in full of debt
securities or any complete redemption of
redeemable securities; or
(5) the Company liquidates or dissolves its
business in accordance with state law.
The company has filed Form C-TR in years
2020 and 2021 and has less than 300
shareholders as of March 1, 2022.
About this Form C-TR
You should rely only on the information
contained in this Form C-TR. We have not
authorized anyone to provide you with
information different from that contained in
this Form C-TR. You should assume that the
information contained in this Form C-TR is
accurate only as of the date of this Form C-
TR, regardless of the time of delivery of
this Form C-TR. Our business, financial
condition, results of operations, and
prospects may have changed since that date.
Statements contained herein as to the
content of any agreements or other document
are summaries and, therefore, are
necessarily selective and incomplete and are
qualified in their entirety by the actual
agreements or other documents.
The Business
Hera Health Solutions is a pharmaceutical
device company that specializes in the
development and commercialization of long
acting treatments through proprietary
biodegradable implants. Hera Health intends
to sell its first product, the contraceptive
biodegradable implant Eucontra, to OB/GYN
practices as well as family planning clinics
in the U.S. market. Internationally, the
Company will seek to sell to nonprofit
organizations and large-scale Non-
Governmental Organizations (NGOs) that
distribute contraceptives to countries with
a limited access to healthcare. It also
intends to price Eucontra at $800 per
device, which the Company believes is
competitive with its alternative, Nexplanon.
The executive team estimates a 98.5% gross
margin for retail sales but intends to
heavily subsidize Eucontra for bulk
distribution to humanitarian partners.
RISK FACTORS
Risks Related to the Company?s Business and
Industry
In order for the Company to compete and
grow, it must attract, recruit, retain and
develop the necessary personnel who have the
needed experience.
Recruiting and retaining highly qualified
personnel is critical to our success. These
demands may require us to hire additional
personnel and will require our existing
management personnel to develop additional
expertise. We face intense competition for
personnel. The failure to attract and retain
personnel or to develop such expertise could
delay or halt the development and
commercialization of our product candidates.
If we experience difficulties in hiring and
retaining personnel in key positions, we
could suffer from delays in product
development, loss of customers and sales and
diversion of management resources, which
could adversely affect operating results.
Our consultants and advisors may be employed
by third parties and may have commitments
under consulting or advisory contracts with
third parties that may limit their
availability to us.
Quality management plays an essential role
in determining and meeting customer
requirements, preventing defects, improving
the Company?s products and services and
maintaining the integrity of the data that
supports the safety and efficacy of our
products.
Our future success depends on our ability to
maintain and continuously improve our
quality management program. An inability to
address a quality or safety issue in an
effective and timely manner may also cause
negative publicity, a loss of customer
confidence in us or our current or future
products, which may result in the loss of
sales and difficulty in successfully
launching new products. In addition, a
successful claim brought against us in
excess of available insurance or not covered
by indemnification agreements, or any claim
that results in significant adverse
publicity against us, could have an adverse
effect on our business and our reputation.
We may implement new lines of business or
offer new products and services within
existing lines of business.
There are substantial risks and
uncertainties associated with these efforts,
particularly in instances where the markets
are not fully developed. In developing and
marketing new lines of business and/or new
products and services, we may invest
significant time and resources. Initial
timetables for the introduction and
development of new lines of business and/or
new products or services may not be achieved
and price and profitability targets may not
prove feasible. We may not be successful in
introducing new products and services in
response to industry trends or developments
in technology, or those new products may not
achieve market acceptance. As a result, we
could lose business, be forced to price
products and services on less advantageous
terms to retain or attract clients or be
subject to cost increases. As a result, our
business, financial condition or results of
operations may be adversely affected.
The Company?s success depends on the
experience and skill of the board of
directors, its executive officers and key
employees.
In particular, the Company is dependent on
Idicula Mathew and Garrett Whitfield who are
CEO and COO of the Company. The Company has
or intends to enter into employment
agreements with Idicula Mathew and Garrett
Whitfield although there can be no assurance
that it will do so or that they will
continue to be employed by the Company for a
particular period of time. The loss of
Idicula Mathew and Garrett Whitfield or any
member of the board of directors or
executive officer could harm the Company?s
business, financial condition, cash flow and
results of operations.
We rely on various intellectual property
rights, including patents in order to
operate our business.
Such intellectual property rights, however,
may not be sufficiently broad or otherwise
may not provide us a significant competitive
advantage. In addition, the steps that we
have taken to maintain and protect our
intellectual property may not prevent it
from being challenged, invalidated,
circumvented or designed-around,
particularly in countries where intellectual
property rights are not highly developed or
protected. In some circumstances,
enforcement may not be available to us
because an infringer has a dominant
intellectual property position or for other
business reasons, or countries may require
compulsory licensing of our intellectual
property. Our failure to obtain or maintain
intellectual property rights that convey
competitive advantage, adequately protect
our intellectual property or detect or
prevent circumvention or unauthorized use of
such property, could adversely impact our
competitive position and results of
operations. We also rely on nondisclosure
and noncompetition agreements with
employees, consultants and other parties to
protect, in part, trade secrets and other
proprietary rights. There can be no
assurance that these agreements will
adequately protect our trade secrets and
other proprietary rights and will not be
breached, that we will have adequate
remedies for any breach, that others will
not independently develop substantially
equivalent proprietary information or that
third parties will not otherwise gain access
to our trade secrets or other proprietary
rights.
As we expand our business, protecting our
intellectual property will become
increasingly important. The protective steps
we have taken may be inadequate to deter our
competitors from using our proprietary
information. In order to protect or enforce
our patent rights, we may be required to
initiate litigation against third parties,
such as infringement lawsuits. Also, these
third parties may assert claims against us
with or without provocation. These lawsuits
could be expensive, take significant time
and could divert management?s attention from
other business concerns. The law relating to
the scope and validity of claims in the
technology field in which we operate is
still evolving and, consequently,
intellectual property positions in our
industry are generally uncertain. We cannot
assure you that we will prevail in any of
these potential suits or that the damages or
other remedies awarded, if any, would be
commercially valuable.
From time to time, third parties may claim
that one or more of our products or services
infringe their intellectual property rights.
Any dispute or litigation regarding patents
or other intellectual property could be
costly and time-consuming due to the
complexity of our technology and the
uncertainty of intellectual property
litigation and could divert our management
and key personnel from our business
operations. A claim of intellectual property
infringement could force us to enter into a
costly or restrictive license agreement,
which might not be available under
acceptable terms or at all, could require us
to redesign our products, which would be
costly and time-consuming, and/or could
subject us to an injunction against
development and sale of certain of our
products or services. We may have to pay
substantial damages, including damages for
past infringement if it is ultimately
determined that our products infringe on a
third party?s proprietary rights. Even if
these claims are without merit, defending a
lawsuit takes significant time, may be
expensive and may divert management?s
attention from other business concerns. Any
public announcements related to litigation
or interference proceedings initiated or
threatened against us could cause our
business to be harmed. Our intellectual
property portfolio may not be useful in
asserting a counterclaim, or negotiating a
license, in response to a claim of
intellectual property infringement. In
certain of our businesses we rely on third
party intellectual property licenses and we
cannot ensure that these licenses will be
available to us in the future on favorable
terms or at all.
Although dependent on certain key personnel,
the Company does not have any key man life
insurance policies on any such people.
The Company is dependent on Idicula Mathew
and Garrett Whitfield in order to conduct
its operations and execute its business
plan, however, the Company has not purchased
any insurance policies with respect to those
individuals in the event of their death or
disability. Therefore, if any of Idicula
Mathew and Garrett Whitfield die or become
disabled, the Company will not receive any
compensation to assist with such person?s
absence. The loss of such person could
negatively affect the Company and its
operations.
