AINOS, INC. The following discussion should be read in conjunction with our financial statements and the notes thereto which appear elsewhere in this report. The results shown herein are not necessarily indicative of the results to be expected in any future periods.
OVERVIEW The Company
The Company currently has offices in
Our Divisions
A. Our Pharmaceutical Division is dedicated to the research and development
of drug therapeutics that support the human immune system and address
persistent diseases.
VELDONA (Very Low-Dose Oral Interferon Alpha)
We seek to leverage our extensive library of clinical research by applying the Company's research in the use of low-dose non-injectable interferon (IFN) for the treatment of neoplastic, viral, and fibrotic diseases. The company's core pharmaceutical drug development program, VELDONA (Very Low-Dose Oral Interferon Alpha), boasts the most comprehensive library of scientific clinical data for low-dose non-injectable interferon, having completed more than 100 pre-clinical animal and human studies over several decades that support its safety and efficacy.
VELDONA is a late stage drug development program based on over 30 years of clinical trial research on low-dose non-injectable interferon alpha that has shown to be exceptionally effective against numerous human disease indications such as influenza, Sjögren's syndrome, hepatitis C, thrombocytopenia, HIV, SARS and other conditions ranging from genital warts to canker sores. The drug's unique mechanism of action has a multitude of treatment applications, in that it is not just directed against a single disease or viral infection, but rather it activates the body's immune system to achieve the effect of fighting against numerous viruses.
Interferons are a family of natural occurring proteins that can be used to treat many diseases that involve the immune system. Interferon-alpha (IFN-?) is a key modulator in our innate immune response to viral infection. Almost every cell in the body can produce interferon when under attack, but interferon seems to be especially important in the cells that form the frontline defense with the outside world, such as the oral and nasal mucosa. Its anti-viral effects include inhibition of viral replication, destruction of virus-infected cells, and activation of other, important immune cells. IFN-? also has anti-proliferative effects which can be targeted at rapidly spreading viruses or rapidly dividing cancer cells.
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Since interferons enhance the immune system in many ways, they are used for many diseases that involve the immune system. For example:
· Interferon alfa-2a (Roferon-A) is approved by the U.S. FDA to treat hairy
cell leukemia, AIDS-related Kaposi's sarcoma, and chronic myelogenous
leukemia;
· Interferon alfa-2b is approved by the U.S. FDA for the treatment of hairy
cell leukemia, malignant melanoma, condylomata acuminata, AIDS-related
Kaposi's sarcoma, chronic hepatitis C, and chronic hepatitis B;
· Ribavirin is also combined with interferon alfa-2b, interferon alfacon-1
(Infergen), pegylated interferon alfa-2b, or pegylated interferon
alpha-2a, all are approved by the U.S. FDA for the treatment of chronic
hepatitis C.: and
· Interferon beta-1a, currently in use to treat multiple sclerosis, and
interferon alfa-2b are both under investigation as potential treatments
for people with COVID-19 coronavirus disease, the deadly respiratory
pandemic caused by the SARS-nCoV-2 virus.
In respect to its VELDONA program, the Company owns three (3) patents issued in
the
· "Treatment of Thrombocytopenia Using Orally Administered Interferon" as
described and claimed in U.S. Patent No. 9,526,694 B2 issued December 27,
2016 , Owned. Expiration: April 2033 .
· "Treatment of Thrombocytopenia Using Orally Administered Interferon" as
described and claimed in U.S. Patent No. 9,750,786 B2 issued September 5,
2017 , Owned. Expiration: April 2033 .
· "Treatment of Thrombocytopenia Using Orally Administered Interferon" as
described and claimed in U.S. Patent No. 9,839,672 B2 issued December 12,
2017 , Owned. Expiration: April 2033 .
· "Treatment of Thrombocytopenia Using Orally Administered Interferon" as
described and claimed in TAIWAN Patent No. I592165 issued July 21, 2017 ,
Owned. Expiration: May 2033 .
The Company continues to seek to expand its patent licensing and
commercialization opportunities for VELDONA with global partners. The Company's
licensing, development and commercialization of its VELDONA patents and research
library are subject to approval by the FDA and other regulatory agencies in the
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B. Our Medical Division focuses on research and development of novel therapy
protocols and medical devices.
