As filed with the Securities and Exchange Commission on January 29, 2016

Registration No. 333-207297

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



 

Amendment No. 4 to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



 

PLX PHARMA INC.

(Exact name of registrant as specified in its charter)



 

   
Delaware   2834   38-3976588
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

8285 El Rio Street, Suite 130
Houston, Texas 77054
(713) 842-1249

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)



 

Natasha Giordano
President and Chief Executive Officer
PLx Pharma Inc.
8285 El Rio Street, Suite 130
Houston, Texas 77054
(713) 842-1249

(Name, address, including zip code, and telephone number, including area code, of agent for service)



 

Copies to:

 
Michael L. Laussade
Jackson Walker L.L.P.
2323 Ross Avenue, Suite 600
Dallas, TX 75201
Phone: (214) 953-5805
FAX: (214) 661-6887
  Barry I. Grossman, Esq.
Benjamin S. Reichel, Esq.
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas
New York, NY 10105
Phone: (212) 370-1300
FAX: (212) 370-7889


 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 
Large accelerated filer o   Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)   Smaller reporting company o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 


 
 

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, Dated January 29, 2016

Preliminary Prospectus

3,800,000 Shares

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Common Stock



 

This is the initial public offering of shares of common stock of PLx Pharma Inc.

We are offering 3,800,000 shares of our common stock. Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $17.00 and $19.00. We have applied to list our common stock on the NASDAQ Capital Market under the trading symbol “PLXP.”

We are an “emerging growth company” under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.

Investing in our common stock involves a high degree of risk. See “Risk factors” beginning on page 12.



 

   
  Per Share   Total
Initial public offering price   $          $       
Underwriting discounts and commissions (1)   $     $  
Proceeds, before expenses, to PLx Pharma   $          $       


 
(1) See “Underwriting” for additional disclosure regarding underwriting discounts, commissions and expenses.

The underwriters may purchase up to an additional 570,000 shares from us at the initial public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares on            , 2016.



 

   
RAYMOND JAMES          
            
     MAXIM GROUP LLC     
            
          JANNEY MONTGOMERY SCOTT


 

The date of this prospectus is            , 2016


 
 

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TABLE OF CONTENTS

TABLE OF CONTENTS

 
PROSPECTUS SUMMARY     1  
SUMMARY FINANCIAL DATA     11  
RISK FACTORS     12  
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS     43  
MARKET, INDUSTRY AND OTHER DATA     45  
USE OF PROCEEDS     46  
DIVIDEND POLICY     47  
CAPITALIZATION     48  
DILUTION     49  
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     51  
BUSINESS     58  
MANAGEMENT     104  
EXECUTIVE COMPENSATION     112  
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS     119  
PRINCIPAL STOCKHOLDERS     121  
DESCRIPTION OF CAPITAL STOCK     123  
SHARES ELIGIBLE FOR FUTURE SALE     127  
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS     129  
UNDERWRITING     134  
LEGAL MATTERS     140  
EXPERTS     140  
ADDITIONAL INFORMATION     140  

Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is accurate only as of its date regardless of the time of delivery of this prospectus or of any sale of common stock.

Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons who come into possession of this prospectus and any free writing prospectus related to this offering in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus and any such free writing prospectus applicable to that jurisdiction.

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before deciding to invest in our common stock, you should read this entire prospectus carefully, including the sections of this prospectus entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes contained elsewhere in this prospectus. Unless the context otherwise requires, references in this prospectus to the “Company,” “PLx,” “we,” “us” and “our” refer to PLx Pharma Inc.

Overview

We are a late-stage specialty pharmaceutical company initially focused on developing our clinically validated and patent-protected PLxGuardTM delivery system to provide safer and more effective aspirin products. Our PLxGuardTM delivery system works by releasing active pharmaceutical ingredients into the duodenum, the first part of the small intestine immediately below the stomach, rather than in the stomach itself. We believe this improves the absorption of many drugs currently on the market or in development, and reduces acute gastrointestinal (GI) side effects — including erosions, ulcers and bleeding — associated with aspirin and ibuprofen, and potentially other drugs.

Our U.S. Food and Drug Administration (FDA) approved lead product, PL2200 Aspirin 325 mg, is a novel formulation of aspirin that uses the PLxGuardTM delivery system to significantly reduce acute GI side effects while providing superior antiplatelet effectiveness for cardiovascular disease prevention as compared with the current standard of care, enteric coated aspirin. A companion 81 mg dose of the same novel formulation — PL2200 Aspirin 81 mg — is in late-stage development and will be the subject of a supplemental New Drug Application (sNDA) leveraging the already approved status of PL2200 Aspirin 325 mg.

Our commercialization strategy will target both the over-the-counter (OTC) and prescription markets, taking advantage of the existing OTC distribution channels for aspirin while leveraging the FDA approval of PL2200 Aspirin 325 mg and expected approval for PL2200 Aspirin 81 mg for OTC and prescription use when recommended by physicians for cardiovascular disease treatment and prevention. Given our clinical demonstration of better antiplatelet efficacy (as compared with enteric coated aspirin) and better acute GI safety, we intend to use a physician-directed sales force to inform physicians — and, by extension, consumers — about our product’s clinical results in an effort to command both greater market share and a higher price for our superior aspirin product. Our product pipeline also includes other oral nonsteroidal anti-inflammatory drugs (NSAIDs) using the PLxGuardTM delivery system that may be developed, including a clinical-stage, GI-safer ibuprofen — PL1200 Ibuprofen 200 mg — for pain and inflammation.

PLxGuardTM Delivery System

Our PLxGuardTM delivery system uses surface acting lipids, such as phospholipids and free fatty acids, to modify the physiochemical properties of various drugs to selectively release these drugs to targeted portions of the GI tract. Unlike tablet or capsule polymer coating technologies (e.g., enteric coating), which rely solely on drug release based on pH differences in the GI tract, the PLxGuardTM system uses the differential in pH and bile acid contents between the stomach and duodenum to target PL2200’s release. This approach is intended to more reliably release active pharmaceutical ingredients in the duodenum and decrease their exposure to the stomach, which is more susceptible to NSAID-induced bleeding and ulceration. The PLxGuardTM system is a platform technology that we believe may be useful in improving the absorption of many acid labile, corrosive, and insoluble or impermeable drugs.

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We believe our PLxGuardTM delivery system has the potential to improve many already-approved drugs and drugs in development because it may:

enhance the efficacy of the drug using our technology;
improve the GI safety of the drug;
provide new or extended patent protection for an already-approved or development-stage drug: and
utilize the 505(b)(2) New Drug Application (NDA) regulatory path, which may provide a faster and lower-cost FDA approval route when used with already-approved drugs.

The PLxGuardTM delivery system has clinically proven these benefits with our novel formulations using aspirin and ibuprofen and has preclinical evidence supporting the potential for a GI-safer oral diclofenac and intravenous indomethacin products. Other existing or new drugs in development that may benefit from the PLxGuardTM delivery system will be evaluated either by us or through collaboration agreements with other companies.

Product Pipeline

Our lead product, PL2200 Aspirin 325 mg, is approved by the FDA for OTC distribution and is the first-ever FDA-approved liquid-fill aspirin capsule. All the clinical trials necessary for product launch have been completed. In clinical trials in diabetic patients at risk for cardiovascular disease, PL2200 Aspirin 325 mg demonstrated better antiplatelet efficacy compared with enteric coated aspirin, which is the current standard of care for cardiovascular disease prevention and treatment. PL2200 325 mg delivers faster antiplatelet efficacy than enteric coated aspirin with a median time to 99% inhibition of serum Thromboxane B2 of two hours compared with 48 hours for enteric coated aspirin. Serum Thromboxane B2 is a clinically accepted marker for antiplatelet efficacy (sometimes referred to as “aspirin response”).

PL2200 Aspirin 325 mg provides more reliable, predictable and sustained antiplatelet benefits than enteric coated aspirin with a 3 – 5 times greater chance of a complete aspirin antiplatelet effect than enteric coated aspirin. PL2200 Aspirin 325 mg has demonstrated a statistically significant 65% reduction in the risk of acute ulcers compared with immediate release aspirin in healthy subjects with an age associated risk for cardiovascular disease. This acute GI safety benefit may also be important for acute coronary syndrome (ACS) patients. Moreover, we believe ACS patients who are also diabetics and suffer from gastroparesis, or a lack of digestive stomach motility, could also benefit from PL2200 Aspirin due to its more predictable absorption when compared to enteric coated aspirin. The acute GI safety benefit may also be used to differentiate PL2200 Aspirin 325 mg from products intended for use in conditions associated with pain and inflammation, including other aspirin and NSAID products.

PL2200 Aspirin 81 mg is our lower-dose companion product for PL2200 Aspirin 325 mg (the two dose forms are often referred to in this prospectus collectively as “PL2200 Aspirin”). This product utilizes exactly the same formulation as the 325 mg product (except delivered in a capsule one quarter the size) and will be the subject of an sNDA, which we expect to file with the FDA early in the second half of 2016. We will rely on the clinical results for PL2200 Aspirin 325 mg for the PL2200 81 mg sNDA and do not anticipate any additional clinical trials will be required, effectively positioning this product as an end of Phase 3 status. (For a more detailed explanation of clinical trial phases, see the discussion below under “Business — Government regulation —  Clinical trials.”)

We believe our technology may be used with other selected NSAIDs, such as ibuprofen. For the U.S. OTC market, we have used the PLxGuardTM delivery system to create a lipid-based formulation of ibuprofen, PL1200 Ibuprofen 200 mg and a 400 mg product for prescription doses of ibuprofen. We have OTC and prescription (Rx) Investigational New Drug applications (IND) active with the FDA and have demonstrated bioequivalence with the OTC 200 mg dose ibuprofen to support a 505(b)(2) NDA in fasted-state clinical trials at three different doses, 200 mg, 400 mg and

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800 mg. Using the PL1200 formulation at prescription doses, we demonstrated better GI safety in osteoarthritic patients with equivalent analgesic and anti-inflammatory efficacy, when compared with prescription ibuprofen in a six-week endoscopy pilot clinical trial. PL1200 and PL1100 Ibuprofen may be considered as being in Phase 1 in the FDA process and may qualify for the 505(b)(2) NDA path.

The following table summarizes information regarding our product candidates and development program:

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The Market

Cardiovascular/Aspirin Market

Aspirin, also known as acetylsalicylic acid (ASA), is a foundational medicine for the treatment and prevention of cardiovascular disease (CVD) — a collective term for chest pain, coronary artery disease, heart attack, heart failure, high blood pressure and stroke — which is the leading cause of death in the United States. Aspirin is widely used to treat patients exhibiting signs and symptoms of heart attack or stroke (collectively referred to as ACS), and is commonly prescribed or recommended by physicians, in addition to other drugs such as cholesterol or blood pressure medications, as the standard of care for treating ACS and preventing recurrent ACS for the duration of a patient’s life.

The 325 mg dose is generally prescribed:

in an acute setting for the treatment of ACS;
following an interventional procedure (such as placement of a stent); and
for preventing heart attack or stroke during the high-risk period following an event or intervention.

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Eventually, most patients move to the 81 mg dose for secondary prevention applications and for high-risk primary prevention, as they are typically directed to take aspirin every day for the rest of their life. The 81 mg aspirin dose is the most prevalent, representing approximately 70% to 80% of aspirin sales in the United States, followed by the 325 mg dose and then several other dose forms including powdered and effervescent aspirin products. In the United States, the primary use for aspirin is for the prevention and treatment of cardiovascular disease as evidenced by the predominance of the 81 mg dose.

Aspirin is also used for pain relief and fever reduction. The most widely used dose for pain is 325 mg. A GI-safer PL2200 Aspirin 325 mg may be able to capture market share from other aspirin and NSAID products in the large pain and inflammation market.

Annual global aspirin sales in 2013 were estimated to be $1.6 billion (Euromonitor), including branded products such as Bayer®, Ecotrin® and St. Joseph®, together with numerous private label or store brands. Because of the known GI toxicity issues associated with immediate release (or “regular”) aspirin, enteric coated aspirin has evolved to become the leading aspirin dose form, representing over 90% of U.S. aspirin sales in 2013. This success is largely based on early clinical studies suggesting that enteric coated aspirin showed a reduction in superficial gastric lesions as compared with regular aspirin. However, when measured using contemporary clinical procedures, enteric coated aspirin has not continued to demonstrate such reductions. These deficiencies create a significant opportunity for the demonstrated efficacy of PL2200 Aspirin.

Pain & Inflammation/Ibuprofen

The global OTC pain market for NSAIDs was over $12 billion in annual sales in 2013 (Evaluate Pharma). Ibuprofen in the United States alone represents $1.6 billion. This class of drugs is one of the most widely used drugs worldwide. Increasing concerns over liver toxicity associated with acetaminophen products coupled with known ibuprofen analgesic superiority over acetaminophen, indicate there is a substantial global opportunity for a GI safer ibuprofen product. While we do not believe our technology will work with the entire NSAIDs class, it is possible that our technology may be successfully applied to other NSAIDs beyond aspirin and ibuprofen. For example, we have preclinical data suggesting that diclofenac — a leading NSAID for pain and inflammation outside the United States — is a viable product candidate.

Our Key Competitive Strengths

Our lead product, PL2200 Aspirin 325 mg, has been approved by the FDA under a traditional NDA process.  We intend to leverage clinical studies and market research to launch PL2200 Aspirin 325 mg on a commercial scale using a combined prescription and OTC strategy that takes advantage of the existing OTC distribution channels for aspirin while leveraging the FDA approval of PL2200 Aspirin 325 mg for prescription and recommendation by physicians for cardiovascular disease treatment and prevention. We will be seeking approval of the companion PL2200 Aspirin 81 mg dose via an sNDA that should benefit from the prior approval of PL2200 Aspirin 325 mg.
Our management team has extensive experience in development and commercialization of OTC products.  Mr. Valentino, our Executive Chairman of the Board, brings over 30 years of experience in the healthcare industry. Mr. Valentino successfully built Adams Respiratory Therapeutics into a fully integrated specialty pharmaceutical company with more than $490 million in annual revenue and leading OTC brands such as Mucinex® and Delsym®. In December 2007, Adams Respiratory Therapeutics sold to Reckitt Benckiser for approximately $2.3 billion. Ms. Giordano, our President and Chief Executive Officer, has over 20 years in the life science industry and has successfully developed commercialization plans for several new product launches across various therapeutic areas, specifically building physician directed sales teams, including with one of the most successful products in the cardiology sector, Lipitor.