We have not prepared any audited financial
statements.
Therefore, you have no audited financial
information regarding the Company?s
capitalization or assets or liabilities on
which to make your investment decision. If
you feel the information provided is
insufficient, you should not invest in the
Company.
We are subject to income taxes as well as
non-income based taxes, such as payroll,
sales, use, value-added, net worth, property
and goods and services taxes, in the U.S.
Significant judgment is required in
determining our provision for income taxes
and other tax liabilities. In the ordinary
course of our business, there are many
transactions and calculations where the
ultimate tax determination is uncertain.
Although we believe that our tax estimates
are reasonable: (i) there is no assurance
that the final determination of tax audits
or tax disputes will not be different from
what is reflected in our income tax
provisions, expense amounts for non-income
based taxes and accruals and (ii) any
material differences could have an adverse
effect on our financial position and results
of operations in the period or periods for
which determination is made.
We are not subject to Sarbanes-Oxley
regulations and lack the financial controls
and safeguards required of public companies.
We do not have the internal infrastructure
necessary, and are not required, to complete
an attestation about our financial controls
that would be required under Section 404 of
the Sarbanes-Oxley Act of 2002. There can be
no assurance that there are no significant
deficiencies or material weaknesses in the
quality of our financial controls. We expect
to incur additional expenses and diversion
of management?s time if and when it becomes
necessary to perform the system and process
evaluation, testing and remediation required
in order to comply with the management
certification and auditor attestation
requirements.
Changes in employment laws or regulation
could harm our performance.
Various federal and state labor laws govern
our relationship with our employees and
affect operating costs. These laws include
minimum wage requirements, overtime pay,
healthcare reform and the implementation of
the Patient Protection and Affordable Care
Act, unemployment tax rates, workers?
compensation rates, citizenship
requirements, union membership and sales
taxes. A number of factors could adversely
affect our operating results, including
additional government-imposed increases in
minimum wages, overtime pay, paid leaves of
absence and mandated health benefits,
mandated training for employees, increased
tax reporting and tax payment changing
regulations from the National Labor
Relations Board and increased employee
litigation including claims relating to the
Fair Labor Standards Act.
Successful development of our products is
uncertain.
The product candidates that we expect to
develop are based on processes and
methodologies that are not currently widely
employed. Our development of current and
future product candidates are subject to the
risks of failure and delay inherent in the
development of new products and products
based on new technologies, including delays
in product development, clinical testing, or
manufacturing; unplanned expenditures in
product development, clinical testing, or
manufacturing, a failure to receive
regulatory approvals, the inability to
manufacture on our own, or through any
others, product candidates on a commercial
scale, or failure to achieve market
acceptance, and the emergence of superior or
equivalent products.
Because of these risks, our research and
development efforts may not result in any
commercially viable products. If a
significant portion of these development
efforts are not successfully completed,
required regulatory approvals are not
obtained, or any approved products are not
commercially successfully, our business,
financial condition, and results of
operations may be materially harmed.
The Health Care Reform Law 2.3% excise tax
on domestic sales of medical devices by
manufacturers and importers beginning in
2013, and the fee on branded prescription
drugs and biologics that was implemented in
2011, may adversely affect sales and cost of
goods sold.
The Health Care Reform Law 2.3% excise tax
on domestic sales of medical devices by
manufacturers and importers beginning in
2013, and the fee on branded prescription
drugs and biologics that was implemented in
2011, may adversely affect sales and cost of
goods sold.
For example, (i) where we purchase medical
devices from third-party manufacturers, the
manufacturers may increase their prices to
cover their payment of the excise tax and
our costs to purchase such medical devices
may therefore increase and (ii) where we
manufacture medical devices or are the
importer of record, our cost of goods sold
may increase because we are subject to
paying the excise tax. If either of these
scenarios were to occur, then there could be
an adverse impact to our results of
operations and financial condition.
Political, economic and regulatory
influences are subjecting the healthcare
industry to potential fundamental changes
that could substantially affect our results
of operations.
Government and private sector initiatives to
limit the growth of healthcare costs,
including price regulation, competitive
pricing, coverage and payment policies,
comparative effectiveness of therapies,
technology assessments and alternative
payment models, are continuing in countries
where we do business, including the U.S.
These changes are causing the marketplace to
put increased emphasis on the delivery of
more cost-effective treatments. As a U.S.
headquartered Company with significant sales
in the U.S., this healthcare reform
legislation will materially impact us.
Certain provisions of the legislation will
not be effective for a number of years and
it is unclear what the full impact of the
legislation will be. Provisions of this
legislation, including Medicare provisions
aimed at improving quality and decreasing
costs, comparative effectiveness research,
an independent payment advisory board, and
pilot programs to evaluate alternative
payment methodologies, could meaningfully
change the way healthcare is developed and
delivered, and may adversely affect our
business and results of operations. Further,
we cannot predict what healthcare programs
and regulations will be ultimately
implemented at the federal or state level,
or the effect of any future legislation or
regulation in the U.S. or internationally.
However, any changes that lower
reimbursements for our products, reduce
medical procedure volumes or increase cost
containment pressures on us or other
participants in the healthcare industry
could adversely affect our business and
results of operations.
Changes to government health care programs
that reduce payments under Medicare and
Medicaid may negatively impact payments from
commercial third-party payers.
The Healthcare Reform Law will result in
increased state legislative and regulatory
changes in order for states to comply with
new federal mandates, such as the
requirement to establish or participate in
Exchanges and to participate in grants and
other incentive opportunities. In its June
28, 2012 ruling, the U.S. Supreme Court
struck down the portion of the Health Reform
Law that would have allowed the Department
of Health and Human Services to penalize
states that do not implement the Medicaid
expansion provisions with the loss of
existing federal Medicaid funding. Thus,
states may opt not to implement the
expansion. In some cases, commercial third-
party payors rely on all or portions of
Medicare payment systems to determine
payment rates. Current or future health care
reform and deficit reduction efforts,
changes in laws or regulations regarding
government health care programs, other
changes in the administration of government
health care programs and changes to
commercial third-party payers in response to
health care reform and other changes to
government health care programs could have a
material, adverse effect on our financial
position and results of operations.
Products that we manufacture, source,
distribute or market are required to comply
with regulatory requirements.
To lawfully operate our businesses, we are
required to hold permits, licenses and other
regulatory approvals from, and to comply
with operating and security standards of,
governmental bodies. Failure to maintain or
renew necessary permits, licenses or
approvals, or noncompliance or concerns over
noncompliance may result in suspension of
our ability to distribute, import or
manufacture products, product recalls or
seizures, or criminal and civil sanctions
and could have an adverse effect on our
results of operations and financial
condition.
The manufacture, distribution, marketing and
use of our products are subject to extensive
regulation and increased scrutiny by the
Food and Drug Administration (FDA) and other
regulatory authorities globally.
Any new product must undergo lengthy and
rigorous testing and other extensive, costly
and time-consuming procedures mandated by
FDA and foreign regulatory authorities.
Changes to current products may be subject
to vigorous review, including additional
510(k) and other regulatory submissions, and
approvals are not certain. Our facilities
must be approved and licensed prior to
production and remain subject to inspection
from time to time thereafter. Failure to
comply with the requirements of FDA or other
regulatory authorities, including a failed
inspection or a failure in our adverse event
reporting system, could result in adverse
inspection reports, warning letters, product
recalls or seizures, monetary sanctions,
injunctions to halt the manufacture and
distribution of products, civil or criminal
sanctions, refusal of a government to grant
approvals or licenses, restrictions on
operations or withdrawal of existing
approvals and licenses. Any of these actions
could cause a loss of customer confidence in
us and our products, which could adversely
affect our sales and results of operations.