SMART (Simultaneous Metabolic Activation & Restoration Therapy)
Current diabetes treatments aim to control blood glucose levels, but do not address the underlying metabolic features of the disease. We believe that diabetes treatment must go beyond "glucose control." Our SMART therapy focuses on a protocol-based pulsatile insulin infusion (PII) treatment that mimics the normal pancreas' functions in stimulating the liver and essentially all cells in the body to process carbohydrates normally
In
Based on the clinical data derived from its research pilot testing, the Company
developed a proprietary infusion therapy and a novel pulsatile insulin pump in
· SMART Initial Patient Screening for HbA1c, fasting blood glucose,
pro-insulin, insulin, hsCRP, and adiponectin levels and assessment of
diabetic complications- peripheral neuropathy, nephropathy, retinopathy as
part of a comprehensive diagnostics, health history, genetic and physical
examinations;
· SMART Pancreas Rescue Protocol involving doses of Insulin glargine
Pioglitazone +/- GLP-1 agonist or SGLT-2 inhibitor if needed for weight
loss;
· SMART Pulsatile Insulin Therapy consisting of applying its pulsatile pump
for out-patient users along with certain IV supplement for metabolic
efficiency; and
· SMART Lifestyle Coaching that encourages physical activity through
training and monitoring, and involves nutritional counseling.
In respect to its SMART Pulsatile Pump, the Company owns three (3) patents
issued in
· "SMART DRUG INJECTION DEVICE" as described and claimed in TAIWAN invention
patent application number 108137797, Owned, Issued: November 27, 2020 ,
Expiration: October 18, 2039 .
· "SMART DRUG INJECTION DEVICE" as described and claimed in TAIWAN design
utility model patent application number 108213819, Owned, Issued: December
12, 2019 , Expiration: November 11, 2038 .
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· "SMART DRUG INJECTION DEVICE" as described and claimed in CHINA design
utility model patent application number 201921808292.6, Owned, Issued:
July 28, 2020 , Expiration: June 27, 2039 .
· "SMART DRUG INJECTION DEVICE" as described and claimed in CHINA invention
patent application number 201911024619.5, Pending.
· "SMART DRUG INJECTION DEVICE" as described and claimed in US invention
patent application number 17/069,418, Pending.
The Company expects to continue pilot testing of its Pulsatile Pump and
proprietary diabetes therapies as preparation for FDA and regulatory approvals
in
Ainos SARS-CoV-2 Antigen Rapid Test Kit ("Covid-19 Test Kit")
The Company entered into an exclusive agreement on
On
The Covid-19 Test Kit uses an antigen rapid test technology jointly developed by
Taiwan's
Other Point-of-care Testing ("POCT") Rapid Test Kit Products
In addition to the Ainos COVID-19 (SARS CoV2 Antigen Rapid Test), the Company plans to jointly develop, sell, and/or market other rapid test kit products with a focus on diagnostic medical devices to detect pneumonia, vaginal infection and helicobacter pylori (H. pylori) bacterial infection.
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We expect that the following five (5) Patent Assets assigned to the Company by Ainos KY at the consummation of the Ainos transaction will form the basis for the next generation of the Company's rapid test kit products:
· A GAS SENSOR AND MANUFACTURE METHOD THEREOF as described and claimed in
TAIWAN invention patent number I565944.
· MEDICAL VENTILATOR CAPABLE OF ANALYZING INFECTION AND BACTERIA OF
PNEUMONIA VIA GAS IDENTIFICATION as described and claimed in TAIWAN
invention patent number I565945.
· GAS DETECTOR as described and claimed in TAIWAN invention patent number
D183554.
· MEDICAL VENTILATOR CAPABLE OF ANALYZING INFECTION AND BACTERIA OF
PNEUMONIA VIA GAS IDENTIFICATION as described and claimed in Japan Patent
No.: JP 6392811 B2. The Company is granted exclusive license rights in
Japan from January 1, 2021 to December 31, 2028 .
· GAS DETECTOR as described and claimed in CHINA invention patent number CN
304042244 S. The Company is granted exclusive license rights in China from
January 1, 2021 to December 31, 2028 .