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PL2200 Aspirin 325 mg has demonstrated clinically superior antiplatelet efficacy in diabetic patients when compared to enteric coated aspirin, the current standard of care for cardiovascular disease prevention.  PL2200 Aspirin 325 mg delivers faster and more reliable, predictable and sustained antiplatelet benefits than enteric coated aspirin as clinically demonstrated in diabetic patients at risk for cardiovascular disease with a median time to 99% inhibition of serum Thromboxane B2 of two hours compared with 48 hours and with a 3 – 5 times greater chance of a complete aspirin antiplatelet effect than enteric coated aspirin.(Serum Thromboxane B2 is an accepted clinical marker of anti-platelet efficacy.)
PL2200 Aspirin 325 mg has demonstrated clinically superior GI safety when compared to regular aspirin.  PL2200 Aspirin 325 mg has demonstrated a statistically significant 65% reduction in the risk of acute ulcers compared with regular aspirin in healthy subjects with an age associated risk for cardiovascular disease. Based on physician market research, we believe that our clinical data supporting superior acute GI safety as compared to aspirin is important for physicians who are having difficulty keeping high-risk patients on sustained aspirin use due to lack of tolerability.
Our PLxGuardTM delivery system is a platform technology that may improve the GI safety and efficacy when applied to already approved drugs.  Our PLxGuardTM delivery system is a platform technology that we believe could improve the GI safety of selected NSAIDs that meet specific criteria. According to a report by Evaluate Pharma, the global OTC pain market for NSAIDs was over $12 billion in 2013. We intend to explore new development opportunities and utilize the 505(b)(2) NDA regulatory pathway to decrease the time and costs associated with obtaining FDA approval for new products.
Our PLxGuardTM delivery system may lower development risk and costs by leveraging the 505(b)(2) NDA pathway.  A 505(b)(2) NDA is permitted to reference safety and effectiveness data submitted by the original manufacturer of the underlying approved drug as part of its NDA, to be based on the FDA’s prior conclusions regarding the safety and effectiveness of that previously approved drug, or to rely in part on data in the public domain. Reliance on data collected by others may expedite the development program for our product candidates by potentially decreasing the amount of clinical data that we would need to generate to submit an NDA. As the FDA has previously approved PL2200 Aspirin 325 mg with a 505(b)(2) NDA, we believe that there is a strong likelihood that our future products would similarly qualify. The factors related to this qualification are expected to reduce the time and costs associated with clinical trials when compared to a traditional NDA for a new chemical entity. We also believe the strategy of targeting drugs with proven safety and efficacy provides a better prospect of clinical success of our proprietary development portfolio as compared to de novo drug development. We estimate that the average time to market and cost of clinical trials for our products could be less than that required to develop a new drug.
Our issued patents and patent applications in the United States and worldwide may protect us from generic competition and enable a higher price point than current aspirin products.  We believe our patent portfolio provides strong protection of our delivery platform, drug formulations and manufacturing processes with 60 issued patents and additional pending applications with expirations ranging from December 19, 2021 through September 27, 2032.

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Our Strategy

Our goal is to become a leading specialty pharmaceutical company, commercializing both the PL2200 Aspirin 325 mg and PL2200 Aspirin 81 mg dose forms and developing additional branded products using our PLxGuardTM technology. The key elements of our strategy are to:

Successfully commercialize PL2200 Aspirin 325 mg.  Prior to launch, we will need to finalize a brand name and final label with the FDA, scale up our commercial production capabilities, and conduct three validation manufacturing runs required to satisfy FDA pre-launch requirements. We intend to hire, train and deploy a 120- to 150-person sales force to support a national launch to appropriate healthcare providers. This will provide a technical focus on PL2200 Aspirin 325 mg and 81 mg products based upon our compelling clinical results to enhance the value of these products.

Obtain FDA approval for PL2200 Aspirin 81 mg and prepare it for commercial launch.   This will include, in addition to the efforts described above, submission of an sNDA seeking approval to launch PL2200 Aspirin 81 mg simultaneously with the already-approved 325 mg dose form.

Initiate a market launch strategy targeting physicians who desire reliable and predictable antiplatelet efficacy for their highest risk cardiovascular patients.  Our market launch strategy will focus on physician detailing by targeting physicians who are seeking reliable and predictable antiplatelet efficacy for their highest risk cardiovascular patients. This strategy is designed to drive product sales professionally with a technical sales approach. We anticipate taking advantage of aspirin’s unique OTC and prescription approval by using a sales force to call on physicians to inform them of the clinically validated attributes of PL2200 Aspirin. This physician sales effort will be designed to create interest in PL2200 Aspirin among healthcare professionals and to influence their recommendations and prescriptions of PL2200 Aspirin over other aspirin products.

Move beyond aspirin to leverage our PLxGuardTM delivery system in new products.  While we are currently focused on PL2200 Aspirin, there is a pipeline of additional opportunities that can be exploited. We are developing novel formulations that combine already-approved selected NSAIDs that meet our specific criteria with our proprietary PLxGuardTM — technology to make safer and more effective new products. In addition to PL2200 Aspirin, we have clinical data for a GI-safer OTC ibuprofen product, PL1200 Ibuprofen 200 mg, and preclinical data for a GI-safer diclofenac and a GI-safer intravenous indomethacin. We believe that the PLxGuardTM technology may also prove a novel drug delivery platform for corrosive, acid labile and insoluble and impermeable drugs providing delivery along the GI tract. We believe that by focusing initially on commercializing PL2200 Aspirin we can demonstrate the viability of our PLxGuardTM delivery system as a versatile platform technology.

Hire additional senior management and key personnel to support the formulation and execution of successful product launches.  Though we will continue to evaluate other market launch options, including co-promotion in the United States with one or more existing firms, we currently expect to launch PL2200 Aspirin in the United States using our own sales and marketing team. This will require additional hiring of both management and sales personnel.

Seek strategic partners to commercialize PL2200 Aspirin and other products in global markets.  We have licensed the rights to commercialize PL2200 Aspirin in the People’s Republic of China (including Macao and Hong Kong), along with an option for commercialization in Cambodia, Indonesia, Laos, Malaysia, Myanmar, Papua New Guinea, Philippines, Singapore, Taiwan, Thailand and Vietnam. We will continue to seek partners in other global markets.

Risks Associated With Our Business

Our business is subject to numerous risks and uncertainties related to our status as a development-stage company, our financial condition and need for additional capital, the commercialization of PL2200 Aspirin, development of other product candidates, our reliance on

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third parties, our intellectual property and government regulation. These risks include those highlighted in the section entitled “Risk Factors” immediately following this prospectus summary, including the following:

We have not yet generated significant revenues, have a limited operating history, have incurred net losses in each year since our inception and anticipate that we will continue to incur significant losses for the foreseeable future, and if we are unable to achieve and sustain profitability, the market value of our common stock will likely decline.
In order to pursue these strategies and fund our operations, we will need to raise substantial additional financing. As of September 30, 2015, we had working capital of approximately $337,000 and cash and cash equivalents of approximately $408,000. As a result, our independent registered public accounting firm has noted that our recurring losses from operations and minimal working capital raise substantial doubt regarding our ability to continue as a going concern without raising additional capital such as via this offering. If we are unable to raise capital when needed, we could be forced to reduce or terminate our operations or commercialization efforts.
We are substantially dependent on the success of our lead product candidate, PL2200 Aspirin. If we are unable to successfully commercialize PL2200 Aspirin or experience significant delays in doing so, our business could be materially harmed.
Even though PL220 Aspirin 325 mg has already obtained regulatory approval, it may never achieve market acceptance necessary for commercial success and the market opportunity may be smaller than we estimate.
Our ability to market PL2200 Aspirin for long-term use may be hampered by lack of trial results demonstrating long-term GI-safety benefits.
We currently have no sales and marketing staff or distribution organization. If we are unable to develop a sales and marketing and distribution capability on our own or through third parties, we will not be successful in commercializing our future products.
We face substantial competition and our competitors may discover, develop or commercialize products faster or more successfully than us.
Our business will be highly dependent on professional and public reputation and perception, which may change, leading to volatile levels of sales.
We may not be able to protect our intellectual property rights throughout the world.
The regulatory approval process is expensive, time consuming and uncertain and may prevent us from obtaining, or cause delays in obtaining, approvals for the commercialization of the 81 mg dose form of PL2200 Aspirin or future product candidates, which will materially impair our ability to generate revenue.
There is currently no viable public market for our common stock, and one may never develop.
The price of our common stock may be volatile, and you may not be able to resell your shares at or above the initial public offering price.

Corporate Information

We were originally incorporated in the State of Texas on November 12, 2002, under the name of “ZT MediTech, Inc.,” subsequently changing its name to “GrassRoots Pharmaceuticals, Inc” in December of 2002 and then to PLx Pharma Inc. in March of 2003. On December 31, 2013, PLx Pharma Inc. converted from a Texas corporation to a Texas limited liability company, PLx Pharma LLC. On July 27, 2015, PLx Pharma LLC converted from a Texas limited liability company to a Delaware corporation, PLx Pharma Inc.

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”PLx Pharma,” “PLxGuardTM,” our logo and other trade names, trademarks and service marks of PLx Pharma appearing in this prospectus belong to us. Other trade names, trademarks and service marks appearing in this prospectus are the property of their respective holders.

Our principal executive offices are located at 8285 El Rio Street, Suite 130, Houston, Texas, 77054, and our telephone number is (713) 842-1249. Our website address is www.plxpharma.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock.

Implications of Being an Emerging Growth Company

As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012. An “emerging growth company” may take advantage of exemptions from some of the reporting requirements that are otherwise applicable to public companies. These exceptions include:

being permitted to present only two years of audited financial statements and only two years of related disclosure in “Management’s discussion and analysis of financial condition and results of operations” in this prospectus;
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended;
reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We may take advantage of these provisions until the earlier of (i) the last day of our fiscal year following the fifth anniversary of the closing of this offering (ii) the last day of the fiscal year (a) in which we have total annual gross revenue of at least $1.0 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, and (iii) the date on which we have issued more than $1.0 billion of non-convertible debt in any three-year period.

In this prospectus, we have elected to take advantage of certain of the reduced disclosure obligations, and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different from what you might receive from other public reporting companies in which you hold equity interests. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards, at the same time, as other public companies that are not emerging growth companies.

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THE OFFERING

Common stock offered by us    
    3,800,000 shares
Common stock outstanding before this offering    
    5,565,823 shares
Common stock to be outstanding immediately after this offering    
    9,365,823 shares
Underwriters’ over-allotment option    
    We have granted the underwriters a 30-day option to purchase up to an additional 570,000 shares at the public offering price less the underwriting discount and commissions, to cover over-allotments, if any.
Use of proceeds    
    The net proceeds from the issuance of our common stock in this offering will be approximately $62.8 million, or approximately $72.4 million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $18.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
    We intend to use these net proceeds to: advance PL2200 Aspirin 325 mg to market-readiness; obtain supplemental regulatory approval of PL2200 Aspirin 81 mg; fund the commercial scale validation and manufacturing necessary to support both efforts; fund the hiring, training, and deployment of a physician directed sales force to support the commercial launch of PL2200 Aspirin 325 mg and PL2200 Aspirin 81 mg and the expansion of our management team; and to fund working capital, capital expenditures and other general corporate purposes, which may include the acquisition or licensing of other products, businesses or technologies. See “Use of proceeds” for additional information.
Risk factors    
    See “Risk factors” beginning on page 12 and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.
Proposed NASDAQ symbol    
    We have applied to list our common stock on the NASDAQ Capital Market under the symbol “PLXP.”

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The number of shares of our common stock to be outstanding after this offering is based on 5,565,823 shares of our common stock outstanding as of December 31, 2015, and excludes the following:

877,865 shares of our common stock issuable upon the exercise of stock options outstanding as of December 31, 2015, at an exercise price of $9.80 per share under our 2015 Omnibus Incentive Plan (the “2015 Plan”); and
122,135 shares of our common stock, subject to increase on an annual basis, reserved for future issuance under the 2015 Plan.

Unless otherwise indicated, all information in this prospectus reflects and assumes no exercise of the underwriters’ option to purchase an additional 570,000 shares of our common stock.

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SUMMARY FINANCIAL DATA

The following tables summarize our financial data and should be read together with the section in this prospectus entitled “Management’s discussion and analysis of financial condition and results of operations” and our financial statements and related notes included elsewhere in this prospectus.

We have derived the statements of operations data for the years ended December 31, 2013 and 2014 and the statement of financial position data as of December 31, 2013 and 2014 from our audited financial statements included elsewhere in this prospectus. We have derived the statements of operations data for the nine months ended September 30, 2014 and 2015 from our unaudited financial statements included elsewhere in this prospectus. The unaudited financial statements reflect, in the opinion of management, all adjustments necessary for the fair presentation of the financial condition and the results of operations for such periods. Our historical results are not necessarily indicative of the results that should be expected in the future.

       
  Nine Months Ended
September 30,
  Years Ended
December 31,
(in thousands, except per share amounts)   2015   2014   2014   2013
     (unaudited)          
Statements of Operations Data
                                   
Grant and license revenue   $ 172     $ 176     $ 288     $ 641  
Research and development expenses     143       2,779       3,345       5,667  
General and administrative expenses     1,301       1,458       2,048       4,218  
Other (income) expense     2,029       (6 )      (10 )      (6 ) 
Net loss   $  (3,301 )    $  (4,055 )    $  (5,095 )    $  (9,238 ) 
Net loss per share   $ (0.61 )    $ (0.76 )    $ (0.96 )    $ (1.79 ) 

       
  At September 30, 2015   At December 31,
(in thousands)   Actual   As
Adjusted (1)
  2014   2013
     (unaudited)          
Balance Sheets Data
                                   
Cash and cash equivalents   $  408     $  63,220     $  247     $  5,198  
Working capital     337       63,149       78       4,992  
Total assets     851       63,663       775       5,882  
Accumulated deficit     (46,731 )      (46,731 )      (43,430 )      (38,336 ) 
Total stockholders’ equity     573       63,385       519       5,438  

(1) The as adjusted balance sheet data gives effect to the issuance and sale of 3,800,000 shares of common stock in this offering after deducting the underwriting discount and commissions and offering expenses payable by us at an assumed public offering price of $18.00 per share which is mid-point of the estimated offering price shown on the cover of this prospectus.