Federal and State Laws Pertaining to
Healthcare Fraud and Abuse Could Adversely
Affect Our Business.
We are subject to various federal and state
laws targeting fraud and abuse in the
healthcare industry, including anti-kickback
laws, false claims laws, laws constraining
the sales, marketing and other promotional
activities of manufacturers of medical
devices by limiting the kinds of financial
arrangements we may enter into with
physicians, hospitals, laboratories and
other potential purchasers of medical
devices, laws requiring the reporting of
certain transactions between us and
healthcare professionals and HIPAA, as
amended by HITECH, which governs the conduct
of certain electronic healthcare
transactions and protects security and
privacy of protected health information.
Violations of these laws are punishable by
criminal or civil sanctions, including
substantial fines, imprisonment and
exclusion from participation in government
healthcare programs such as Medicare and
Medicaid. Many of the existing requirements
are new and have not been definitively
interpreted by state authorities or courts,
and available guidance is limited. Unless
and until we are in full compliance with
these laws, we could face enforcement action
and fines and other penalties, and could
receive adverse publicity, all of which
could materially harm our business. In
addition, changes in or evolving
interpretations of these laws, regulations,
or administrative or judicial
interpretations, may require us to change
our business practices or subject our
business practices to legal challenges,
which could have a material adverse effect
on our business, financial condition and
results of operations.
We may rely on a group of third-party
distributors to effectively distribute our
products outside the United States.
We may depend, in part, on medical device
distributors for the marketing and selling
of our products in most geographies outside
of the U.S. We depend on these distributors?
efforts to market our products, yet we are
unable to control their efforts completely.
These distributors typically sell a variety
of other, non-competing products that may
limit the resources they dedicate to selling
our products. In addition, we are unable to
ensure that our distributors comply with all
applicable laws regarding the sale of our
products. If our distributors fail to
effectively market and sell our products, in
full compliance with applicable laws, our
operating results and business may suffer.
Recruiting and retaining qualified third-
party distributors and training them in our
technology and product offerings require
significant time and resources. To develop
and expand our distribution, we must
continue to scale and improve our processes
and procedures that support our
distributors. Further, if our relationship
with a successful distributor terminates, we
may be unable to replace that distributor
without disruption to our business. If we
fail to maintain relationships with our
distributors, fail to develop new
relationships with other distributors,
including in new markets, fail to manage,
train or incentivize existing distributors
effectively, or fail to provide distributors
with competitive products on attractive
terms, or if these distributors are not
successful in their sales efforts, our
revenue may decrease and our operating
results, reputation and business may be
harmed.
The commercial success of our products will
depend in part upon the level of
reimbursement we receive from third parties
for the cost of our products to users.
The commercial success of any product will
depend, in part, on the extent to which
reimbursement for the costs of our products
and related treatments will be available
from third-party payors such as government
health administration authorities, private
health insurers, managed care programs, and
other organizations. Adequate third-party
insurance coverage may not be available for
us to establish and maintain price levels
that are sufficient for us to continue our
business or for realization of an
appropriate return on investment in product
development.
If we are unable to educate physicians on
the safe and effective use of our products,
we may be unable to achieve our expected
growth.
An important part of our sales process
includes the education of physicians on the
safe and effective use of our products.
There is a learning process for physicians
to become proficient in the use of our
products and it typically takes several
procedures for a physician to become
comfortable using the product. If a
physician experiences difficulties during an
initial procedure or otherwise, that
physician may be less likely to continue to
use our product, or to recommend it to other
physicians. It is critical to the success of
our commercialization efforts to educate
physicians on the proper use of the product,
and to provide them with adequate product
support during clinical procedures. It is
important for our growth that these
physicians advocate for the benefits of our
products in the broader marketplace. If
physicians are not properly trained, they
may misuse or ineffectively use our
products. This may also result in
unsatisfactory patient outcomes, patient
injuries, negative publicity or lawsuits
against us, any of which could have an
adverse effect on our business.
We depend on fewer suppliers for our
products and therefore we may be less able
to negotiate price terms with suppliers.
In recent years, pharmaceutical suppliers
have been subject to increasing
consolidation. As a result, a small number
of very large companies control a
significant share of the market. Many
healthcare organizations also have
consolidated to create larger healthcare
enterprises with greater market power. If
this consolidation trend continues, it could
reduce the size of our target market and
give the resulting enterprises greater
bargaining power, which may lead to a
decrease in the prices for our products and
services.
If third-party payors do not provide
adequate coverage and reimbursement for the
use of our products, our revenues will be
negatively impacted.
Our success in marketing our products
depends in large part on whether U.S. and
international government health
administrative authorities, private health
insurers and other organizations will
adequately cover and reimburse customers for
the cost of our products. In the United
States, a third-party payor?s decision to
provide coverage for our products does not
imply that an adequate reimbursement rate
will be obtained. Further, one third-party
payor?s decision to cover our products does
not assure that other payors will also
provide coverage for the products or provide
coverage at an adequate reimbursement rate.
Reimbursement systems in international
markets vary significantly by country and by
region within some countries, and
reimbursement approvals must be obtained on
a country-by-country basis. In many
international markets, a product must be
approved for reimbursement before it can be
approved for sale in that country. Further,
many international markets have government-
managed healthcare systems that control
reimbursement for new devices and
procedures. In most markets there are
private insurance systems as well as
government-managed systems. If sufficient
coverage and reimbursement is not available
for our current or future products, in
either the United States or internationally,
the demand for our products and our revenues
will be adversely affected.
We face heavy government regulation, and FDA
regulatory approval of our products is
uncertain.
The research, testing, manufacturing and
marketing of drug products such as those
that we are developing are subject to
extensive regulation by federal, state and
local government authorities, including the
FDA. To obtain regulatory approval of a
product, we must demonstrate to the
satisfaction of the applicable regulatory
agency that, among other things, the product
is safe and effective for its intended use.
In addition, we must show that the
manufacturing facilities used to produce the
products are in compliance with current Good
Manufacturing Practices regulations (cGMP).
The process of obtaining FDA and other
required regulatory approvals and clearances
will require us to expend substantial time
and capital. Despite the time and expense
expended, regulatory approval is never
guaranteed. The number of preclinical and
clinical trials that will be required for
FDA approval varies depending on the drug
candidate, the disease or condition that the
drug candidate is in development for, and
the requirements applicable to that
particular drug candidate. The FDA can
delay, limit or deny approval of a drug
candidate for many reasons, including that a
drug candidate may not be shown to be safe
or effective, the FDA may not approve our
manufacturing process, the FDA may interpret
data from preclinical and clinical trials in
different ways than we do, and the FDA may
not meet, or may extend, the Prescription
Drug User Fee Act date with respect to a
particular New Drug Application ("NDA").
For example, if certain of our methods for
analyzing our trial data are not accepted by
the FDA, we may fail to obtain regulatory
approval for our product candidates.
Moreover, if and when our products do obtain
marketing approval, the marketing,
distribution and manufacture of such
products would remain subject to extensive
ongoing regulatory requirements. Failure to
comply with applicable regulatory
requirements could result in warning
letters, fines, civil penalties,
injunctions, recall or seizure of products,
total or partial suspension of production,
refusal of the government to grant future
approvals, withdrawal of approvals, or
criminal prosecution.
Any delay or failure by us to obtain
regulatory approvals for our product
candidates could diminish competitive
advantages that we may attain and would
adversely affect the marketing of our
products. To date, we have not received
regulatory approval to market any of our
product candidates in any jurisdiction.
Following regulatory approval of any of our
drug candidates, we will be subject to
ongoing regulatory obligations and
restrictions, which may result in
significant expense and limit our ability to
commercialize our potential products.