The Company's development and commercialization of its rapid test kit products
are subject to approval by the FDA and other regulatory agencies in the
C. Our Consumer Division is dedicated to sales and marketing of consumer
health products and internet-based and smart phone-based health monitoring
applications
Liposomal Nutraceuticals
We continue our sales activities of liposomal nutraceuticals and food supplements that include Vitamin C, Glutathione, CoQ10, Curcumin/Resveratrol, DHA, and a Multi-Vitamin.
The Company has elected to discontinue its prior efforts in developing oral
health supplements in order to allocate resources to more commercially
profitable consumer health products and has not extended the following patent:
"COMPOSITION AND METHOD FOR PROMOTING ORAL HEALTH" as described and claimed in
Ainos Smartphone Monitoring App
The Company has developed a consumer-friendly, smartphone-based tracking function that can be used in conjunction with the Ainos SARS-CoV-2 Antigen Rapid Test Kit. Our application enables test results from our rapid test kits to be accessible through a QR code. The QR Code scans the test kit and stores each test kit's unique ID. We expect this easy to use feature will assist consumers with monitoring, tracking, and validation of their health status, while assisting government public health authorities with data collection and surveillance of outbreaks.
On
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Pursuant to the Ainos Agreement, the Company acquired certain patent assets (the
"Patent Assets") by issuing 100,000,000 shares of common stock (the "Shares")
valued at
The foregoing description of the Ainos Agreement is not complete and is
qualified in its entirety by the text of the agreement, which is included as
Exhibit 2.1 to the Form 8-K filed by the Company with the
On
Patents and Proprietary Rights
Since inception, the Company has worked to build an extensive patent portfolio
for the medical diagnosis and treatment of persistent diseases. This portfolio
consists of patents with claims that encompass method of use or treatment,
and/or composition of matter and manufacturing. As listed in this Overview
section, the Company presently owns eleven (11) issued patents with two patents
pending and license rights in
Cost of Compliance with Environmental Regulations
The Company incurred no costs to comply with environment regulations during the timeframe of this report.
United States Regulation
Before products with health claims can be marketed in
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In general, before any ethical pharmaceutical product can be marketed in
• Preclinical laboratory and animal tests; • Submission of an investigational new drug application, or IND, which must
become effective before human clinical trials may begin; • Adequate and well-controlled human clinical trials to establish the safety
and efficacy of the proposed drug for its intended use; • Pre-approval inspection of manufacturing facilities and selected clinical
investigators;
• Submission of a New Drug Application (NDA) to the FDA; and
FDA approval of an NDA, or of an NDA supplement (for subsequent indications • or other modifications, including a change in location of the manufacturing
facility).
Substantial financial resources are necessary to fund the research, clinical trials, and related activities necessary to satisfy FDA requirements or similar requirements of state, local, and foreign regulatory agencies. At such time as the Company undertakes to commercialize any of its products, all necessary preclinical testing, clinical trials, data review, and approval steps will be judiciously executed to insure that the product satisfies all regulatory requirements at all levels.
505(b)(2)
The Company has historically followed and will continue to follow the traditional approval process for New Drugs as set out in Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act. If an alternative path to FDA approval for new or improved formulations of previously approved products is scientifically and economically feasible and beneficial to the Company and the public, the Company may choose to follow this alternative path as established by section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act. This section of the Act permits the applicant to rely on certain preclinical or clinical studies conducted for an approved product as some of the information required for approval and for which the applicant has not obtained a right of reference. The process of approval under 505(b)(2) will be followed as judiciously as 505(b)(1) or any regulation.