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RISK FACTORS

Investing in our common stock involves a high degree of risk. Before deciding to invest in our common stock, you should carefully consider each of the following risk factors and all other information set forth in this prospectus and any related free writing prospectus. The following risks and the risks described elsewhere in this prospectus, including in the section entitled “Management’s discussion and analysis of financial condition and results of operations,” could materially harm our business, financial condition, operating results, cash flow and prospects. If that occurs, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Capital Requirements

   We have not yet generated significant revenues, have a limited operating history, have incurred net losses in each year since our inception and anticipate that we will continue to incur significant losses for the foreseeable future, and if we are unable to achieve and sustain profitability, the market value of our common stock will likely decline.

Though we have been in existence since 2003, until recently, our efforts had been focused on research and development. We have not generated any revenue from the sale of products, have generated minimal revenue from licensing activities, and have incurred losses in each year since we commenced operations in 2003. Our net losses for the years ended December 31, 2013 and 2014 were $9.2 million and $5.1 million, respectively. As of September 30, 2015, we had an accumulated deficit of approximately $46.7 million.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we continue the development and commercialization of PL2200 Aspirin and our other product candidates. Our expenses will also increase substantially if and when we:

continue to discover and develop additional product candidates;
establish a sales, marketing and distribution infrastructure to commercialize PL2200 Aspirin and any other product candidates for which we may obtain marketing approval;
establish a manufacturing and supply chain sufficient for commercial quantities of PL2200 Aspirin and any other product candidates for which we may obtain marketing approval;
maintain, expand and protect our intellectual property portfolio;
hire additional clinical, scientific and commercial personnel;
add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts, as well as to support our transition to a public reporting company; and
acquire or in-license other product candidates and technologies.

Even if we do generate revenues, we many never achieve profitability, and even if we do achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline. Because of the numerous risks and uncertainties associated with developing biopharmaceutical products, we are unable to predict the extent of any future losses or when, if ever, we will become profitable.

   There is significant doubt about our ability to continue as a going concern if we are unable to secure additional funding.

Our independent registered public accounting firm has noted, both in their report on our accompanying consolidated financial statements and in Note 2 to such financial statements, that we have suffered recurring losses from operations, that we have insufficient working capital as of

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September 30, 2015, and that these factors raise substantial doubt regarding our ability to continue as a going concern. Our continuation as a going concern is dependent upon, among other things, our ability to obtain necessary equity or debt financing to continue operations (through this offering or otherwise), and ultimately our ability to commercialize PL2200 Aspirin.

   We are substantially dependent on the success of our lead product candidate, PL2200 Aspirin. If we are unable to successfully commercialize PL2200 Aspirin or experience significant delays in doing so, our business could be materially harmed.

Since 2003, we have invested our efforts and financial resources almost exclusively in the development of PL2200 Aspirin. Our future success is substantially dependent on our ability to successfully commercialize PL2200 Aspirin, which will depend on several factors, including the following:

establishing commercial manufacturing and supply arrangements;
establishing a commercial infrastructure;
identifying and successfully establishing one or more collaborations to commercialize PL2200 Aspirin;
acceptance of the product by patients, the medical community and third-party payors;
obtaining market share while competing with more established companies;
a continued acceptable safety and adverse event profile of the product; and
qualifying for, identifying, registering, maintaining, enforcing and defending intellectual property rights and claims covering the product.
   Serious adverse events, undesirable side effects or other unexpected properties of PL2200 Aspirin or any other product candidate may be identified after approval that could delay, prevent or cause the withdrawal of regulatory approval, limit the commercial potential, or result in significant negative consequences following marketing approval.

Serious adverse events or undesirable side effects caused by, or other unexpected properties of, PL2200 Aspirin or our product candidates could cause us, an institutional review board, or regulatory authorities to interrupt, delay or halt our manufacturing and distribution operations and could result in a more restrictive label, the imposition of distribution or use restrictions or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities. If PL2200 Aspirin or any of our other product candidates are associated with serious adverse events or undesirable side effects or have properties that are unexpected, we may need to abandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in clinical or earlier stage testing have later been found to cause undesirable or unexpected side effects that prevented further development of the compound.

Undesirable side effects or other unexpected adverse events or properties of PL2200 Aspirin or any of our other product candidates could arise or become known either during clinical development or, if approved, after the approved product has been marketed. If such an event occurs during development, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of, or deny approval of our other product candidates. If such an event occurs with respect to PL2200 Aspirin, a number of potentially significant negative consequences may result, including:

regulatory authorities may withdraw the approval of such product;
regulatory authorities may require additional warnings on the label or impose distribution or use restrictions;
regulatory authorities may require one or more post-market studies;

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we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
we could be sued and held liable for harm caused to patients; and
our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate, or could substantially increase commercialization costs and expenses, which could delay or prevent us from generating revenue from the sale of our products and harm our business and results of operations.

   We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate our operations or commercialization efforts.

Since inception through September 30, 2015, total net cash flows used by our operating activities were approximately $41.0 million. As of September 30, 2015, we had working capital of approximately $337,000 and cash and cash equivalents of approximately $408,000. We anticipate that we will need to raise substantial additional financing in the future to fund our operations.

We may obtain additional financing through public or private equity offerings, debt financings (including related-party financings), a credit facility or strategic collaborations. Additional financing may not be available to us when we need it or it may not be available to us on favorable terms, if at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. Our future financing requirements will depend on many factors, some of which are beyond our control, including:

our ability to enter into additional collaboration, licensing or other arrangements and the terms and timing of such arrangements;
the type, number, costs and results of the product candidate development programs which we are pursuing or may choose to pursue in the future;
the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities;
the timing of, and costs involved in, seeking and obtaining FDA and other regulatory approvals;
the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, including litigation costs and the results of such litigation;
the emergence of competing technologies and other adverse market developments;
the resources we devote to marketing, and, if approved, commercializing our product candidates;
the scope, progress, expansion, and costs of manufacturing our product candidates;
our ability to enter into collaborative agreements, to support the development of our product candidates and development efforts;
the amount of funds we receive in this offering; and
the costs associated with being a public company.

Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies. We currently have no understandings, commitments or agreements relating to any of these types of transactions.

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If we are unable to raise additional funds when needed, we may be required to sell or license to others technologies or clinical product candidates or programs that we would prefer to develop and commercialize ourselves. Without additional funding — or, alternatively, a partner willing to collaborate and fund development — we will be unable to continue development of PL1200 Ibuprofen or any other development-stage products in our pipeline.

As the result of our capital needs, we have substantially reduced our research and development activities over the past six months, and our executives have agreed to receive no compensation in 2015, subject to the completion of this offering. Both of these concessions create considerable competitive risks for our business.

   Even though PL2200 Aspirin 325 mg has already obtained regulatory approval, it may never achieve market acceptance by physicians, patients, and others in the medical community necessary for commercial success and the market opportunity may be smaller than we estimate.

Even if we are able to launch PL2200 Aspirin commercially, it may not achieve market acceptance among physicians, patients, hospitals (including pharmacy directors) and third-party payors and, ultimately, may not be commercially successful. Market acceptance of any product candidate for which we receive approval depends on a number of factors, including:

the efficacy and safety of the product candidate as demonstrated in clinical trials;
relative convenience and ease of administration;
the clinical indications for which the product candidate is approved;
the potential and perceived advantages and disadvantages of the product candidates, including cost and clinical benefit relative to alternative treatments;
strength of competitive products;
the effectiveness of our sales and marketing efforts;
the strength of marketing and distribution support;
the willingness of physicians to recommend or prescribe the product;
the willingness of hospital pharmacy directors to purchase our products for their formularies;
our ability to maintain regulatory approvals for PL2200 Aspirin;
acceptance by physicians, operators of hospitals and treatment facilities and parties responsible for reimbursement of the product;
the availability of adequate coverage and reimbursement by third-party payors and government authorities;
limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling or an approved risk evaluation and mitigation strategy;
the approval of other new products for the same indications;
the timing of market introduction of the approved product as well as competitive products; and
adverse publicity about the product or favorable publicity about competitive products.

Any failure by PL2200 Aspirin or any other product candidate that obtains regulatory approval to achieve market acceptance or commercial success would adversely affect our business prospects.

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   Our ability to market PL2200 Aspirin for long-term use may be hampered by lack of trial results demonstrating long-term GI-safety benefits.

While demonstrating a statistically significant reduction in mucosal damage at 42 days when evaluated using the same clinical endpoints used for early studies involving enteric coated aspirin, PL2200 Aspirin 325 mg did not demonstrate a reduction in ulcer risk over the course of a 42-day trial when more contemporary clinical endpoints were used. This lack of demonstrated long-term GI benefits could hamper our ability to market PL2200 Aspirin 325 mg for long-term use.

   For many new product candidates, we will rely on third parties to conduct our preclinical studies and all of our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize any of our product candidates.

If we elect to pursue new products, we will rely on medical institutions, clinical investigators, contract laboratories and other third parties, such as contract research organizations, to conduct our preclinical studies and clinical trials on our product candidates in compliance with applicable regulatory requirements. These third parties are not our employees and, except for restrictions imposed by our contracts with such third parties, we have limited ability to control the amount or timing of resources that they devote to our programs. Although we rely on these third parties to conduct our preclinical studies and clinical trials, we remain responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol and the applicable legal, regulatory, and scientific standards, and our reliance on these third parties does not relieve us of our regulatory responsibilities. The FDA and regulatory authorities in other jurisdictions require us to comply with regulations and standards, commonly referred to as current good clinical practices, or cGCPs, for conducting, monitoring, recording and reporting the results of clinical trials, in order to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials. If we or any of our third-party contractors fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. In addition, we are required to report certain financial interests of our third party investigators if these relationships exceed certain financial thresholds and meet other criteria. Our clinical trials must also generally be conducted with products produced under current good manufacturing practice, or cGMP, regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

Many of the third parties with whom we contract may also have relationships with other commercial entities, some of which may compete with us. If the third parties conducting our preclinical studies or our clinical trials do not perform their contractual duties or obligations or comply with regulatory requirements we may need to enter into new arrangements with alternative third parties. This could be costly, and our preclinical studies or clinical trials may need to be extended, delayed, terminated or repeated, and we may not be able to obtain regulatory approval in a timely fashion, or at all, for the applicable product candidate, or to commercialize such product candidate being tested in such studies or trials. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third party contractors or to do so on commercially reasonable terms. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

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   Clinical trials for future products may be delayed or prevented.

Clinical trials may be delayed or prevented for a broad range of reasons, including:

Difficulties obtaining regulatory approval to begin trials;
Delays in reaching agreements on acceptable terms with contract manufacturers and contract research organizations;
Insufficient or inadequate supply or quality of a product candidate or other materials necessary to conduct our clinical trials;
Challenges recruiting and enrolling subjects to participate in clinical trials for a variety of reasons, including size and nature of subject population, proximity of subjects to clinical sites, eligibility criteria for the trial, nature of trial protocol, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications;
Difficulties maintaining contact with subjects after treatment, which results in incomplete data;
Receipt by a competitor of marketing approval for a product targeting an indication that our product targets, such that we are not “first to market” with our product candidate;
Governmental or regulatory delays and changes in regulatory requirements, policy and guidelines;
Inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities;
Unforeseen safety issues, including serious adverse events associated with a product candidate, or lack of effectiveness; and
Lack of adequate funding to continue the clinical trial.

One or more of these difficulties could result in delayed or cancelled trials and have a significant negative impact on our earnings.

   We will rely on third-party contract manufacturing organizations to manufacture and supply PL2200 Aspirin and other product candidates for us, as well as certain raw materials used in the production thereof. If one of our suppliers or manufacturers fails to perform adequately we may be required to incur significant delays and costs to find new suppliers or manufacturers.

We currently have limited experience in, and we do not own facilities for, manufacturing our product candidates, including PL2200 Aspirin. We rely upon third-party manufacturing organizations to manufacture and supply our product candidates and certain raw materials used in the production thereof. Some of our key components for the production of PL2200 Aspirin have a limited number of suppliers.

We will not control the manufacturing process of, and will be completely dependent on, our contract manufacturing partners for compliance with cGMP regulations for manufacture of our drug products. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In addition, we will have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

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We do not have commercial supply agreements with our suppliers. In the event that we and our suppliers cannot agree to the terms and conditions for them to provide clinical and commercial supply needs, we would not be able to manufacture our product or candidates until a qualified alternative supplier is identified, which could also delay the development of, and impair our ability to commercialize, our product candidates.

Our third-party suppliers may not be able to meet our supply needs or timelines and this may negatively affect our business. The failure of third-party manufacturers or suppliers to perform adequately or the termination of our arrangements with any of them may adversely affect our business.

   A key ingredient for our products is currently available from only a single provider.

One key ingredient is currently limited to a single provider, Lipoid GmbH, who supplies cGMP lecithin and is a leader in supplying high quality lipids to the global pharmaceutical industry. Lipoid developed this particular cGMP lecithin with us over a several year period, and has informed us that we are currently the only buyer of the product. We do not have a long-term contract with Lipoid for the supply of commercial quantities of this product, and there can be no assurances that Lipoid will be able to supply sufficient commercial quantities in compliance with regulatory requirements at an acceptable cost.

   We may be subject to costly product liability claims related to our products and product candidates and, if we are unable to obtain adequate insurance or are required to pay for liabilities resulting from a claim excluded from, or beyond the limits of our insurance coverage, a material liability claim could adversely affect our financial condition.

We face the risk that the use of our product candidates may result in adverse side effects. Although we have product liability insurance, our insurance may be insufficient to reimburse us for any expenses or losses we may suffer, and we may be required to increase our product liability insurance coverage as we increase the size of our operations. We do not know whether we will be able to continue to obtain product liability coverage and obtain expanded coverage if we require it, on acceptable terms, if at all. We may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage. To the extent that we are required to provide indemnities in favor of third parties, there is also a risk that these third parties could incur liability and bring a claim under such indemnities. An individual may bring a product liability claim against us alleging that one of our product candidates or products has caused an injury or is found to be unsuitable for consumer use. Any product liability claim brought against us, with or without merit, could result in:

the inability to commercialize PL2200 Aspirin or future product candidates;
decreased demand for PL2200 Aspirin or future candidates;
regulatory investigations that could require costly recalls or product modifications;
loss of revenue;
substantial costs of litigation;
liabilities that substantially exceed our product liability insurance, which we would then be required to pay ourselves;
an increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all;
the diversion of management’s attention from our business; and
damage to our reputation and the reputation of our products.

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Product liability claims may subject us to the foregoing and other risks, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

   We currently have no sales and marketing staff or distribution organization. If we are unable to develop a sales and marketing and distribution capability on our own or through third parties, we will not be successful in commercializing our future products.