With regard to our drug candidates, if any
are approved by the FDA or by another
regulatory authority, we are held to
extensive regulatory requirements over
product manufacturing, labeling, packaging,
adverse event reporting, storage,
advertising, promotion and record keeping.
Regulatory approvals may also be subject to
significant limitations on the indicated
uses or marketing of the drug candidates.
Potentially costly follow-up or post-
marketing clinical studies may be required
as a condition of approval to further
substantiate safety or efficacy, or to
investigate specific issues of interest to
the regulatory authority. Previously unknown
problems with the drug candidate, including
adverse events of unanticipated severity or
frequency, may result in restrictions on the
marketing of the drug, and could include
withdrawal of the drug from the market.
In addition, the law or regulatory policies
governing pharmaceuticals may change. New
statutory requirements may be enacted or
additional regulations may be enacted that
could prevent or delay regulatory approval
of our drug candidates. We cannot predict
the likelihood, nature or extent of adverse
government regulation that may arise from
future legislation or administrative action,
either in the United States or elsewhere. If
we are not able to maintain regulatory
compliance, we might not be permitted to
market our drugs and our business could
suffer.
We may in the future be subject to various
U.S. federal and state laws pertaining to
health care fraud and abuse, including anti-
kickback, self-referral, false claims and
fraud laws, and any violations by us of such
laws could result in fines or other
penalties.
If one or more of our product candidates is
approved, we will likely be subject to the
various U.S. federal and state laws intended
to prevent health care fraud and abuse. The
federal anti-kickback statute prohibits the
offer, receipt, or payment of remuneration
in exchange for or to induce the referral of
patients or the use of products or services
that would be paid for in whole or part by
Medicare, Medicaid or other federal health
care programs. Remuneration has been broadly
defined to include anything of value,
including cash, improper discounts, and free
or reduced price items and services. Many
states have similar laws that apply to their
state health care programs as well as
private payers. Violations of the anti-
kickback laws can result in exclusion from
federal health care programs and substantial
civil and criminal penalties.
The False Claims Act (FCA) imposes liability
on persons who, among other things, present
or cause to be presented false or fraudulent
claims for payment by a federal health care
program. The FCA has been used to prosecute
persons submitting claims for payment that
are inaccurate or fraudulent, that are for
services not provided as claimed, or for
services that are not medically necessary.
The FCA includes a whistleblower provision
that allows individuals to bring actions on
behalf of the federal government and share a
portion of the recovery of successful
claims. If our marketing or other
arrangements were determined to violate the
FCA or anti-kickback or related laws, then
our revenue could be adversely affected,
which would likely harm our business,
financial condition, and results of
operations.
State and federal authorities have
aggressively targeted medical technology
companies for alleged violations of these
anti-fraud statutes, based on improper
research or consulting contracts with
doctors, certain marketing arrangements that
rely on volume-based pricing, off-label
marketing schemes, and other improper
promotional practices. Companies targeted in
such prosecutions have paid substantial
fines in the hundreds of millions of dollars
or more, have been forced to implement
extensive corrective action plans or
Corporate Integrity Agreements, and have
often become subject to consent decrees
severely restricting the manner in which
they conduct their business. If we become
the target of such an investigation or
prosecution based on our contractual
relationships with providers or
institutions, or our marketing and
promotional practices, we could face similar
sanctions, which would materially harm our
business.
If we are found to have violated laws
protecting the privacy or security of
patient health information, we could be
subject to civil or criminal penalties,
which could increase our liabilities and
harm our reputation or our business.
There are a number of U.S. federal and state
laws and foreign laws protecting the privacy
and security of individually identifiable
health information, or "protected health
information" including patient records, and
restricting the use and disclosure of that
protected health information that we are
subject to. In the United States, the U.S.
Department of Health and Human Services
promulgated health information privacy and
security rules under the Health Insurance
Portability and Accountability Act of 1996
(HIPAA) and then significantly strengthened
and broadened the applicability of HIPAA
under the Health Information Technology for
Economic and Clinical Health Act (HITECH,
together HIPAA). HIPAA applies to health
care providers engaging in certain standard
transactions electronically; health plans
and health care clearing houses. These
entities are referred to as "covered
entities." Certain HIPAA provisions also
apply to "business associates" of covered
entities, or third party providers of
services to covered entities that involve
the use or disclosure of protected health
information. HIPAA?s privacy rules protect
medical records and protected health
information in all forms by limiting its use
and disclosure, giving individuals the right
to access, amend and seek accounting of
their own health information and limiting,
in some circumstances, the use and
disclosure of protected health information
to the minimum amount reasonably necessary
to accomplish the intended purpose of the
use or disclosure. HIPAA?s security
standards require both covered entities and
business associates to implement
administrative, physical and technical
security measures to maintain the security
of protected health information in
electronic form. Covered entities and
business associates must conduct initial and
ongoing risk assessments to ensure the
ongoing effectiveness of security measures
and maintain a written information security
plan. We are a covered entity and as such,
we must comply with HIPAA and ensure that
all aspects of our operations comply with
relevant HIPAA standards. We are subject to
random audit by federal authorities, and
enforcement by both state and federal
regulators. We are also subject to
investigation in response to complaints. If
we are found to be in violation of the HIPAA
requirements, we could be subject to civil
or criminal penalties as well as fines,
which could increase our liabilities and
harm our reputation or our business.
Beyond HIPAA, most states have adopted data
security laws protecting the personal data
of state residents. Personal data subject to
protection typically includes name coupled
with social security number, state-issued
identification number, or financial account
number. Most states require specific,
technical security measures for the
protection of all personal data, including
employee data, and impose their own breach
notification requirements in the event of a
loss of personal data. State data security
laws generally overlap and apply
simultaneously with HIPAA. Non-U.S. privacy
protection requirements such as the European
Union?s Data Protection Directive governing
the processing of personal data, may be
stricter than the U.S. law and violation
would impose similar or more severe
penalties. These laws could create liability
for us or increase our cost of doing
business, and any failure to comply could
result in harm to our reputation, and
potentially fines and penalties.
Healthcare legislative reform measures may
have a material adverse effect on our
business and results of operations.
In the United States, there have been and
continue to be a number of legislative
initiatives to contain healthcare costs. For
example, in March 2010, the Patient
Protection and Affordable Care Act, as
amended by the Health Care and Education
Reconciliation Act, or the Affordable Care
Act, was passed, which substantially changed
the way health care is financed by both
governmental and private insurers, and
significantly impacted the U.S.
pharmaceutical industry. The Affordable Care
Act, among other things, subjected biologic
products to potential competition by lower-
cost biosimilars, addressed a new
methodology by which rebates owed by
manufacturers under the Medicaid Drug Rebate
Program are calculated for drugs that are
inhaled, infused, instilled, implanted or
injected, increased the minimum Medicaid
rebates owed by manufacturers under the
Medicaid Drug Rebate Program and extended
the rebate program to individuals enrolled
in Medicaid managed care organizations,
established annual fees and taxes on
manufacturers of certain branded
prescription drugs, and a new Medicare
Part D coverage gap discount program, in
which manufacturers must agree to offer 50%
point-of-sale discounts off negotiated
prices of applicable brand drugs to eligible
beneficiaries during their coverage gap
period, as a condition for the
manufacturer?s outpatient drugs to be
covered under Medicare Part D.
We expect that additional state and federal
healthcare reform measures will be adopted
in the future, any of which could limit the
amounts that federal and state governments
will pay for healthcare products and
services, which could result in reduced
demand for our products or additional
pricing pressures, which would negatively
affect our business.
New product development involves a lengthy,
expensive and complex process.
