NVUS 2018 Annual Report

Risks Related to Our Operations We have incurred significant operating losses since our inception and expect that we will continue to incur losses over the next several years and may never achieve or maintain profitability. We have incurred significant annual net operating losses in every year since our inception. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. If OP0201 or any future product candidates we develop are not successfully developed and approved, we may never generate any revenue from sales of products. The Company has experienced net losses and negative cash flows from operating activities since its inception. The &RPSDQ\¶V net loss for the year ended December 31, 2018 is $14.1 million and the Company has an accumulated deficit of $41.6 million. We have not generated any revenues from product sales, have not completed the development of any product candidate and may never have a product candidate approved for commercialization. We expect it will be several years, if ever, before we have a product candidate ready for commercialization. We have financed our operations to date primarily through sales of equity. We have devoted substantially all of our financial resources and efforts to research and development, including pre-clinical studies and our clinical trials. Our net losses may fluctuate significantly from quarter to quarter and year to year and will depend, in part, on the rate at which we incur expenses and our ability to generate revenue. Net losses and negative cash flows have had, and ZLOO FRQWLQXH WR KDYH DQ DGYHUVH HIIHFW RQ RXU VWRFNKROGHUV¶ HTXLW\ DQG ZRUNLQJ capital. We are focused primarily on developing OP0201 as a potential first-in-class treatment option for patients at risk for or with otitis media (OM) (middle ear inflammation with or without infection). Although we have successfully manufactured a current Good Manufacturing Procedures (cGMP) batch of OP0201 drug product suitable for clinical trials, this was done on a smaller scale, and we may have difficultly scaling up manufacturing in a timely and cost-effective manner. We are currently conducting four clinical trials to explore the safety, tolerability, and potential efficacy of OP0201. Upon completion of these clinical studies, we intend to initiate phase 2 and phase 3 studies, with an initial focus on a development program that, if successful, will lead to registration of OP0201 in North America and key European markets as a product to treat OM and prevent OM in children. We expect that it will be several years, if ever, before we have a product candidate ready for commercialization. If we are unable to successfully generate clinical data for the OP0201 program, we may have greater difficulty raising additional capital on favorable terms, or at all. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses that we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially if and as we: x continue formulation development of our product candidates; x continue device development for our drug-device product candidates; x continue nonclinical and clinical development of our product candidates; x seek to identify and acquire additional product candidates; x acquire or in-license other products and technologies; x enter into collaboration arrangements with regards to product discovery or development; x develop manufacturing processes; x seek marketing approvals for any of our product candidates that successfully complete clinical trials; x establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; x maintain, expand and protect our intellectual property portfolio; x hire additional personnel; x add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and x operate as a public company. To become and remain profitable, we must develop and eventually commercialize a product or products with significant market potential. This will require us to be successful in a range of challenging activities, including completing

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