We currently have no sales, marketing or distribution organization or history. To achieve commercial success for any approved product candidate, we must either develop a sales, marketing and distribution organization or outsource these functions to third parties. If we rely on third parties for marketing and distributing our approved products, any revenue we receive will depend upon the efforts of third parties, which may not be successful and are only partially within our control, and our product revenue may be lower than if we directly marketed or sold our products. We have no historical operations in this area, and if such efforts were necessary, we may not be able to successfully commercialize our future products. If we are not successful in commercializing our future products, either on our own or through third parties, any future product revenue will be materially and adversely affected.

   We face substantial competition and our competitors may discover, develop or commercialize products faster or more successfully than us.

The development and commercialization of new drug products is highly competitive. We face competition from major pharmaceutical companies and biotechnology companies worldwide with respect to PL2200 Aspirin and other product candidates that we may seek to develop or commercialize in the future. There are a number of pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of product candidates that compete directly or indirectly with PL2200 Aspirin. Potential competitors also include academic institutions, government agencies and other public and private research organizations. Our competitors may succeed in developing, acquiring or licensing technologies and drug products that are more effective, safer or less costly than PL2200 Aspirin or any other product candidates that we are currently developing or that we may develop, which could render our product candidates obsolete and noncompetitive.

Many of our competitors have materially greater name recognition and financial, manufacturing, marketing, research and drug development resources than we do. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. Large pharmaceutical companies in particular have extensive expertise in commercial sales, preclinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with our competitors.

Finally, the success of any product that is successfully commercialized will depend in large part on our ability to prevent competitors from launching a generic version that would compete with such product. If such competitors are able to establish that our patents are invalid or that the generic version would not infringe upon our product, they may be able to launch a generic product prior to the expected expiration of our relevant patents, and any generic competition could have a material adverse effect on our business, results of operations, financial condition and prospects.

   We may fail to innovate and be competitive.

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 compounds 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, causing our revenues and operating results to suffer.

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We expect to compete with a large number of multinational pharmaceutical companies, biotechnology companies, and generic pharmaceutical companies. To successfully expand our product offerings, we must continue to deliver to the market innovative, cost-effective products that meet important medical needs. Our product revenues can be adversely affected by the introduction by competitors of branded products that are perceived as superior by the marketplace, by generic or biosimilar versions of our branded products, and by generic or biosimilar versions of other products in the same therapeutic class as our branded products. Our revenues can also be adversely affected by treatment innovations that eliminate or minimize the need for treatment with drugs.

   We may attempt to form collaborations in the future with respect to our products, but we may not be able to do so, which may cause us to alter our development and commercialization plans.

We may form strategic alliances, create joint ventures or collaborations or enter into licensing arrangements with third parties with respect to our programs that we believe will complement or augment our existing business. For example, we have entered into a licensing arrangement with Lee’s Pharmaceutical Holdings Limited for the commercialization of PL2200 Aspirin in China and with an option for additional countries in Southeast Asia. We may attempt to find other strategic partners for other geographic jurisdictions and we may also attempt to find one or more strategic partners for the development or commercialization of one or more of our other product candidates. We face significant competition in seeking appropriate strategic partners, and the negotiation process to secure appropriate terms is time-consuming and complex. We may not be successful in our efforts to establish such a strategic partnership for any product candidates and programs on terms that are acceptable to us, or at all.

Any delays in identifying suitable collaborators and entering into agreements to develop or commercialize our product candidates could negatively impact the development or commercialization of our product candidates in geographic regions where we do not have development and commercialization infrastructure. Absent a collaboration partner, we would need to undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we are unable to do so, we may not be able to develop our product candidates or bring them to market and our business may be materially and adversely affected.

   We may be unable to realize the potential benefits of any collaboration.

Even if we are successful in entering into a collaboration with respect to the development or commercialization of one or more product candidates, there is no guarantee that the collaboration will be successful. Collaborations may pose a number of risks, including:

collaborators may not perform their obligations as expected;
disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the course of development, might cause delays or termination of the development or commercialization of product candidates, and might result in legal proceedings, which would be time-consuming, distracting and expensive;
collaborators may be impacted by changes in their strategic focus or available funding, or business combinations involving them, which could cause them to divert resources away from the collaboration;
collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;

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the collaborations may not result in us achieving revenue to justify such transactions; and
collaborations may be terminated and, if terminated, may result in a need for us to raise additional capital to pursue further development or commercialization of the applicable product candidate.

As a result, a collaboration may not result in the successful development or commercialization of our product candidates.

   We will need to grow our organization, and we may experience difficulties in managing growth.

As of January 1, 2016, we had seven employees. We will need to expand our managerial, operational, financial and other resources in order to manage our operations, continue our development activities, commercialize PL2200 Aspirin or other product candidates and transition to becoming a public reporting company. Our management and personnel, systems and facilities currently in place may not be adequate to support this future growth. Our need to effectively execute our business strategy requires that we:

manage our internal discovery and development efforts effectively while carrying out our contractual obligations to licensors, contractors, government agencies, any future collaborators and other third parties;
continue to improve our operational, financial and management controls, reporting systems and procedures; and
identify, recruit, maintain, motivate and integrate additional employees.

If we are unable to expand our managerial, operational, financial, and other resources to the extent required to manage our development and commercialization activities, our business will be materially adversely affected.

   We are highly dependent on the services of Michael J. Valentino and Natasha Giordano, and on our ability to attract and retain qualified personnel.

We may not be able to attract or retain qualified management and scientific and clinical personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses. We are highly dependent on the principal members of our management and scientific staff, particularly our Executive Chairman of the Board, Michael J. Valentino, and our President and Chief Executive Officer, Natasha Giordano. If we are not able to retain Mr. Valentino or Ms. Giordano, or are not able to attract, on acceptable terms, additional qualified personnel necessary for the continued development of our business, we may not be able to sustain our operations or grow. Although we have executed employment agreements with each member of our current executive management team, including Mr. Valentino and Ms. Giordano, we may not be able to retain their services as expected. Further, all members of our management team agreed to receive no compensation in 2015 (subject to the completion of this offering), which could negatively impact our ability to retain such management personnel.

In addition, we have scientific and clinical advisors who assist us in formulating our product development and clinical strategies. These advisors are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us, or may have arrangements with other companies to assist in the development of products that may compete with ours.

If we are not able to attract, retain and motivate necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise additional capital and our ability to implement our business strategy.

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   Our business involves the use of hazardous materials and we and our third-party manufacturers must comply with environmental laws and regulations, which may be expensive and restrict how we do business.

Our third-party manufacturers’ activities and our own activities may involve the controlled storage, use and disposal of hazardous materials, including the components of our pharmaceutical product candidates, test samples and reagents, biological materials and other hazardous compounds. We and our manufacturers are subject to federal, state, local and foreign laws and regulations governing the use, generation, manufacture, storage, handling and disposal of these hazardous materials. We currently carry no insurance specifically covering environmental claims relating to the use of hazardous materials. Although we believe that our safety procedures for handling and disposing of these materials and waste products comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials. In the event of an accident, state or federal or other applicable authorities may curtail our use of these materials and/or interrupt our business operations. In addition, if an accident or environmental discharge occurs, or if we discover contamination caused by prior operations, including by prior owners and operators of properties we acquire, we could be liable for cleanup obligations, damages and fines. If such unexpected costs are substantial, this could significantly harm our financial condition and results of operations.

   We or the third parties upon whom we depend may be adversely affected by natural disasters.

Changes to global climate, extreme weather and natural disasters that could affect demand for our products and services, cause disruptions in manufacturing and distribution networks, alter the availability of goods and services within the supply chain, and affect the overall design and integrity of our operations.

Our corporate headquarters is located in Houston, Texas, which in the past has experienced hurricanes. Hurricanes or other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, operations, financial condition and prospects.

If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our information technology systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.

If such an event were to affect our supply chain, it could have a material adverse effect on our business.

   Our employees, independent contractors, principal investigators, consultants and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk that our employees, independent contractors, principal investigators, consultants and vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (1) FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA; (2) manufacturing standards; (3) federal and state healthcare fraud and abuse laws and regulations; or (4) laws that require the true, complete and accurate reporting of financial information or data. Specifically, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation.

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It is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

   Requirements associated with being a public company will increase our costs significantly, as well as divert significant company resources and management attention.

Prior to this offering, we have not been subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), or the other rules and regulations of the SEC or any securities exchange relating to public companies. We are working with our legal, independent accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, the expenses that will be required in order to adequately prepare for being a public company could be material, particularly after we cease to be an “emerging growth company.” Compliance with the various reporting and other requirements applicable to public companies will also require considerable time and attention of management. In addition, the changes we make may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis.

Being a public company could also make it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner or with adequate compliance, we may be subject to sanctions by regulatory authorities.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal controls over financial reporting and, beginning with our annual report for the year ending December 31, 2015, provide a management report on the internal control over financial reporting. If we have a material weakness in our internal controls over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We will be evaluating our internal controls systems to allow management to report on, and eventually our independent auditors will attest to, the effectiveness of the operation of our internal controls. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and eventual auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002. The aforementioned auditor attestation requirements will not apply to us until we are no longer an “emerging growth company.”

To date, we have not conducted a review of our internal controls for the purpose of providing the reports required by these rules. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate

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compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or NASDAQ. Any such action could adversely affect our financial results or investors’ confidence in us and could cause our stock price to fall. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls that are deemed to be material weaknesses, we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities, which would entail expenditure of additional financial and management resources and could materially adversely affect our stock price. Deficient internal controls could also cause us to fail to meet our reporting obligations or cause investors to lose confidence in our reported financial information, which could have a negative effect on our stock price.

Risks Related to Product Safety and Efficacy Issues

   Our understanding of the safety and efficacy of PL2200 Aspirin could change as larger portions of the population begin using PL2200 Aspirin.

PL2200 Aspirin, like all NSAIDs, poses specific risks, including stomach bleeding and, for aspirin, Reyes syndrome. As the product is used by additional patients, we may discover new risks associated with PL2200 Aspirin which may result in changes to the distribution program and additional restrictions on the use of PL2200 Aspirin which may decrease demand for the product. Regulatory authorities have been moving towards more active and transparent pharmacovigilance and are making greater amounts of stand-alone safety information and clinical trial data directly available to the public through websites and other means, e.g. periodic safety update report summaries, risk management plan summaries and various adverse event data. Safety information, without the appropriate context and expertise, may be misinterpreted and lead to misperception or legal action which may potentially cause our product sales or stock price to decline. Further, if serious safety, resistance or drug interaction issues arise with our marketed products, sales of these products could be limited or halted by us or by regulatory authorities and our results of operations would be adversely affected.

   Adverse safety events involving our marketed products may have a negative impact on our business.

Discovery of safety issues with our products could create product liability and could cause additional regulatory scrutiny and requirements for additional labeling, withdrawal of products from the market, and the imposition of fines or criminal penalties. Adverse safety events may also damage physician and patient confidence in our products and our reputation. Any of these could result in liabilities, loss of revenue, material write-offs of inventory, material impairments of intangible assets, goodwill and fixed assets, material restructuring charges and other adverse impacts on our results of operations. The reporting of adverse safety events involving our products or products similar to ours and public rumors about such events may increase claims against us and may also cause our product sales or stock price to decline or experience periods of volatility. Restrictions on use or significant safety warnings that may be required to be included in the label of our products — such as the risk of developing an allergic reaction to soy, stomach bleeding or Reyes syndrome, in the label for PL2200 Aspirin — may significantly reduce expected revenues for this product and require significant expense and management time.

Unexpected safety or efficacy concerns can arise with respect to marketed products, whether or not scientifically justified, leading to product recalls, withdrawals, or declining sales, as well as product liability, consumer fraud and/or other claims, including potential civil or criminal governmental actions.

   Our business will be highly dependent on professional and public reputation and perception, which may change, leading to volatile sales.

Market perceptions of us are very important to our business, especially market perceptions of our company and brands and the safety and quality of our products. If we, our partners and

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suppliers, or our brands suffer from negative publicity, or if any of our products or similar products which other companies distribute are subject to market withdrawal or recall or are proven to be, or are claimed to be, ineffective or harmful to consumers, then this could have a material adverse effect on our business, financial condition, results of operations, cash flows, and/or share price. Also, because we are dependent on market perceptions, negative publicity associated with product quality, patient illness, or other adverse effects resulting from, or perceived to be resulting from, our products, or our partners’ and suppliers’ manufacturing facilities, could have a material adverse effect on our business, financial condition, results of operations, cash flows, or share price.

   We must be able to adapt to changed circumstances and quickly update product labels, which could be costly or harm our reputation.

We may be required by regulatory authorities 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 can 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 reimbursement status or priority with certain payors, which could also adversely affect revenues.

Risks Related to Intellectual Property

   If we are unable to obtain and maintain sufficient intellectual property protection for PL2200 Aspirin or our future product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our product candidates may be adversely affected.

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our technologies. If we do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability. In particular, our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our product candidates. However, we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may also fail to identify patentable aspects of our research and development before it is too late to obtain patent protection.

Further, the patentability of inventions, and the validity, enforceability and scope of patents in the pharmaceutical field involve complex legal and scientific questions and can be uncertain. As a result, patent applications that we own or license may fail to result in issued patents in the United States or in other foreign countries for many reasons. For example since patent applications in the United States and most other countries are confidential for a period of time after filing, we cannot be certain that we were the first to file any patent application related to our product candidates. Even if patents have issued, or do successfully issue, from patent applications, third parties may challenge the validity, enforceability or scope thereof, which may result in such

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patents being narrowed, invalidated or held unenforceable. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around our claims. If the breadth or strength of protection provided by the patents and patent applications we hold, license or pursue with respect to our product candidates is threatened, it could threaten our ability to commercialize our product candidates. Further, if we encounter delays in our clinical trials, the period of time during which we could market any of our product candidates under patent protection, if approved, would be reduced. Changes to the patent laws in the United States and other jurisdictions could also diminish the value of our patents and patent applications or narrow the scope of our patent protection.

   If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and our business would be harmed.

In addition to the protection afforded by patents, we rely on confidential proprietary information — including trade secrets and know-how — to develop and maintain our competitive position. Any disclosure to or misappropriation by third parties of our confidential proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market. We seek to protect our confidential proprietary information, in part, by confidentiality agreements and invention assignment agreements with our employees and confidentiality agreements with consultants, scientific advisors, contractors and collaborators. These agreements are designed to protect our proprietary information. However, we cannot be certain that such agreements have been entered into with all relevant parties, and we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. For example, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. We also seek to preserve the integrity and confidentiality of our confidential proprietary information by maintaining physical security of our premises and physical and electronic security of our information technology systems, but it is possible that these security measures could be breached. If any of our confidential proprietary information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position. If we are unable to prevent material disclosure of the intellectual property related to our technologies to third parties, we will not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, results of operations and financial condition.