We may be unable to develop or commercialize
any of the product candidates we are
currently researching. Moreover, even if we
develop such candidates, they may be subject
to significant regulatory review, approval
and other government regulations. We are
currently conducting research and
development on Eucontra for contraception.
There can be no assurance that our
technologies will be capable of reliably
addressing resistant infections or that we
can develop and commercialize our products
at all. New product development involves a
lengthy, expensive and complex process and
we currently have no fully validated
diagnostic candidates. In addition, before
we can commercialize any new product
candidates, we will need to conduct
substantial research and development,
conduct validation studies, expend
significant funds, develop and scale-up our
laboratory processes, and obtain regulatory
approval and acceptance of our product
candidates.
This process involves a high degree of risk
and takes several years. Our product
development efforts may fail for many
reasons, including failure of the product at
the research or development stage, and lack
of clinical validation data to support the
effectiveness of the product.
Few research and development projects result
in commercial products, and perceived
viability in early clinical trials often is
not replicated in later studies. At any
point, we may abandon development of a
product candidate or we may be required to
expend considerable resources repeating
clinical trials, which would adversely
impact the timing for generating potential
revenues from those product candidates. In
addition, as we develop product candidates,
we will have to make significant investments
in product development, marketing and sales
resources.
We may not be able to conduct clinical
trials necessary to commercialize and sell
our proposed products and formulations.
In order to conduct clinical trials that are
necessary to obtain approval by the FDA to
market a formulation or product, it is
necessary to receive clearance from the FDA
to conduct such clinical trials. The FDA can
halt clinical trials at any time for safety
reasons or because we or our clinical
investigators do not follow the FDA?s
requirements for conducting clinical trials.
If we are unable to receive clearance to
conduct clinical trials or the trials are
halted by the FDA, we would not be able to
achieve any revenue from such product as it
is illegal to sell any drug or medical
device for human consumption without FDA
approval. Moreover, it is our stated
intention to attempt to avail ourselves of
the FDA?s Fast Track approval procedure,
which we believe is less costly and time
consuming. If this approval pathway is not
available to us with respect to a particular
formulation or product, or at all, the time
and cost associated with developing and
commercializing such formulations or
products may be prohibitive and our business
strategy would be materially and adversely
affected.
Our long-term viability and growth will
depend upon successful clinical trials.
Product development is very expensive and
involves a high degree of risk. Only a small
number of research and development programs
result in the commercialization of a
product. Success in preclinical work or
early stage clinical trials does not ensure
that later stage or larger scale clinical
trials will be successful. Conducting
clinical trials is a complex, time-consuming
and expensive process. Our ability to
complete our clinical trials in a timely
fashion depends in large part on a number of
key factors including protocol design,
regulatory and institutional review board
approval, the rate of patient enrollment in
clinical trials, and compliance with
extensive current Good Clinical Practices.
In addition, if another Company is the first
to file for marketing approval of a
competing orphan drug candidate, that
Company may ultimately receive marketing
exclusivity for its drug candidate,
preventing us from commercializing our
orphan drug candidate in the applicable
market for several years.
We face significant competition from other
biotechnology and pharmaceutical companies.
We are aware of several companies that are
working to develop drugs that would compete
against our drug candidates. Many of our
existing or potential competitors have
substantially greater financial, technical
and human resources than we do and
significantly greater experience in the
discovery and development of drug
candidates, as well as in obtaining
regulatory approvals of those drug
candidates in the U.S. and in foreign
countries. Our current and potential future
competitors may also have significantly more
experience commercializing drugs that have
been approved for marketing. Mergers and
acquisitions in the pharmaceutical and
biotechnology industries could result in
even more resources being concentrated among
a small number of our competitors.
Competition may increase further as a result
of advances in the commercial applicability
of technologies and greater availability of
capital for investment in these industries.
Our competitors may succeed in developing,
acquiring or licensing, on an exclusive
basis, drug candidates that are more
effective or less costly than any drug
candidate that we may develop.
Our ability to compete successfully will
depend largely on our ability to discover,
develop and commercialize drugs that are
superior to other products in the market,
demonstrate through our clinical trials that
our drug candidates are differentiated from
existing and future therapies, attract
qualified scientific, product development
and commercial personnel, obtain patent or
other proprietary protection for our drugs
and technologies, obtain required regulatory
approvals, successfully collaborate with
pharmaceutical companies in the discovery,
development and commercialization of new
drugs, and negotiate competitive pricing and
reimbursement with third party payers
The availability of our competitors?
products could limit the demand, and the
price we are able to charge, for any drug
candidate we develop. The inability to
compete with existing or subsequently
introduced drug candidates would have a
material adverse impact on our business,
financial condition and prospects.
Established pharmaceutical companies may
invest heavily to accelerate discovery and
development of novel compounds or to in
license novel compounds that could make our
drug candidates less competitive. In
addition, any new product that competes with
an approved product must demonstrate
compelling advantages in efficacy,
convenience, tolerability and safety in
order to overcome price competition and to
be commercially successful. Accordingly, our
competitors may succeed in obtaining patent
protection, discovering, developing or
receiving FDA approval for or
commercializing medicines before we do,
which would have a material adverse impact
on our business.
Our research and development efforts may not
succeed in developing commercially
successful products and technologies, which
may limit our ability to achieve
profitability.
We must continue to explore opportunities
that may lead to new products and
technologies. To accomplish this, we must
commit substantial efforts, funds, and other
resources to research and development. A
high rate of failure is inherent in the
research and development of new products and
technologies. Any such expenditures that we
make will be made without any assurance that
our efforts will be successful. Failure can
occur at any point in the process, including
after significant funds have been invested.
Regardless of whether our clinical trials
are deemed to be successful, promising new
product candidates may fail to reach the
market or may only have limited commercial
success because of efficacy or safety
concerns, failure to achieve positive
clinical outcomes, inability to obtain
necessary regulatory approvals or satisfy
regulatory criteria, limited scope of
approved uses, excessive costs to
manufacture, the failure to establish or
maintain intellectual property rights, or
infringement of the intellectual property
rights of others.
Even if we successfully develop new products
or enhancements, they may be quickly
rendered obsolete by changing customer
preferences, changing industry standards, or
competitors? innovations. Innovations may
not be quickly accepted in the marketplace
because of, among other things, entrenched
patterns of clinical practice or uncertainty
over third-party reimbursement. We cannot
state with certainty when or whether any of
our products under development will be
launched, whether we will be able to
develop, license, or otherwise acquire drug
candidates or products, or whether any
products will be commercially successful.
Failure to launch successful new products or
new indications for existing products may
cause our products to become obsolete, which
may limit our ability to achieve
profitability.
Even if we are able to obtain regulatory
approvals for our new pharmaceutical
products, generic or branded, the success of
those products is dependent upon market
acceptance.
Levels of market acceptance for our new
products could be impacted by several
factors, including but not limited to: i)
the availability of alternative products
from our competitors, ii) the price of our
products relative to that of our
competitors, iii) the timing of our market
entry, iv) the ability to market our
products effectively to the retail level and
v) the acceptance of our products by
government and private entities. Some of
these factors are not within our control.
Additionally, continuing studies of the
proper utilization, safety and efficacy of
pharmaceutical products are being conducted
by the industry, government agencies and
others. Such studies, which increasingly
employ sophisticated methods and techniques,
can call into question the utilization,
safety and efficacy of previously marketed
products. In some cases, studies have
resulted, and may in the future result, in
the discontinuance of product marketing or
other risk management programs such as the
need for a patient registry. These
situations, should they occur, could have a
material adverse effect on our
profitability, business, financial position
and results of operations.
Our manufacturing activity is subject to
certain risks.