Orphan Drug Designation
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs
intended to treat a rare disease or condition, which is generally a disease or
condition that affects fewer than 200,000 individuals in
Similarly, substantial financial resources are necessary to fund the research, design, testing, fabrication and related activities necessary to satisfy FDA requirements or similar requirements of state, local, and foreign regulatory agencies for medical devices. The Company may seek to obtain FDA clearance for the sales, marketing, and use of its novel pulsatile insulin pump for the U.S. market after obtaining FDA approvals under one of the following regulatory approvals:
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Premarket Notification 510(k)
Each person who intends to market in the
If the Company's novel pulsatile insulin pump is determined to be similar to one
already cleared for the U.S. market, the Company will seek FDA clearance under
510(k) at least 90 days before the device is marketed. A 510(k) application
requires demonstration of substantial equivalence to another legally
Premarket Approval (PMA)
Alternatively, if the Company's device is deemed to be completely new to the U.S. market or classified as a Class III device, the Company will be required to apply for PMA approval. The Medical Device Amendments of 1976 to the FD&C Act established three regulatory classes for medical devices. The three classes are based on the degree of control necessary to assure that the various types of devices are safe and effective. The most regulated devices are in Class III. The amendments define a Class III device as one that supports or sustains human life or is of substantial importance in preventing impairment of human health or presents a potential, unreasonable risk of illness or injury.
Under Section 515 of the FD&C Act, all devices placed into Class III are subject to premarket approval requirements. Premarket approval by FDA is the required process of scientific review to ensure the safety and effectiveness of Class III devices.
Foreign Regulation
In addition to regulations in
The policies of the FDA and foreign regulatory authorities may change and
additional government regulations may be enacted which could prevent or delay
regulatory approval of investigational drugs or approval of new diseases for
existing products and could also increase the cost of regulatory compliance. It
is not possible to predict the likelihood, nature or extent of adverse
governmental regulation that might arise from future legislative or
administrative action, either in
Research and Development
During the quarter ended
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Employees and Consultants
Following the consummation of the Ainos transaction, the Company retained key
personnel in its
· Lawrence Lin through his firm, i2China Management Group, LLC , continues to
serve as Executive Advisor to the Company.
· John Junyong Lee , Esq. continues to serve as Chief Legal Counsel and
Corporate Secretary.
· Chrystal Shelton continues to serves as Administration Manager.
The Company is actively interviewing executives to assist it achieve profitability through an expansion of its product and service lines and market reach. To facilitate this expansion the Company elected to not renew certain employment relationships to enable it to make strategic hiring decisions as follows:
· Stephen T. Chen's employment with the Company as Chief Executive Officer
(CEO), President and Chief Operating Officer (COO), and Chief Financial
Officer (CFO) expired on April 15, 2021 , and was not renewed. Dr. Chen
resigned as Chairman of the Board, and Board director on April 15, 2021 .
· Bernard Cohen's employment with the Company as Vice President -
Administration (VP-Admin) expired on April 5, 2021 , and was not renewed.
· Maggie Wang's employment with the Company as Director of Business
Development and manager of the Company's Taiwan Branch expired on April
30, 2021 , and was not renewed.
Results of Operations for Quarter Ended
Revenues. The Company reported revenue for the quarter ended
Research and Development Expenses. There was no R&D activity in the second
quarter of 2021 compared to
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were
Operating Loss. The Company's operating loss was
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Interest Expense. During the three months ended
Net Loss. Net loss attributable to common shareholders was
Results of Operations for the Six Months Ended
Revenues. The total revenue recognized from the sale of nutraceuticals and
Covid-19 Test Kits in
Cost of Revenues. Cost of sales for the six months ended
Research and Development Expenses. There was no R&D activity for the six months
ended
Selling, General and Administrative Expenses. Selling, general and
administrative expenses of
Operating Loss. In the six month period ended
Interest Income and Expense. Interest expense, net was
Net Loss. The Net Loss for the first half of 2021, increased to
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Liquidity and Capital Resources
As of
The Company continues to develop and establish new revenue streams to become,
and maintain, the position of a profitable going concern. Our major areas of
focus are (1) to continue to leverage the Company's core technology, the
development and application of low-dose non-injectable interferon, (2) to
commercialize its metabolic restoration therapy for the treatment of diabetes
and other metabolic diseases, and (3) as a result of the Securities Purchase
Agreement transaction, leverage newly-integrated staffing and capital resources
to quickly develop, license and commercialize a scheduled pipeline of medical
diagnostic products, beginning with the sales of Covid-19 Test Kits in
There can be no assurance that we will be successful in our efforts to make the
Company profitable. If those efforts are not successful, we will evaluate our
need to obtain working capital financial assistance from Ainos KY, of up to
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