   If we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our product candidates.

There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and we may become party to, or threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect to our technology or product candidates, including post-grant or inter-partes proceedings, interference or derivation proceedings before the U.S. Patent and Trademark Office, or USPTO. Third parties may assert infringement claims against us based on existing or future intellectual property rights. The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance. The pharmaceutical and biotechnology industries have produced a significant number of patents, and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our product candidates, products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are

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invalid, and we may not be able to do this. Proving that a patent is invalid is difficult. For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on us. Even if we are successful in defending these claims, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on us.

If we are found to infringe a third party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate or product. Alternatively, we may be required to obtain a license from such third party in order to use the infringing technology and continue developing, manufacturing or marketing the infringing product candidate. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. We may also elect to enter into license agreements in order to settle patent infringement claims or to resolve disputes prior to litigation, and any such license agreements may require us to pay royalties and other fees that could be significant. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

   We may be involved in lawsuits to protect or enforce our intellectual property rights, which could be expensive, time consuming and unsuccessful.

Competitors may infringe or otherwise violate our patents, the patents of our licensors, or our other intellectual property rights. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims that we assert against perceived infringers could also provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property rights. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid or is unenforceable, in whole or in part, or may refuse to stop the other party in such infringement proceeding from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly, and could put any of our patent applications at risk of not yielding an issued patent.

Post-grant or inter-parte proceedings, interference or derivation proceedings provoked by third parties or brought by the USPTO or any foreign patent authority may be necessary to determine the priority of inventions or other matters of inventorship with respect to our patents or patent applications. We may also become involved in other proceedings, such as re-examination or opposition proceedings, before the USPTO or its foreign counterparts relating to our intellectual property or the intellectual property rights of others. An unfavorable outcome in any such proceedings could require us to cease using the related technology or to attempt to license rights to it from the prevailing party, or could cause us to lose valuable intellectual property rights. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms, if any license is offered at all. Litigation or other proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may also become involved in disputes with others regarding the ownership of intellectual property rights. For example, we jointly develop intellectual property with certain parties, and disagreements may therefore arise as to the ownership of the intellectual property developed pursuant to these relationships. If we are unable to resolve these disputes, we could lose valuable intellectual property rights.

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We may not be able to prevent misappropriation of our trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully as in the United States. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and/or management personnel from their normal responsibilities. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. Uncertainties resulting from the initiation and continuation of intellectual property litigation or other proceedings could have negatively affect our ability to compete in the marketplace.

   We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on all of our product candidates throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong, or where standards are different than they are in the United States. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions, including China, where we currently have granted a license for PL2200 Aspirin 325 mg. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

   If we breach any of the agreements under which we license the use, development and commercialization rights to our product candidates from third parties, we could lose license rights that are important to our business.

In addition to our own patents, an important patent family covering PL2200 Aspirin is owned by The Board of Regents of the University of Texas System. Our development and commercialization of PL2200 Aspirin is subject to our license agreement with The University of Texas as is our license agreement with Lee’s Pharmaceutical Holdings Limited. Under our existing license agreements, we are subject to various obligations, including diligence obligations with respect to development and commercialization activities, payment obligations for achievement of certain milestones and royalties on product sales, as well as other material obligations. If we fail to comply with any of these obligations or otherwise breach our license agreements, The University of Texas may have the right to terminate the applicable license in whole or in part. Specifically, Section 4.6 of our license agreement with the University of Texas System (as amended) provides that “Reasonable commercial diligence shall require that PLX . . . . [o]n or before September 8, 2013, Sell or offer for Sale a Licensed Product.” While we believe that we have exercised reasonable commercial diligence to actively attempt such commercialization, we have not yet successfully commercialized a licensed product. As such, The Board of Regents of the University of Texas System may have the option to terminate the license agreement, or to limit the exclusivity of the license in certain territories.

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The loss of our license agreement with The University of Texas could materially adversely affect our ability to proceed with the development or potential commercialization of PL2200 Aspirin as currently planned, and could materially adversely affect our ability to proceed with any development or potential commercialization of PL1200 Ibuprofen and other NSAID programs.

The risks described elsewhere pertaining to our patents and other intellectual property rights also apply to the intellectual property rights that we license, and any failure by us or our licensors to obtain, maintain and enforce these rights could have a material adverse effect on our business. In some cases we do not have control over the prosecution, maintenance or enforcement of the patents that we license, and may not have sufficient ability to consult and input into the patent prosecution and maintenance process with respect to such patents, and our licensors may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain and enforce the licensed patents.

   Limitations on intellectual property rights may result in other threats to our competitive advantage.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business or permit us to maintain our competitive advantage. The following examples are illustrative:

others may be able to make compounds that are similar to PL2200 Aspirin or our future product candidates but that are not covered by the claims of the patents that we own or license;
we or our licensors or collaborators might not have been the first to make the inventions covered by an issued patent or pending patent application that we own or license;
we or our licensors or collaborators might not have been the first to file patent applications covering an invention;
others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;
pending patent applications that we own or license may not lead to issued patents;
issued patents that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;
our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; and
we may not develop or in-license additional proprietary technologies that are patentable.
   We may be subject to claims that our employees or consultants have wrongfully used or disclosed alleged trade secrets of former or other employers.

Some of our employees, consultants, advisors, and members of our Board of Directors, including our senior management, have been employed or retained by other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individuals’ former or other employer. We are not aware of any material threatened or pending claims related to these matters, but in the future litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

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Risks Related to Government Regulation

   The regulatory approval process is expensive, time consuming and uncertain and may prevent us from obtaining, or cause delays in obtaining, approvals for the commercialization of PL2200 Aspirin 81 mg or future product candidates, which will materially impair our ability to generate revenue.

The design, development, research, testing, manufacturing, labeling, storage, recordkeeping, approval, selling, import, export, advertising, promotion, and distribution of drug products are subject to extensive and evolving regulation by federal, state and local governmental authorities in the United States, principally by the FDA, and foreign regulatory authorities, with regulations differing from country to country. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. While we are permitted to market PL2200 Aspirin 325 mg, neither we nor any future partner are permitted to market any other product candidate in the United States until we receive regulatory approval of an NDA from the FDA.

We have not submitted an application or obtained marketing approval for doses of PL2200 Aspirin other than the 325 mg dose, or for any other product candidate anywhere in the world. An NDA must include extensive preclinical and clinical data and supporting information to establish to the FDA’s satisfaction the product candidate’s safety and efficacy for each desired indication. The NDA must also include significant information regarding the chemistry, manufacturing and controls for the product candidate. Obtaining regulatory approval of an NDA can be a lengthy, expensive and uncertain process. In addition, failure to comply with FDA and other applicable U.S. and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions, including:

warning letters;
civil and criminal penalties;
injunctions;
withdrawal of approved products;
product recalls;
total or partial suspension of production; and
refusal to approve pending NDAs or supplements to approved NDAs.

These actions could result in, among other things, substantial modifications to our business practices and operations; refunds of our products; the inability to obtain future approvals or marketing authorizations; and withdrawals or suspensions of current products from the market. Any of these events could disrupt our business and have a material adverse effect on our revenues, profitability and financial condition.

Prior to receiving approval to commercialize any future product candidates in the United States or abroad, we and any applicable collaboration partners must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities abroad, that such product candidates are safe and effective for their intended uses. Preclinical testing and clinical trials are long, expensive and uncertain processes. We may spend several years completing our testing for any particular product candidate, and failure can occur at any stage. Negative or inconclusive results or adverse medical events during a clinical trial could also cause the FDA or us to terminate a clinical trial or require that we repeat it or conduct additional clinical trials. Additionally, data obtained from preclinical studies and clinical trials can be interpreted in different ways and the FDA or other regulatory authorities may interpret the results of our studies and trials less favorably than we do. Even if we believe the preclinical or clinical data for a product candidate is promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. Administering any product

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candidates to humans may produce undesirable side effects, which could interrupt, delay or halt clinical trials of such product candidates and result in the FDA or other regulatory authorities denying approval of such product candidates for any or all targeted indications. The FDA or other regulatory authorities may determine that certain doses of PL2200 Aspirin or any other product candidate that we develop are not effective, or are only moderately effective, or have undesirable or unintended side effects, toxicities, safety profile or other characteristics that preclude marketing approval or prevent or limit commercial use. In addition, any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.

   We are subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to restrictions, withdrawal from the market, or penalties if we fail to comply with applicable regulatory requirements or if we experience unanticipated problems with our product candidates, when and if approved.

An approved product and its manufacturer are subject to continual review by the FDA and, as applicable, non-U.S. regulatory authorities. Any regulatory approval that we receive for our product candidates may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies or surveillance to monitor the safety and efficacy of the product. In addition, if the FDA or non-U.S. regulatory authorities approve any of our product candidates, we will be subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to labeling, packaging, adverse event reporting, storage, distribution, advertising, promotion, recordkeeping and submission of safety and other post-market information. Manufacturers of our products and manufacturers’ facilities are required to comply with cGMP regulations, which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used to manufacture our products, and these facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.

We, and our direct and indirect suppliers, remain subject to the periodic inspection of our plants and facilities, review of production processes, and testing of our products to confirm that we are in compliance with all applicable regulations. For example, the FDA conducts ongoing inspections to determine whether our record keeping, production processes and controls, personnel and quality control are in compliance with the cGMP regulations, the Quality System Regulation, and other FDA regulations. Adverse findings during regulatory inspections may result in the implementation of Risk Evaluation and Mitigation Strategies programs, completion of government mandated post-marketing clinical studies, and government enforcement action relating to labeling, advertising, marketing and promotion, as well as regulations governing manufacturing controls noted above. The FDA has increased its enforcement activities related to the advertising and promotion of pharmaceutical, biological and medical device products. We will also be required to report certain adverse reactions and production problems, if any, to the FDA and to comply with requirements concerning advertising and promotion for our products. If we, any future collaboration partner or a regulatory authority discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the collaboration partner, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing.

The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling and regulatory requirements. The FDA also imposes stringent restrictions on manufacturers’ communications regarding off-label use and if we do not restrict the marketing of

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our products only to their approved indications, we may be subject to enforcement action for off-label marketing. If we, our product candidates or the manufacturing facilities for our product candidates fail to comply with regulatory requirements of the FDA and/or other non-U.S. regulatory authorities, we could be subject to administrative or judicially imposed sanctions, including:

mandated modifications to promotional materials or the required provision of corrective information to healthcare practitioners;
restrictions imposed on the product or its manufacturers or manufacturing processes;
restrictions imposed on the labeling or marketing of the product;
restrictions imposed on product distribution or use;
requirements for post-marketing clinical trials;
suspension of any ongoing clinical trials;
suspension of or withdrawal of regulatory approval;
voluntary or mandatory product recalls and publicity requirements;
refusal to approve pending applications for marketing approval of new products or supplements to approved applications filed by us;
restrictions on operations, including costly new manufacturing requirements;
seizure or detention of our products;
refusal to permit the import or export of our products;
required entry into a consent decree, which can include imposition of various fines (including restitution or disgorgement of profits or revenue), reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;
civil or criminal penalties; or
injunctions.

Widely publicized events concerning the safety risk of certain drug products have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and the imposition by the FDA of risk evaluation and mitigation strategies, or REMS, to ensure that the benefits of the drug outweigh its risks. In addition, because of the serious public health risks of high profile adverse safety events with certain products, the FDA may require, as a condition of approval, costly REMS programs.

The regulatory requirements and policies may change and additional government regulations may be enacted for which we may also be required to comply. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or in other countries. If we or any future collaboration partner are not able to maintain regulatory compliance, we or such collaboration partner, as applicable, will not be permitted to market our future products and our business will suffer.

   Failure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally.

We may seek a distribution and marketing collaborator for PL2200 Aspirin or other product candidates commercialized outside of the United States. In order to market our product candidates in the European Economic Area, or EEA (which comprises the 28 Member States of the EU, plus Norway, Iceland and Liechtenstein), and many other foreign jurisdictions, we or our collaboration partners must obtain separate regulatory approvals. We have had limited interactions with foreign regulatory authorities, and approval procedures vary among countries and can involve additional clinical testing. In addition, the time required to obtain approval from foreign regulatory

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authorities may differ from that required to obtain FDA approval. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on our ability to obtain approval in other countries. The foreign regulatory approval process generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We may or may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and even if we file, we may not receive necessary approvals to commercialize our product candidates in any market.

   Healthcare reform measures could hinder or prevent our product candidates’ commercial success.

In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future revenue and profitability and the future revenue and profitability of our potential customers. Federal and state lawmakers regularly propose and, at times, enact legislation that results in significant changes to the healthcare system, some of which is intended to contain or reduce the costs of medical products and services. The Affordable Care Act contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures that have impacted and will continue to impact existing government healthcare programs and will result in the development of new programs.

   We currently benefit from regulations that mandate full reimbursement without cost sharing for aspirin when prescribed by a health care provider. Changes to these regulations could significantly reduce reimbursement rates in a manner that negatively affects our sales.

As a result of regulations enacted as part of the Affordable Care Act, we expect that PL2200 will qualify for 100% coverage when prescribed by physicians for the prevention of cardiovascular disease in patients with certain age-associated risks, requiring no out-of-pocket payments. While this will initially have the potential to expand the demand for PL2200 Aspirin, changes to these regulations could have a significant adverse effect on reimbursement rates and, indirectly, on sales of PL2200 Aspirin.

   We are subject to healthcare laws, regulation and enforcement and our failure to comply with those laws could adversely affect our business, operations and financial condition.

Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We could be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which we conduct our business. The regulations that may affect our ability to operate include, without limitation:

the federal Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;
the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government, and which may apply to entities that provide coding and billing advice to customers;

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federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
the federal physician sunshine requirements under the Affordable Care Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members; and
the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”), which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. In addition, recent healthcare reform legislation has strengthened these laws. For example, the recently enacted Affordable Care Act, among other things, amends the intent requirement of the Federal Anti-Kickback Statute and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it. In addition, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

These laws and regulations are broad in scope and they are subject to change and evolving interpretations, which could require us to incur substantial costs associated with compliance or to alter one or more of our sales or marketing practices. In addition, any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, the exclusion from participation in federal and state healthcare programs, imprisonment, or the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.