We may manufacture the products sold to our
customers in a location to be obtained in
the future. As a result, we may be dependent
upon the uninterrupted and efficient
operation of our manufacturing facility and
our distribution facilities throughout the
country. Our manufacturing facilities and
distribution facilities may be subject to
the risk of catastrophic loss due to, among
other things, earthquake, fire, flood,
terrorism or other natural or man-made
disasters, as well as occurrence of
significant equipment failures. If any of
these facilities were to experience a
catastrophic loss, it would be expected to
disrupt our operations and could result in
personal injury or property damage, damage
relationships with our customers or result
in large expenses to repair or replace the
facilities or systems, as well as result in
other liabilities and adverse impacts.
We contract with third-party manufacturers
to produce our products in accordance with
our specifications and standards. These
contract manufacturers are subject to the
same risks as our manufacturing facility as
noted above. While we have implemented
stringent quality control procedures to
verify that our contract manufacturers
comply with our specifications and
standards, we do not have full control over
their manufacturing activities. Any
difficulties, delays and defects in our
products resulting from the activities of
our contract manufacturers may have an
adverse effect on our business and results
of operations.
In addition, the occurrence of
manufacturing-related compliance issues
could require subsequent withdrawal of the
drug approval, reformulation of the drug
product, additional testing or changes in
labeling of the finished product. Any delay,
interruption or cessation of production by
our third-party manufacturers or strategic
partners of our commercial products or
product candidates, or their respective
materials and components, as a result of any
of the above factors or otherwise, may limit
our ability to meet demand for commercial
products and/or delay ongoing clinical
trials, either of which could have a
material adverse effect on our business,
results of operations and financial
condition.
We could experience difficulties and delays
in the manufacturing, distribution and sale
of our products.
Our product supply and related patient
access could be negatively impacted by,
among other things: (i) product seizures or
recalls or forced closings of manufacturing
plants; (ii) disruption in supply chain
continuity including from natural or man-
made disasters at one of our facilities or
at a critical supplier, as well as our
failure or the failure of any of our
suppliers to comply with Current Good
Manufacturing Practices and other applicable
regulations or quality assurance guidelines
that could lead to manufacturing shutdowns,
product shortages or delays in product
manufacturing; (iii) manufacturing, quality
assurance/quality control, supply problems
or governmental approval delays; (iv) the
failure of a sole source or single source
supplier to provide us with the necessary
raw materials, supplies or finished goods
within a reasonable timeframe; (v) the
failure of a third-party manufacturer to
supply us with bulk active or finished
product on time; (vi) construction or
regulatory approval delays for new
facilities or the expansion of existing
facilities, including those intended to
support future demand for our biologics
products; (vii) the failure to meet new and
emerging regulations requiring products to
be tracked throughout the distribution
channels using unique identifiers to verify
their authenticity in the supply chain; and
(viii) other manufacturing or distribution
issues, including limits to manufacturing
capacity due to regulatory requirements, and
changes in the types of products produced,
such as biologics, physical limitations or
other business interruptions, any of which
could have a negative effect on our business
and results of operations.
Increased concerns over the safety of our
products may result in negative publicity or
increased regulatory controls on our
products.
The Company?s reputation is the foundation
of our relationships with physicians,
patients and other customers. If we are
unable to effectively manage real or
perceived issues, which could negatively
impact sentiments toward the Company, our
business could suffer. Pharmaceuticals and
medical devices are perceived to be
dangerous products and our customers may
have a number of concerns about the safety
of our products whether or not such concerns
have a basis in generally accepted science
or peer-reviewed scientific research. These
concerns may be increased by negative
publicity, even if the publicity is
inaccurate. In addition, government
investigations related to the use of our
products, but not the efficacy of the
products themselves, may cause reputational
harm to the Company. Negative publicity
could also result in an increased number of
product liability claims, whether or not
these claims have a basis in scientific
fact.
We are also subject to adverse event
reporting regulations that require us to
report to the FDA or similar bodies in other
countries if our products are associated
with a death or serious injury, even if
there is no available evidence of a causal
relationship between the adverse event and
the product. Such reports may be publicly
released by the FDA and other authorities.
Furthermore, any adverse publicity
associated with adverse events for our
products, and related post-marketing
actions, could cause consumers to seek
alternatives to our products, and thereby
cause our sales to decline, even if our
products are ultimately determined not to
have been the primary cause of the adverse
event.
Pharmaceutical products can develop
unexpected safety or efficacy concerns,
which could have a material adverse effect
on our business.
Pharmaceutical products receive regulatory
approval based on data obtained in
controlled clinical trials of limited
duration. After approval, the products are
used for longer periods of time by much
larger numbers of patients; we and others
(including regulatory agencies and private
payers) collect extensive information on the
efficacy and safety of our marketed products
by continuously monitoring the use of our
products in the marketplace. In addition, we
or others may conduct post-marketing
clinical studies on efficacy and safety of
our marketed products. New safety or
efficacy data from market surveillance,
post-marketing clinical studies or general
use may result in product label changes,
product recalls, withdrawals, or declining
sales, as well as product liability,
consumer fraud and/or other claims,
including potential civil or criminal
governmental actions.
Product labeling changes for our marketed
products could result in a negative impact
on revenues.
We or regulatory authorities may need to
change the labeling for any pharmaceutical
product, including after a product has been
marketed for several years. These changes
are often the result of additional data from
post-marketing studies, head-to-head trials,
adverse events reports, studies that
identify biomarkers (objective
characteristics that can indicate a
particular response to a product or therapy)
or other studies or post-marketing
experience that produce important additional
information about a product. New information
added to a product?s label can affect its
risk-benefit profile, leading to potential
recalls, withdrawals, or declining revenue,
as well as product liability claims.
Sometimes additional information from these
studies identifies a portion of the patient
population that may be non-responsive to a
medicine or would be at higher risk of
adverse reactions and labeling changes based
on such studies may limit the patient
population. The studies providing such
additional information may be sponsored by
us, but they could also be sponsored by
competitors, insurance companies, government
institutions, managed care organizations,
scientists, investigators, or other
interested parties. While additional safety
and efficacy information from such studies
assist us and healthcare providers in
identifying the best patient population for
each product, it can also negatively impact
our revenues due to inventory returns and a
more limited patient population going
forward. Additionally, certain study
results, especially from head-to-head
trials, could affect a product?s formulary
listing, which could also adversely affect
our revenues.
We are dependent on our collaborative
agreements for the development of products
and business development, which exposes us
to the risk of reliance on the viability of
third parties.
In conducting our research and development
activities, we currently rely, and will in
the future rely, on collaborative agreements
with third parties such as manufacturers,
contract research organizations, commercial
partners, universities, governmental
agencies and not-for-profit organizations
for both strategic and financial resources.
The loss of, or failure to perform by us or
our partners under, any applicable
agreements or arrangements, or our failure
to secure additional agreements for other
products in development, would substantially
disrupt or delay our research and
development and commercialization
activities. Any such loss would likely
increase our expenses and materially harm
our business, financial condition and
results of operation.
We extensively outsource our clinical trial
activities and usually perform only a small
portion of the start-up activities in-house.
We rely on independent third-party contract
research organizations (CROs) to perform
most of our clinical studies, including
document preparation, site identification,
screening and preparation, pre-study visits,
training, program management and
bioanalytical analysis. Many important
aspects of the services performed for us by
the CROs are out of our direct control. If
there is any dispute or disruption in our
relationship with our CROs, our clinical
trials may be delayed. Moreover, in our
regulatory submissions, we rely on the
quality and validity of the clinical work
performed by third-party CROs. If any of our
CROs? processes, methodologies or results
were determined to be invalid or inadequate,
our own clinical data and results and
related regulatory approvals could be
adversely impacted.
Reliance on third-party relationships and
outsourcing arrangements could adversely
affect our business.