Failure to comply with domestic and international privacy and security laws can result in the imposition of significant civil and criminal penalties. The costs of compliance with these laws, including protecting electronically stored information from cyberattacks, and potential liability associated with failure to do so could adversely affect our business, financial condition and results of operations. We are subject to various domestic and international privacy and security regulations, including but not limited to HIPAA. HIPAA mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information. In addition, many states have enacted comparable laws addressing the privacy and security of health information, some of which are more stringent than HIPAA.

   Our international operations will be subject to the Foreign Corrupt Practices Act

As we pursue international licensing and sales arrangements outside the United States, we will be heavily regulated and expect to have significant interaction with foreign officials. Additionally, in many countries outside the United States, the health care providers who prescribe human pharmaceuticals are employed by the government and the purchasers of human pharmaceuticals are government entities; therefore, our interactions with these prescribers and purchasers would be subject to regulation under the Foreign Corrupt Practices Act, or FCPA, which prohibits any U.S. individual or business from paying, offering or authorizing payment or offering

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of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business.

Compliance with these regulations may be costly, and may limit our ability to expand into certain markets. Further, we may inadvertently be found to be in violation of these and other regulations, which could result in material sanctions and penalties.

Risks Related to Our Common Stock and This Offering

   The price of our common stock may be volatile, and you may not be able to resell your shares at or above the initial public offering price.

The initial public offering price for the shares of our common stock sold in this offering has been determined by negotiation between the underwriters and us. This price may not reflect the market price of our common stock following this offering. You may be unable to sell your shares of common stock at or above the initial public offering price due to fluctuations in the market price of our common stock. Factors that could cause volatility in the market price of our common stock include, but are not limited to:

ability to or delays in commercializing PL2200 Aspirin;
ability to commercialize or obtain regulatory approval for our product candidates, or delays in commercializing or obtaining regulatory approval;
any need to suspend or discontinue clinical trials due to side effects or other safety risks, or any need to conduct studies on the long-term effects associated with the use of our product candidates;
manufacturing issues related to PL2200 Aspirin, our product candidates for clinical trials or future products for commercialization;
commercial success and market acceptance of our product candidates following regulatory approval;
undesirable side effects caused by product candidates after they have entered the market;
ability to discover, develop and commercialize additional product candidates;
announcements relating to collaborations that we may enter into with respect to the development or commercialization of our product candidates, or the timing of payments we may make or receive under these arrangements;
success of our competitors in discovering, developing or commercializing products;
strategic transactions undertaken by us;
additions or departures of key personnel;
product liability claims related to our clinical trials or product candidates;
prevailing economic conditions;
business disruptions caused by earthquakes or other natural disasters;
disputes concerning our intellectual property or other proprietary rights;
FDA or other U.S. or foreign regulatory actions affecting us or our industry;
healthcare reform measures in the United States;
sales of our common stock by our officers, directors or significant stockholders;
future sales or issuances of equity or debt securities by us;

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fluctuations in our quarterly operating results; and
the issuance of new or changed securities analysts’ reports or recommendations regarding us.

In addition, the stock markets in general, and the markets for pharmaceutical stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our management would be diverted from the operation of our business.

   Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

Based on the beneficial ownership of our common stock as of December 31, 2015, after this offering, our officers and directors, together with holders of 5% or more of our outstanding common stock before this offering and their respective affiliates, will beneficially own approximately 25.1% of our common stock (assuming no exercise of the underwriters’ option to purchase additional shares of common stock). Accordingly, these stockholders will continue to have significant influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transaction. The interests of these stockholders may not be the same as or may even conflict with your interests. For example, these large stockholders could delay or prevent a change of control of our company, even if such a change of control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or our assets and might affect the prevailing market price of our common stock. The significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

   We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, Section 102 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (as amended, the “Securities Act”) for complying with new or revised accounting standards. As an “emerging growth company,” we can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides

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that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

   Future sales of our common stock or securities convertible or exchangeable for our common stock may depress our stock price.

If our existing stockholders or holders of our options or warrants sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline. The perception in the market that these sales may occur could also cause the trading price of our common stock to decline. Based on the number of shares of common stock outstanding as of December 31, 2015, upon the completion of this offering, we will have outstanding a total of 9,365,823 shares of common stock, assuming no exercise of the underwriters’ option to purchase additional shares of common stock. Of these shares, only the shares of common stock sold by us in this offering (and not held by our affiliates), plus any shares sold upon exercise of the underwriters’ option to purchase additional shares of common stock, will be freely tradable without restriction in the public market immediately following this offering.

A total of 184,376 shares of common stock are not subject to lock-up agreements with the underwriters and therefore will be eligible for sale in the public market upon closing of this offering. We expect that the lock-up agreements with the underwriters pertaining to this offering will expire 180 days from the date of this prospectus. After the lock-up agreements expire, up to an additional 5,381,447 shares of common stock will be eligible for sale in the public market, subject to volume limitations under Rule 144 under the Securities Act with respect to shares held by directors, executive officers and other affiliates. The underwriters may, however, in their sole discretion, permit our officers, directors and other stockholders and the holders of our outstanding options and warrants who are subject to the lock-up agreements to sell shares prior to the expiration of the lock-up agreements. Sales of these shares, or perceptions that they will be sold, could cause the trading price of our common stock to decline.

In addition, based on the number of shares subject to outstanding awards under the 2015 Plan, or available for issuance thereunder, as of December 31, 2015, and including the initial reserves under the 2015 Plan, 1,000,000 shares of common stock that are either subject to outstanding options, outstanding but subject to vesting, or reserved for future issuance under the 2015 Plan will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements and Rule 144 and Rule 701 under the Securities Act. We may also file a registration statement permitting shares of common stock issued in the future pursuant to the 2015 Plan to be freely resold by plan participants in the public market, subject to the lock-up agreements, applicable vesting schedules and, for shares held by directors, executive officers and other affiliates, volume limitations under Rule 144 for shares. The 2015 Plan also contains a provision for the annual increase of the number of shares reserved for issuance under such plan, as described elsewhere in this prospectus, which shares we also intend to register. If the shares we may issue from time to time under the 2015 Plan are sold, or if it is perceived that they will be sold, by the award recipient in the public market, the trading price of our common stock could decline.

   If there is no viable public market for our common stock, you may not be able to sell your shares at or above the initial public offering price.

Prior to this offering, there has been no public market for our common stock, and there can be no assurance that a regular trading market will develop and continue after this offering or that the market price of our common stock will not decline below the initial public offering price. The initial public offering price was determined through negotiations between us and the underwriters and may not be indicative of the market price of our common stock following this offering. Among the factors considered in such negotiations were prevailing market conditions, certain of our financial information, market valuations of other companies that we and the underwriters believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant.

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   Investors in this offering will suffer immediate and substantial dilution of their investment.

If you purchase common stock in this offering, you will pay more for your shares than our as adjusted net tangible book value per share. Based upon an assumed initial public offering price of $18.00 per share, the midpoint of the price range on the cover page of this prospectus, you will incur immediate and substantial dilution of $11.23 per share, representing the difference between our assumed initial public offering price and our as adjusted net tangible book value per share. Based upon the assumed initial public offering price of $18.00 per share, purchasers of common stock in this offering will have contributed approximately 61.8% of the aggregate purchase price paid by all purchasers of our stock but will own only approximately 40.6% of our common stock outstanding after this offering.

We have also issued options in the past to acquire common stock at prices significantly below the initial offering price. As of December 31, 2015, there were 877,865 shares of common stock subject to outstanding options with an exercise price of $9.80 per share. To the extent that these outstanding options are ultimately exercised, you will incur further dilution, and our stock price may decline.

   We may be at risk of securities class action litigation.

We may be at risk of securities class action litigation. This risk is especially relevant for us due to our dependence on positive clinical trial outcomes and regulatory approvals of each of our product candidates. In the past, pharmaceutical companies have experienced significant stock price volatility, particularly when associated with binary events such as clinical trials and product approvals. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business and result in a decline in the market price of our common stock.

   Raising additional capital may cause dilution to our existing stockholders or involve the issuance of securities with rights, preferences and privileges senior to those of holders of our common stock.

To raise capital, we may from time to time issue additional shares of common stock at a discount from the then-current trading price of our common stock. As a result, our common stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock. Whether or not we issue additional shares of common stock at a discount, any issuance of common stock will, and any issuance of other equity securities or of options, warrants or other rights to purchase common stock may, result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline. New investors could also gain rights, preferences and privileges senior to those of holders of our common stock, which could cause the price of our common stock to decline.

   We will have broad discretion in the use of the net proceeds of this offering and may not use them effectively.

Our management will have broad discretion over the use of the net proceeds from this offering. Because of the number and variability of factors that will determine our use of such proceeds, you may not agree with how we allocate or spend the proceeds from this offering. We may pursue collaborations, clinical trials or discovery and development programs that do not result in an increase in the market value of our common stock and that may increase our losses. Our failure to allocate and spend the net proceeds from this offering effectively would have a material adverse effect on our financial condition and business. Until the net proceeds are used, they may be placed in investments that do not produce significant investment returns or that may lose value.

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   Provisions of our charter documents or Delaware law could delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for you to change management.

Provisions in our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by making it more difficult to replace or remove our board of directors. These provisions include:

a prohibition on stockholder action through written consent;
no cumulative voting in the election of directors;
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director;
a requirement that special meetings of stockholders be called only by the board of directors, the chairman of the board of directors, the chief executive officer or, in the absence of a chief executive officer, the president;
an advance notice requirement for stockholder proposals and nominations;
directors may not be removed without cause and may only be removed with cause by the affirmative vote of 66 2/3% of all outstanding shares of our capital stock with the power to vote in the election of directors;
the authority of our board of directors to issue preferred stock with such terms as our board of directors may determine; and
a requirement of approval of not less than 66 2/3% of all outstanding shares of our capital stock with the power to vote to amend any bylaws by stockholder action, or to amend specific provisions of our certificate of incorporation.

In addition, Delaware law prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person who, together with its affiliates, owns or within the last three years has owned 15% or more of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Accordingly, Delaware law may discourage, delay or prevent a change in control of our company.

Provisions in our charter and other provisions of Delaware law could limit the price that investors are willing to pay in the future for shares of our common stock.

   Provisions of our charter documents limit the liability of our officers and directors, which could limit the ability of stockholders (and outside parties) to bring claims against such officers and directors.

Our certificate of incorporation contains provisions that limit the liability of our current and former directors for monetary damages to the fullest extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for any breach of fiduciary duties as directors, except liability for:

any breach of the director’s duty of loyalty to the corporation or its stockholders;
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
unlawful payments of dividends or unlawful stock repurchases or redemptions; or
any transaction from which the director derived an improper personal benefit.

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Such limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable remedies, such as injunctive relief or rescission.

Our certificate of incorporation and our bylaws provide that we are required to indemnify our directors to the fullest extent permitted by Delaware law. Our bylaws also provide that, upon satisfaction of certain conditions, we shall advance expenses incurred by a director in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. Our certificate of incorporation and bylaws provide our board of directors with discretion to indemnify our officers and employees when determined appropriate by the board. We have entered and expect to continue to enter into agreements to indemnify our directors and executive officers. With certain exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain customary directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

   We do not anticipate paying any cash dividends on our capital stock in the foreseeable future; therefore capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

We have never declared or paid cash dividends on our capital stock. We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. In addition, the terms of any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

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SELECTED FINANCIAL DATA

The following data should be read together with the section in this prospectus entitled “Management’s discussion and analysis of financial condition and results of operations” and our financial statements and related notes included elsewhere in this prospectus. We have derived the statements of operations data for the years ended December 31, 2013 and 2014 and the statement of financial position data as of December 31, 2013 and 2014 from our audited financial statements included elsewhere in this prospectus. We have derived the statements of operations data for the nine months ended September 30, 2014 and 2015 from our unaudited financial statements included elsewhere in this prospectus. The unaudited financial statements reflect, in the opinion of management, all adjustments necessary for the fair presentation of the financial condition and the results of operations for such periods. Our historical results are not necessarily indicative of the results that should be expected in the future.

       
     Nine Months Ended
September 30,
  Years Ended
December 31,
(in thousands, except per share amounts)   2015   2014   2014   2013
       (unaudited)                    
Statements of Operations Data
                                   
Grant and license revenue   $ 172     $ 176     $ 288     $ 641  
Research and development expenses     143       2,779       3,345       5,667  
General and administrative expenses     1,301       1,458       2,048       4,218  
Other (income) expense     2,029       (6 )      (10 )      (6 ) 
Net loss   $ (3,301 )    $ (4,055 )    $ (5,095 )    $ (9,238 ) 
Net loss per share   $ (0.61 )    $ (0.76 )    $ (0.96 )    $ (1.79 ) 
Balance Sheets Data
                                
Cash and cash equivalents   $ 408     $ 63,220     $ 247     $ 5,198  
Working capital     337       63,149       78       4,992  
Total assets     851       63,663       775       5,882  
Accumulated deficit     (46,731 )      (46,731 )      (43,430 )      (38,336 ) 
Total stockholders’ equity     573       63,385       519       5,438  

(1) The as adjusted balance sheet data gives effect to the issuance and sale of 3,800,000 shares of common stock in this offering after deducting the underwriting discount and commissions and offering expenses payable by us at an assumed public offering price of $18.00 per share which is mid-point of the estimated offering price shown on the cover of this prospectus.
   If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

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   We have applied to list the shares of our common stock and on the NASDAQ Capital Market. If so listed, we will be required to meet the NASDAQ Capital Market’s continued listing requirements and other NASDAQ rules, or we may risk delisting. Delisting could negatively affect the price of our common stock, which could make it more difficult for us to sell securities in a future financing or for you to sell the common stock.

We have applied to list the shares of our common stock on the NASDAQ Capital Market, and if so listed, and we will be required to meet the continued listing requirements of the NASDAQ Capital Market and other NASDAQ rules, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price and certain other corporate governance requirements. In particular, we are required to maintain a minimum bid price for our listed common stock of $1.00 per share. If we do not meet these continued listing requirements, our common stock could be delisted. Delisting from the NASDAQ Capital Market would cause us to pursue eligibility for trading of these securities on other markets or exchanges, or on the “pink sheets.” In such case, our stockholders’ ability to trade, or obtain quotations of the market value of our common stock would be severely limited because of lower trading volumes and transaction delays. These factors could contribute to lower prices and larger spreads in the bid and ask prices of these securities. There can be no assurance that the offered securities, if delisted from the NASDAQ Capital Market in the future, would be listed on a national securities exchange, a national quotation service, the over-the-counter markets or the pink sheets. Delisting from the NASDAQ Capital Market, or even the issuance of a notice of potential delisting, would also result in negative publicity, make it more difficult for us to raise additional capital, adversely affect the market liquidity of the offered securities, decrease securities analysts’ coverage of us or diminish investor, supplier and employee confidence.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This prospectus, including the sections titled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Market, Industry and Other Data,” “Business” and “Shares Eligible for Future Sale,” contains forward-looking statements. In some cases you can identify these statements by forward-looking words, such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “potential,” “seek,” “expect,” “goal,” or the negative or plural of these words or similar expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

our expected uses of the net proceeds to us from this offering;
our ability to bring both PL2200 Aspirin 81 mg and PL2200 Aspirin 325 mg to market-readiness;
our ability to maintain regulatory approval of PL2200 Aspirin 325 mg or obtain and maintain regulatory approval of PL2200 Aspirin 81 mg and any future product candidates;
the benefits of the use of PL2200 Aspirin 325 mg and PL2200 Aspirin 81 mg;
the projected dollar amounts of future sales of established and novel GI-safer technologies for NSAIDs and other analgesics;
our ability to successfully commercialize our PL2200 Aspirin products, or any future product candidates;
the rate and degree of market acceptance of our PL2200 Aspirin products or any future product candidates;
our expectations regarding government and third-party payor coverage and reimbursement;
our ability to scale up manufacturing of our PL2200 Aspirin products to commercial scale;
our ability to successfully build a specialty sales force and commercial infrastructure or collaborate with a firm that has these capabilities;
our ability to compete with companies currently producing GI-safer technologies for NSAIDs and other analgesics;
our reliance on third parties to conduct our clinical studies;
our reliance on third-party contract manufacturers to manufacture and supply our product candidates for us;
our reliance on our collaboration partners’ performance over which we do not have control;
our ability to retain and recruit key personnel, including development of a sales and marketing function;
our ability to obtain and maintain intellectual property protection for our PL2200 Aspirin products or any future product candidates;
the actual receipt and timing of any milestone payments or royalties from our collaborators;
our estimates of our expenses, ongoing losses, future revenue, capital requirements and our needs for or ability to obtain additional financing;
our expectations regarding the time during which we will be an emerging growth company under the JOBS Act;

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our ability to identify, develop, acquire and in-license new products and product candidates;
our ability to successfully establish and successfully maintain appropriate collaborations and derive significant revenue from those collaborations;
our financial performance; and
developments and projections relating to our competitors or our industry.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

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MARKET, INDUSTRY AND OTHER DATA

We obtained the industry, market and similar data set forth in this prospectus from our own internal estimates and research, and from industry publications and research, surveys and studies conducted by third parties, including primary market research commissioned by us. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information and estimates.

Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

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USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of 3,800,000 shares of our common stock in this offering will be approximately $62.8 million, or approximately $72.4 million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $18.00, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $18.00 per share would increase (decrease) the net proceeds from this offering by approximately $3.53 million, assuming that the number of shares we are offering, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1,000,000 shares in the number of shares we are offering would increase (decrease) the net proceeds to us from this offering by approximately $16.74 million, assuming that the assumed initial public offering price remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

As of September 30, 2015, we had cash and cash equivalents of approximately $408,000. We currently estimate that we will use the net proceeds from this offering, together with our cash and cash equivalents, as follows:

Approximately $10 million will be used for funding necessary to advance PL2200 Aspirin 325 mg and PL2200 Aspirin 81 mg to market-readiness. For both products, which will share a common manufacturing process and branding, this will fund the commercial scale-up of manufacturing and manufacturing validation runs and stability testing;
Approximately $5 million will be used for funding development of a brand and proprietary name and pre-launch activities as appropriate to prepare both products to a point of being ready to launch commercially. In addition, this will fund actions necessary to obtain supplemental regulatory approval of PL2200 Aspirin 81 mg;
Approximately $35 million will be used for funding necessary to hire, train and deploy a physician directed sales force to commercially launch PL2200 Aspirin 325 mg and 81 mg; and
The balance of the amount raised in the offering will be used to fund working capital, capital expenditures and other general corporate purposes, which may include the acquisition or licensing of other products, businesses or technologies, additional clinical trials and the expansion of our executive team, as well as the evaluation and development of new product opportunities.

This expected use of the net proceeds from this offering and our existing cash and cash equivalents represents our intentions based upon our current plans and business conditions. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development and commercialization efforts and the status of and results from clinical studies, as well as any collaborations that we may enter into with third parties and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering. We have no current understandings, agreements or commitments for any material acquisitions or licenses of any products, businesses or technologies.

Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment grade, interest bearing instruments and U.S. government securities.

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DIVIDEND POLICY

We have never declared or paid, and do not anticipate declaring, or paying in the foreseeable future, any cash dividends on our capital stock. Future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then existing conditions, including our operating results, financial conditions, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2015:

on an actual basis;
on an as adjusted basis to reflect the sale by us of 3,800,000 shares of common stock in this offering at an assumed initial public offering price of $18.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table together with the section in this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus.

     
  As of September 30, 2015
(unaudited)
(in thousands except share and per share amounts)   Actual   Adjustments   Actual as
adjusted
Cash and cash equivalents   $ 408     $ 62,812     $ 63,220  
Stockholders’ equity:
                          
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding, actual; 10,000,000 shares authorized, none issued and outstanding, actual as adjusted                  
Common stock, $0.001 par value, 100,000,000 shares authorized, 5,565,823 issued and outstanding, actual; 100,000,000 authorized, 9,365,823 shares issued and outstanding, actual as adjusted     6       4       10  
Additional paid-in-capital     47,298       62,808       110,106  
Accumulated deficit     (46,731 )            (46,731 ) 
Total Stockholders’ equity     573       62,812       63,385  
Total Capitalization   $ 573     $ 62,812     $ 63,385  

(1) A $1.00 increase (decrease) in the assumed initial public offering price of $18.00 per share would increase (decrease) each of actual as adjusted cash and cash equivalents and total stockholders’ equity by $3.53 million, assuming the number of shares we are offering, as set forth on the cover page of this prospectus, remains the same, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase (decrease) of 1,000,000 shares in the number of shares we are offering would increase (decrease) each of actual as adjusted cash and cash equivalents and total stockholders’ equity by approximately $16.74 million, assuming the assumed initial public offering price per share, as set forth on the cover page of this prospectus, remains the same.

The number of shares of our common stock to be outstanding after this offering is based on 5,565,823 shares of our common stock outstanding as of December 31, 2015, and excludes the following:

877,865 shares of our common stock issuable upon the exercise of stock options outstanding as of December 31, 2015 at an exercise price of $9.80 per share under the 2015 Plan; and
122,135 shares of common stock, subject to increase on an annual basis, reserved for future issuance under the 2015 Plan.

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DILUTION

Dilution is the amount by which the offering price paid by the purchasers of the shares of common stock sold in the offering exceeds the net tangible book value per share of our common stock after this offering. The historical net tangible book value of our common stock as of September 30, 2015 was approximately $0.6 million, or $0.10 per share.

After giving effect to our receipt of the net proceeds from our sale of 3,800,000 shares of our common stock at an assumed initial public offering price of $18.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2015 would have been approximately $63.4 million, or $6.77 per share. This represents an immediate increase in as adjusted net tangible book value of $6.67 per share to our existing stockholders and an immediate dilution of $11.23 per share to investors purchasing common stock in this offering.

The following table illustrates this dilution on a per share basis to new investors:

   
Assumed initial public offering price per share         $ 18.00  
Historical net tangible book value per share as of September 30, 2015   $ 0.10        
Increase in as adjusted net tangible book value per share attributable to new investors   $ 6.67        
As adjusted net tangible book value per share after this offering         $ 6.77  
Dilution per share to investors participating in this offering         $ 11.23  

Each $1.00 increase (decrease) in the assumed initial public offering price of $18.00 per share would increase (decrease) the net tangible book value, as adjusted to give effect to this offering, by $0.38 per share and the dilution to new investors by $0.62 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their option to purchase additional shares in this offering in full, the net tangible book value, as adjusted to give effect to this offering, would be $7.34 per share and the dilution to new investors would be $10.66 per share.

We may also increase or decrease the number of shares we are offering. An increase (decrease) of 1,000,000 shares in the number of shares we are offering would increase (decrease) our as adjusted net tangible book value by $0.96 per share, and decrease (increase) the dilution per share to investors in this offering by $0.96 per share, assuming that the assumed initial public offering price remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will change based on the actual initial public offering price, number of shares and other terms of this offering determined at pricing.

The table below summarizes as of September 30, 2015, the number of shares of our common stock, the total consideration, and the average price per share (i) paid to us by our existing stockholders and (ii) to be paid by new investors purchasing our common stock in this offering at an assumed initial public offering price of $18.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

         
  Shares purchased   Total consideration   Average price
per share
     Number   Percent   Amount   Percent
Existing stockholders before this offering     5,565,823       59.4 %    $ 42,233,000       38.2 %    $ 7.59  
New investors     3,800,000       40.6 %    $ 68,400,000       61.8 %    $ 18.00  
Total     9,365,823       100.0 %    $ 110,633,000       100.0 %    $ 11.81  

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A $1.00 increase (decrease) in the assumed initial public offering price of $18.00 per share would increase (decrease) total consideration paid by new investors by $3.8 million and increase (decrease) the percent of total consideration paid by new investors by 1.3%, assuming the number of shares we are offering, as set forth on the cover page of this prospectus, remains the same

If the underwriters exercise their option to purchase additional shares in this offering in full, the percentage of shares of our common stock held by existing stockholders will be reduced to 56% of the total number of shares of our common stock outstanding after this offering, and the number of shares held by new investors will increase to 4,370,000 shares, or 44% of the total number of shares of our common stock outstanding after this offering.

The number of shares of our common stock to be outstanding after this offering is based on 5,565,823 shares of our common stock outstanding as of December 31, 2015, and excludes the following:

877,865 shares of our common stock issuable upon the exercise of stock options outstanding as of December 31, 2015 at an exercise price of $9.80 per share under the 2015 Plan;
122,135 shares of common stock, subject to increase on an annual basis, reserved for future issuance under the 2015 Plan.

To the extent that any outstanding options or warrants are exercised, new options are issued under our stock-based compensation plans or we issue additional shares of common stock in the future, there will be further dilution to investors participating in this offering. If all of these options were exercised, then our existing stockholders, including the holders of these options, would own 62.9% and our new investors would own 37.1% of the total number of shares of our common stock outstanding upon the closing of this offering. In such event, the total consideration paid by our existing stockholders, including the holders of these options, would be approximately $50.8 million, or 42.6%, the total consideration paid by our new investors would be $68.4 million, or 57.4%, the average price per share paid by our existing stockholders would be $7.89, and the average price per share paid by our new investors would be $18.00.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the section of this prospectus entitled “Selected Financial Data” and our financial statements and related notes included elsewhere in this prospectus. This discussion and other parts of this prospectus contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions.(See “Cautionary Statement Concerning Forward-Looking Statements” above at page 43.) Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this prospectus entitled “Risk factors.”

Overview

We are a late-stage specialty pharmaceutical company initially focused on developing our clinically validated and patent-protected PLxGuardTM delivery system to provide safer and more effective aspirin products. Our PLxGuardTM delivery system works by releasing active pharmaceutical ingredients into the duodenum, the first part of the small intestine immediately below the stomach, rather than in the stomach itself, which we believe improves the absorption of many drugs currently on the market or in development, and reduces acute gastrointestinal (GI) side effects of aspirin and ibuprofen, and potentially other drugs.

Our FDA-approved lead product, PL2200 Aspirin 325 mg, is a novel formulation of aspirin that uses the PLxGuardTM delivery system to significantly reduce acute GI side effects while providing superior antiplatelet effectiveness for cardiovascular disease prevention as compared with the current standard of care, enteric coated aspirin. A companion 81 mg dose of the same novel formulation — PL2200 Aspirin 81 mg — is in late-stage development and will be the subject of an sNDA leveraging the already approved status of PL2200 Aspirin 325 mg.

Financial overview

Summary

We have not generated net income from operations, and at September 30, 2015, we had an accumulated deficit of approximately $46.7 million, primarily as a result of research and development and general and administrative expenses. While we may in the future generate revenue from a variety of sources, including commercial revenues from the sale of PL2200 Aspirin, license fees, milestone payments and research and development payments in connection with potential future strategic partnerships, we have not yet generated any significant revenue. PL2200 Aspirin is at a late stage of development and may never be successfully developed or commercialized. Accordingly, we expect to incur significant and increasing losses from operations for the foreseeable future as we seek to commercialize PL2200 Aspirin and there can be no assurance that we will ever generate significant revenue or profits.

Research and development expenses

We recognize both internal and external research and development expenses as incurred. Our external research and development expenses consist primarily of:

the cost of acquiring and manufacturing clinical trial and other materials, including expenses incurred under agreements with contract manufacturing organizations;
expenses incurred under agreements with contract research organizations, investigative sites, and consultants that conduct our clinical trials and a substantial portion of our clinical activities; and
other costs associated with development activities, including additional studies.

Internal research and development costs consist primarily of salaries and related fringe benefit costs for our employees (such as workers’ compensation and health insurance premiums), stock-based compensation charges, travel costs, and allocated overhead expenses.

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We expect research costs to be minimal going forward as our focus is on commercializing PL2200 Aspirin.

General and administrative expenses

General and administrative expenses consist principally of personnel-related costs including share based compensation expense, professional fees for legal, intellectual property, consulting, audit and tax services, rent and other general operating expenses not otherwise included in research and development. We anticipate general and administrative expenses will increase in future periods, reflecting an expanding infrastructure, other administrative expenses and increased professional fees associated with being a public reporting company. We further expect a significant increase in overall sales and marketing costs should we successfully commercialize PL2200 Aspirin.

Other income (expense), net

Other income (expense), net is comprised of interest income and interest expense and loss on debt extinguishment.

Critical accounting policies, significant judgments and use of estimates

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Research and development expense

Research and development expenses include costs incurred in performing research and development activities, personnel related expenses, laboratory and clinical supplies, facilities expenses, overhead expenses, fees for contractual services, including preclinical studies, clinical trials and raw materials. We estimate clinical trial expenses based on the services received pursuant to contracts with research institutions and contract research organizations which conduct and manage clinical trials on our behalf. We accrue service fees based on work performed, which relies on estimates of total costs incurred based on milestones achieved, patient enrollment and other events. The majority of our service providers invoice us in arrears, and to the extent that amounts invoiced differ from our estimates of expenses incurred, we accrue for additional costs. The financial terms of these agreements vary from contract to contract and may result in uneven expenses and cash flows. To date, we have not experienced any events requiring us to make material adjustments to our accruals for service fees. If we do not identify costs that we incurred or if we underestimate or overestimate the level of services performed, our actual expenses could differ from our estimates which could materially affect our results of operations. Adjustments to our accruals are recorded as changes in estimates become evident. In addition to accruing for expenses incurred, we may also record payments made to service providers as prepaid expenses that we will recognize as expense in future periods as services are rendered.