We utilize third parties, including
suppliers, alliances with other
pharmaceutical and biotechnology companies,
and third-party service providers, for
selected aspects of product development, the
manufacture and commercialization of certain
products, support for information technology
systems, and certain financial transactional
processes. For example, we may outsource the
day-to-day management and oversight of our
clinical trials to contract research
organizations and the manufacture of certain
of our products. Outsourcing these functions
involves the risk that the third parties may
not perform to our standards or legal
requirements, may not produce reliable
results, may not perform in a timely manner,
may not maintain the confidentiality of our
proprietary information, or may fail to
perform at all. Failure of these third
parties to meet their contractual,
regulatory, confidentiality, or other
obligations to us could have a material
adverse effect on our business.
Product liability claims could harm our
business.
The development, manufacture, testing,
marketing and sale of pharmaceutical
products are associated with significant
risks of product liability claims. Side
effects or adverse events known or reported
to be associated with, or manufacturing
defects in, the products sold by us could
exacerbate a patient?s condition, or could
result in serious injury or impairments or
even death. This could result in product
liability. Some of our products, including
Eucontra, will have boxed warnings in their
labels. Product liability claims may be
brought by individuals seeking relief for
themselves, or by groups seeking to
represent a class of injured patients.
Further, third party payers, either
individually or as a putative class, may
bring actions seeking to recover monies
spent on one of our products. As sales of
our products increase, the risk that product
liability claims will be made against us
increases. The risk of product liability
claims may also increase if a company
receives a warning letter from a regulatory
agency. We cannot predict the frequency,
outcome or cost to defend any such claims.
Product liability insurance coverage is
expensive, can be difficult to obtain and
may not be available to us in the future on
acceptable terms, or at all. Our product
liability insurance may not cover all of the
future liabilities we might incur in
connection with the development, manufacture
or sale of our products. In addition, we may
not continue to be able to obtain insurance
on satisfactory terms or in adequate
amounts. A successful claim or claims
brought against us in excess of available
insurance coverage could subject us to
significant liabilities and could have a
material adverse effect on our business,
financial condition, results of operations
and growth prospects. Such claims whether
meritorious or not could also harm our
reputation and the reputation of our
products, adversely affecting our ability to
market our products successfully. In
addition, defending a product liability
lawsuit is expensive and can divert the
attention of key employees from operating
our business.
In addition, product liability claims could
result in an investigation of the safety or
efficacy of our products, our manufacturing
processes and facilities, or our marketing
programs conducted by the FDA, the EMA, or
the competent authorities of the EU member
states. Such investigations could also
potentially lead to a recall of our products
or more serious enforcement actions,
limitations on the indications for which
they may be used, or suspension, variation,
or withdrawal of approval, any of which
would adversely affect our business.
If we are unable to negotiate and maintain
satisfactory arrangements with group
purchasing organizations with respect to the
purchase of our products, our business could
be adversely affected.
Our ability to sell our products to
hospitals in the United States depends in
part on our relationships with group
purchasing organizations, or GPOs. Many
existing and potential customers for our
products become members of GPOs. GPOs
negotiate pricing arrangements and
contracts, sometimes on an exclusive basis,
with medical supply manufacturers and
distributors. These negotiated prices are
then made available to a GPO?s affiliated
hospitals and other members. If we are not
one of the providers selected by a GPO,
affiliated hospitals and other members may
be less likely to purchase our products, and
if the GPO has negotiated a strict sole
source, market share compliance or bundling
contract for another manufacturer?s
products, we may be precluded from making
sales to members of the GPO for the duration
of the contractual arrangement. Our failure
to renew contracts with GPOs may cause us to
lose market share and could have a material
adverse effect on our sales, financial
condition and results of operations. We
cannot assure you that we will be able to
renew these contracts at the current or
substantially similar terms. If we are
unable to keep our relationships and develop
new relationships with GPOs, our competitive
position may suffer.
We are subject to complex government
healthcare legislation and reimbursement
programs, as well as other cost-containment
pressures.
Many of our products will be purchased or
reimbursed by federal and state government
authorities, private health insurers and
other organizations, including heath
maintenance and managed care organizations.
These third-party payers increasingly
challenge pharmaceutical and medical device
product pricing, which could result in lower
reimbursement rates and a reduction in
demand for our products.
In addition, legislative and regulatory
proposals and enactments to reform
healthcare insurance programs could
significantly influence the manner in which
pharmaceutical products, biologic products
and medical devices are prescribed and
purchased. Individual states have also
become increasingly aggressive in passing
legislation and implementing regulations
designed to control pharmaceutical product
pricing, including price or patient
reimbursement constraints, discounts,
restrictions on certain product access, and
to encourage importation from other
countries and bulk purchasing. Furthermore,
regional healthcare authorities and
individual hospitals are increasingly using
bidding procedures to determine what
pharmaceutical products and which suppliers
will be included in their prescription drug
and other healthcare programs. Any legally
mandated price controls or utilization of
bidding procedures could negatively and
materially impact our revenues, results of
operations and financial condition.
Increased pricing pressure and other
restrictions in the U.S. and abroad from
managed care organizations, institutional
Investors, and government agencies and
programs, among others, could negatively
affect our revenues and profit margins.
Our products continue to be subject to
increasing pressures from market access,
pricing and rebates and other restrictions
in the U.S., the EU and other regions around
the world, including from (i) rules and
practices of managed care organizations and
institutional and governmental Investors;
(ii) judicial decisions and governmental
laws and regulations for Medicare, Medicaid
and U.S. healthcare reform, including the
2010 Patient Protection and Affordable Care
Act; (iii) the potential impact of
pharmaceutical reimbursement, Medicare Part
D Formularies and product pricing in
general; (iv) delays in gaining
reimbursement; (v) government price erosion
mechanisms across Europe and in other
countries, resulting in deflation for
pharmaceutical product pricing; (vi)
collection delays in government-funded
public hospitals outside the U.S. (vii) the
impact on pricing from parallel trade across
borders; (viii) other developments in
technology and/or industry practices that
could impact the reimbursement policies and
practices of third-party payers; and (ix)
limited or blocked market access due to real
or perceived differences in value
propositions for our products compared to
competing products.
The illegal importation of counterfeit
products and pharmaceutical and medical
device products from countries where
government price controls or other market
dynamics result in lower prices may
adversely affect our sales and profitability
in the U.S. and other countries in which we
operate.
Foreign imports are illegal under current
U.S. law, with the sole exception of limited
quantities of prescription drugs imported
for personal use. However, the volume of
illegal imports continues to rise as the
ability of patients and other customers to
obtain these lower priced imports has grown
significantly. In addition, U.S. policy
makers may expand consumers? ability to
import lower priced versions of our products
and competing products from Canada, where
there are government price controls. Any
future legislation or regulations that
increase consumer access to lower priced
medicines from outside the U.S. may lower
the prices we receive for our products,
which could adversely impact our revenues.
BUSINESS
Description of the Business
Hera Health Solutions is a pharmaceutical
device company that specializes in the
development and commercialization of long
acting treatments through proprietary bio-
erodible implants.
Business Plan
Hera Health intends to sell its first
product, the contraceptive biodegradable
implant Eucontra, to OB/GYN practices as
well as family planning clinics in the U.S.
market. Internationally, the Company will
seek to sell to nonprofit organizations and
large-scale Non-Governmental Organizations
(NGOs) that distribute contraceptives to
countries with a limited access to
healthcare. It also intends to price
Eucontra at $800 per device, which the
Company believes is competitive with its
alternative, Nexplanon. The executive team
estimates a 98.5% gross margin for retail
sales but intends to heavily subsidize
Eucontra for bulk distribution to
humanitarian partners.
Hera Health aims to spread awareness for
Eucontra mainly through partnerships and
sponsorships within the OB/GYN and family
planning spaces, as well as with global
humanitarian organizations and healthcare
distributors who focus on areas related to
family planning and women?s health. If the
product is approved for use by the FDA, the
Company also plans to launch an extensive
commercial marketing campaign involving
sales representatives and media
advertisement. The Company?s domestic growth
plan also heavily involves broadening
professionals? knowledge of its technology
through trade shows and conferences.
Nationally, the Company has mapped out
potential conferences in the U.S. to attend
with the goal of further networking with key
opinion leaders on a national level in the
hopes of gaining additional endorsements for
its technology. The executive team will seek
to keep these connections engaged as the
Company continues to develop Eucontra and
fulfill the necessary regulatory
requirements for FDA approval.
History of the Business
The Company was incorporated on May 22, 2017
under the laws of Delaware. The idea for
Hera Health started as a biomedical
engineering capstone project at Georgia
Tech, where Bioengineering students were
given a task to locate and remove lost
implants in the arm. Along the way, the Hera
Health team developed a technology that
would eliminate the problem from ever
occurring in the first place. Now, the
Company?s goal is to provide a drug delivery
implant that could change the way people
take regimented medication all over the
world.
In May 2018, Hera Health participated in the
ZeroTo510 summer accelerator. The program is
a 100-day intensive, hands-on educational
program that speeds up the development of
high-tech, high-growth startup companies.
The accelerator focused on four industries
including home services, medical device,
supply chain and logistics, and Agricultural
technology and innovation.
The Company?s Products and/or Services
We are constantly researching and developing
new formulations of our products to move
into other long acting pharmaceutical
markets. The total addressable market for
long acting medications is $300 billion.
Proceeds from this raise will be used to
help the Company continue research and
development and undergo the Food and Drug
Administration approval process.
In the U.S., we intend to sell and
distribute our product as a pharmaceutical
device aligned with other contraceptive
products. Internationally, we intend to sell
the product through strategic non-profit
organization partnerships.
Competition
The Company?s primary competitors are Merck,
the Bayer Group, Allergan, and Cooper
Surgical. Similar competitive devices
include Nexplanon, Mirena, Skyla, Liletta,
and ParaGuard.
We believe our product is best suited to
directly address the removal issues
associated with the contraceptive arm
implant. Other forms of available long
acting contraceptive options on the market
include Nexplanon, IUDs, and the birth
control pill. We believe many of these other
options are either more invasive, less
effective, require a strict pill taking
regimen, and/or are not discreet. We intend
for the pricing of our product to be very
competitive compared to the other options
available in the market. Moreover, our
Company?s long-acting drug delivery platform
aims to move into other generic medications
in an industry valued at an estimated $300
billion industry.
Customer Base
We intended to market our product to OB/GYNs
with private practices, family planning
organizations, and/or midsize to large non-
profit organizations.
Intellectual Property
Patents
Governmental/Regulatory Approval and
Compliance
Our business has been and will continue to
be subject to the Food and Drug
Administration and various other U.S. laws
and regulations. Failure to comply with
these laws and regulations could subject us
to administrative and legal proceedings and
actions by these various governmental
bodies.
Litigation
There are no existing legal suits pending,
or to the Company?s knowledge, threatened,
against the Company.
Other
The Company?s principal address is 11141
Wellshire Ln., Frisco, TX 75035
The Company has the following additional
addresses: 88 Union Ave. Suite 200 Memphis,
TN 38103
The Company conducts business in Tennessee.
DIRECTORS, OFFICERS AND EMPLOYEES
Directors
The directors or managers of the Company are
listed below along with all positions and
offices held at the Company and their
principal occupation and employment
responsibilities for the past three (3)
years and their educational background and
qualifications.
Name
[Idicula Mathew ? CEO] [June 2016 ? Present]
Officers
The officers of the Company are listed below
along with all positions and offices held at
the Company and their principal occupation
and employment responsibilities for the past
three (3) years and their educational
background and qualifications.
Name
Idicula Mathew
All positions and offices held with the
Company and date such position(s) was held
with start and ending dates
Officer, June 13, 2017 to Present
President, Secretary and CEO, June 2017 to
Present
Principal occupation and employment
responsibilities during at least the last
three (3) years with start and ending dates
Idicula is currently the President and CEO
of Hera Health solutions. He has been CEO
since the Company?s inception, and his
responsibilities include providing vision,
leading business development, filling for
intellectual property, and the overall
commercialization of the Company?s product.
He has a background in product development
with a concentration in biotechnology
research, and he has prior startup
experience.
Education
Idicula obtained a Bachelor of Science
Degree in Bioengineering and Biomedical
Engineering from the Georgia Institute of
Technology.
Employees
The Company currently has four employees in
Tennessee.
Liquidity and Capital Resources
In July 2019 the Company started an offering
pursuant to Regulation CF, which was closed
in August 2019 raising $106,995.
The Company has the following sources of
capital in addition to the proceeds from the
Regulation CF Offering:
1. Innova Memphis- VC lead investor for
Series Seed round
2. BioExel- Series Seed Investor
3. Various investors ? Accredited Series
Seed Investors
Capital Expenditures and Other Obligations
The Company does not intend to make any
material capital expenditures in the near
future.
Material Changes and Other Information
Trends and Uncertainties
The financial statements are an important
part of this Form C-TR and should be
reviewed in their entirety. The financial
statements of the Company are attached
hereto as Exhibit A.
Restrictions on Transfer
Any Securities sold pursuant to Regulation
CF being offered may not be transferred by
any Investor of such Securities during the
one-year holding period beginning when the
Securities were issued, unless such
Securities were transferred: 1) to the
Company, 2) to an accredited investor, as
defined by Rule 501(d) of Regulation D of
the Securities Act of 1933, as amended, 3)
as part of an Offering registered with the
SEC or 4) to a member of the family of the
Investor or the equivalent, to a trust
controlled by the Investor, to a trust
created for the benefit of a family member
of the Investor or the equivalent, or in
connection with the death or divorce of the
Investor or other similar circumstances.
"Member of the family" as used herein means
a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse or spousal
equivalent, sibling,
mother/father/daughter/son/sister/brother-
in-law, and includes adoptive relationships.
Remember that although you may legally be
able to transfer the Securities, you may not
be able to find another party willing to
purchase them.
Bad Actor Disclosure
The Company is not subject to any Bad Actor
Disqualifications under any relevant U.S.
securities laws.
SIGNATURE
Pursuant to the requirements of
Sections 4(a)(6) and 4A of the Securities
Act of 1933 and Regulation Crowdfunding (?
227.100 et seq.), the issuer certifies that
it has reasonable grounds to believe that it
meets all of the requirements for filing on
Form C-TR and has duly caused this Form to
be signed on its behalf by the duly
authorized undersigned.
The issuer also certifies that the
attached financial statements are true and
complete in all material respects.
_______________________________
(Signature)
Idicula Mathew
(Name)
CEO
(Title)
Pursuant to the requirements of
Sections 4(a)(6) and 4A of the Securities
Act of 1933 and Regulation Crowdfunding (?
227.100 et seq.), this Form C-TR has been
signed by the following persons in the
capacities and on the dates indicated.
(Signature)
Idicula Mathew
(Name)
President & Director
(Title)
4/28/2021
(Date)
https://www.marketwatch.com/press-release/injectable-drug-delivery-
market-2018-in-depth-analysis-by-types-key-players-applications-
growth-factors-trend-forecast-2025-2018-10-30
https://www.marketwatch.com/press-release/injectable-drug-delivery-
market-2018-in-depth-analysis-by-types-key-players-applications-
growth-factors-trend-forecast-2025-2018-10-30
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