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Stock-based compensation expense

As of December 31, 2015, there were outstanding options for the purchase of a total of 877,865 shares of Common Stock, with 4,287 options fully vested, 352,331 options vesting in full upon completion of this offering, and the remaining 521,247 options subject to vesting, typically over a two or three-year period.

We expect to continue to grant equity incentive awards in the future as we continue to expand our number of employees and seek to retain our existing employees, and to the extent that we do, our actual stock-based compensation expense recognized in future periods will likely increase.

Stock-based compensation costs related to stock options granted to employees are measured at the date of grant based on the estimated fair value of the award, net of estimated forfeitures. We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of stock-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award.

The Black-Scholes option-pricing model requires the use of highly subjective assumptions to estimate the fair value of stock-based awards. If we had made different assumptions, our stock-based compensation expense, net loss and net loss per share of common stock could have been significantly different. These assumptions include:

Fair value of our common stock:  Because our stock is not publicly traded, we must estimate its fair value, as discussed in “Common stock valuations” below.
Expected volatility:  As we do not have a trading history for our common stock, the expected stock price volatility for our common stock was estimated by taking the average historical price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers consist of several public companies in the biopharmaceutical industry that are similar in size, stage of life cycle and financial leverage. We did not rely on implied volatilities of traded options in our industry peers’ common stock because the volume of activity was relatively low. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount of historical information regarding the volatility of our own common stock price becomes available, or unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation.
Expected term:  We do not believe we are able to rely on our historical exercise and post-vesting termination activity to provide accurate data for estimating the expected term for use in estimating the fair value-based measurement of our options. Therefore, we have opted to use the “simplified method” for estimating the expected term of options.
Risk-free rate:  The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected time to liquidity.
Expected dividend yield:  We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.

The estimated fair value of the common stock underlying our stock options was determined at each grant date by our board of directors. Our board of directors intended all options granted to be exercisable at a price per share not less than the per-share fair value of our common stock underlying those options on the date of grant.

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The valuations of our common stock were determined by us based on recent transactions in our equity securities, the Board’s own evaluation, and information provided by an independent third-party valuation specialist, which included an analysis of the financial position of the Company using an asset-based approach, liquidation alternative, going concern alternative and option pricing model analysis, and factored in the nature and history of our business, and our fund raising history, earning capacity, dividend-paying capacity and general economic outlook.

Income taxes

We file U.S. federal income tax returns. To date, we have not been audited by the Internal Revenue Service or any state income tax authority; however, tax years after 2010 remain open for examination by federal and state tax authorities. We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We assess the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is deemed more likely than not that some portion or all of a deferred tax asset will not be realized.

Results of operations

Comparison of the years ended December 31, 2014 and 2013 and nine months ended September 30, 2015 and 2014

The following table summarizes our net loss during the periods indicated (in thousands):

           
(in thousands)   Year ended
December 31,
  Change   Nine months ended
September 30,
  Change
  2013   2014   2014   2015
                    (Unaudited)   (Unaudited)     
Revenue   $ 641     $ 288     $ (353 )    $ 176     $ 172     $ (4 ) 
Research and development expenses     5,667       3,345       (2,322 )      2,779       143       (2,636 ) 
General and administrative expenses     4,218       2,048       (2,170 )      1,458       1,301       (157 ) 
Other income (expense)     6       10       4       6       (2,029 )      (2,035 ) 
Net loss   $ (9,238 )    $ (5,095 )    $ 4,143     $ (4,055 )    $ (3,301 )    $ 754  

Revenues

Our revenues for the years ended December 31, 2013 and 2014 were $0.6 million and $0.3 million, respectively. As we do not have any commercial revenues yet, the decrease for the year was due primarily to less federal grant revenue in the 2014 period.

Research and development expense

Our research and development expenses for the years ended December 31, 2013 and 2014 were $5.7 million and $3.3 million, respectively, or a decrease of $2.3 million. The decrease in research and development expenses was due to the scope of our outside clinical and product manufacturing activities around PL2200 Aspirin 325 mg being reduced in 2014 as compared to the prior year. Additionally, research costs and activities in support of federal grant awards were reduced in line with the decrease in federal grant revenues noted above.

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Our research and development expenses for the nine months ended September 30, 2014 and 2015 were $2.8 million and $0.1 million, respectively, or a decrease of $2.6 million. The decrease in the 2015 nine-month period was due to our substantial completion of current research and development activities for PL2200 Aspirin 325 mg as compared to the 2014 nine-month period when the majority of our confirmatory anti-platelet efficacy clinical trial efforts were conducted.

General and administrative expense

Our general and administrative expenses for the years ended December 31, 2013 and 2014 were $4.2 million and $2.0 million, respectively, or a decrease of $2.2 million due primarily to a $1.3 million decrease in non-cash share based compensation expense, a $0.4 million non-cash impairment charge on equipment in 2013, a $0.25 million milestone payment upon approval of the NDA for PL2200 Aspirin 325 mg, and higher intellectual property legal costs in 2013 as compared to 2014.

Our general and administrative expenses for the nine months ended September 30, 2014 and 2015 were $1.5 million and $1.3 million, respectively, or a decrease of $0.2 million due primarily to our senior management team’s election to receive zero compensation to date in 2015 for a savings of $0.65 million and a decrease of approximately $0.15 million in intellectual property legal costs partially offset by an approximate $0.4 million increase in equity-based compensation and an approximate $0.2 million increase in general legal costs associated with our conversion from a Texas LLC to a Delaware corporation and public offering activities.

Other income (expense), net

Other income (expense) consists of interest income and expense and loss on debt extinguishment. The increase in other expenses, net for the nine months ended September 30, 2015 as compared to September 30, 2014 is due primarily to (i) an approximate $1.6 million loss on extinguishment of debt; (ii) approximately $388,000 of non-cash amortization of debt discount and; (iii) approximately $53,000 of interest expense on the short term notes payable issued in January and February 2015 which were converted along with the notes themselves into an aggregate 249,196 shares of common stock in July 2015 in conjunction with our conversion from a Texas LLC to a Delaware corporation.

Liquidity and capital resources

Sources of liquidity

Since our inception, we have financed our operations primarily through private placements of preferred stock and short-term financing, totaling approximately $42.2 million.

As of September 30, 2015, we had approximately $408,000 in cash and cash equivalents. In January and February 2015, we issued $800,000 of short term notes payable of which $180,000 was to related party investors. In July 2015, we received a $200,000 payment on the June 2015 amendment to our license agreement with Lee’s Pharmaceuticals. The short-term notes payable plus accrued interest were extinguished in July 2015 in conjunction with our conversion into a Delaware corporation in exchange for 249,196 shares of common stock. With management of our expenses, we believe we presently have sufficient liquidity to continue to operate into the first quarter of 2016.

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Cash flows

The following table sets forth the primary sources and uses of cash for the periods indicated:

           
  Year ended
December 31,
  Change   Nine months ended
September 30,
  Change
     2013   2014   2014   2015
                    (Unaudited)   (Unaudited)   (Unaudited)
     (in thousands)
Net Cash (used in) provided by:
                                                     
Net Cash (used in) provided by operating activities   $ (7,555 )    $ (4,947 )    $ 2,608     $ (3,918 )    $ (640 )    $ 3,278  
Net Cash (used in) provided by investing activities     (711 )      (4 )      707       (3 )            3  
Net Cash provided by financing activities     12,457             (12,457 )            800       800  
Net increase (decrease) in cash and cash equivalents   $ 4,191     $ (4,951 )    $ (9,142 )    $ (3,921 )    $ 160     $ 4,081  

Cash used in operating activities

Net cash used in operating activities during these periods primarily reflected our net losses and changes in working capital. Net cash used in operating activities was $7.5 million and $4.9 million for the years ended December 31, 2013 and 2014, respectively. The $2.6 million decrease in net cash used in operating activities was primarily due to the $4.1 million decrease in our net losses, as discussed above, partially offset by a $1.6 million decrease in noncash items principally due to a $358,000 equipment impairment charge in 2013 and a $1.3 million decrease in share based compensation charges in 2014 as compared to 2013.

Net cash used in operating activities was $3.9 million and $0.6 million for the nine months ended September 30, 2014 and 2015, respectively. The $3.3 million decrease in net cash used in operating activities was primarily due to the approximate $1.6 million non-cash loss on extinguishment of debt, approximately $0.4 million of increased non-cash equity based compensation, approximately $0.4 million non-cash amortization of debt discount, the approximate $0.75 million decrease in our net losses and $0.15 million increase in cash from working capital changes.

Cash used in investing activities

Net cash used in investing activities is primarily due to purchase of equipment to support our future commercialization activities and other office and related equipment.

Net cash used in investing activities was $0.7 million for the year ended December 31, 2013. During the year ended December 31, 2013, we acquired a custom piece of encapsulation equipment for use in our future commercialization activities. There was no significant use of cash for investment activities for the year ended December 31, 2014 or the nine months ended September 30, 2014 and 2015.

Cash provided by financing activities

Net cash provided by financing activities of $12.5 million in the year ended December 31, 2013 was related to proceeds received from the sale of shares of our Series G and G-1 preferred stock. Net cash provided by financing activities of $0.8 million in the nine months ended September 30, 2015 was related to proceeds from the issuance of short term notes payable which were extinguished in July 2015 along with accrued interest payable and associated incentive units in exchange for 249,196 shares of common stock.

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Contractual obligations and commitments

The following table reflects a summary of our estimates of future material contractual obligations as of December 31, 2015. Future events could cause actual payments to differ from these estimates.

         
     Total   <1 year   1 – 3 years   3 – 5 years   5 years
Contractual obligations:
                                         
Operating leases   $ 55,829     $ 55,829                    
Total contractual obligations   $ 55,829     $ 55,829                    

As of December 31, 2015, we have minimum lease payments totaling $55,829 under our office operating lease agreement expiring December 31, 2016. In addition, we are obligated to pay certain milestone payments in future years totaling $350,000 relating to royalties resulting from the approval to sell licensed products and the resulting sales of such licensed products under the patent license agreement with the Board of Regents of the University of Texas.

Qualitative and quantitative disclosures about market risk

We are exposed to market risk related to changes in interest rates as it impacts our interest income. As of December 31, 2015, we had cash and cash equivalents of $91,657. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates as our cash equivalents are invested in interest-bearing money market funds. Due to the short-term duration and low risk profile of our cash equivalents portfolio, a 10% change in interest rates for any period would not have a material effect on interest income we recognize or the fair market value of our investments. Accordingly, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a sudden change in market interest rates.

Off-balance sheet arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

JOBS Act accounting election

The JOBS Act permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

Controls and procedures

A company’s internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers, or persons performing similar functions, and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. In connection with our preparation for his offering, we concluded that there were no material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

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BUSINESS

We are a late-stage specialty pharmaceutical company initially focused on developing our clinically validated and patent-protected PLxGuardTM delivery system to provide safer and more effective aspirin products. Our PLxGuardTM delivery system works by releasing active pharmaceutical ingredients into the duodenum, the first part of the small intestine immediately below the stomach, rather than in the stomach itself. We believe this improves the absorption of many drugs currently on the market or in development, and reduces acute gastrointestinal (GI) side effects — including erosions, ulcers and bleeding — associated with aspirin and ibuprofen, and potentially other drugs.

Our United States Food and Drug Administration (FDA) approved lead product, PL2200 Aspirin 325 mg, is a novel formulation of aspirin that uses the PLxGuardTM delivery system to significantly reduce acute GI side effects while providing superior antiplatelet effectiveness for cardiovascular disease prevention as compared with the current standard of care, enteric coated aspirin. A companion 81 mg dose of the same novel formulation — PL2200 Aspirin 81 mg — is in late-stage development and will be the subject of a supplemental New Drug Application (sNDA) leveraging the already approved status of PL2200 Aspirin 325 mg.

Our commercialization strategy will target both the over-the-counter (OTC) and prescription markets, taking advantage of the existing OTC distribution channels for aspirin while leveraging the FDA approval of PL2200 Aspirin 325 mg and expected approval for PL2200 Aspirin 81 mg for OTC and prescription use when recommended by physicians for cardiovascular disease treatment and prevention. Given our clinical demonstration of better antiplatelet efficacy (as compared with enteric coated aspirin) and better acute GI safety, we intend to use a physician-directed sales force to inform physicians — and, by extension, consumers — about our product’s clinical results in an effort to command both greater market share and a higher price for our superior aspirin product. Our product pipeline also includes other oral nonsteroidal anti-inflammatory drugs (NSAIDs) using the PLxGuardTM delivery system that may be developed as funding is available, including a clinical-stage, GI-safer ibuprofen — PL1200 Ibuprofen 200 mg — for pain and inflammation.

PLxGuardTM Delivery System

Our PLxGuardTM delivery system uses surface acting lipids, such as phospholipids and free fatty acids, to modify the physiochemical properties of various drugs to selectively release these drugs to targeted portions of the GI tract. Unlike tablet or capsule polymer coating technologies (e.g., enteric coating), which rely solely on drug release based on pH differences in the GI tract, the PLxGuardTM system uses the differential in pH and bile acid contents between the stomach and duodenum, to target PL2200 Aspirin’s release. This approach is intended to more reliably release active pharmaceutical ingredients in the duodenum and decrease their exposure to the stomach, which is more susceptible to NSAID-induced bleeding and ulceration. The PLxGuardTM system is a platform technology that we believe may be useful in improving the absorption of many acid labile, corrosive, and insoluble or impermeable drugs.

We believe our PLxGuardTM delivery system has the potential to improve many already approved drugs and drugs in development, because it:

enhances the efficacy of the drug using our technology;
improves the GI safety of the drug;
provides new or extended patent protection for an already approved or in development drug: and
can utilize the 505(b)(2) New Drug Application (NDA) regulatory path, which may provide a faster and lower-cost FDA approval route when used with already approved drugs.

The PLxGuardTM delivery system has clinically proven these benefits with our novel formulations using aspirin and ibuprofen and has preclinical evidence supporting the potential for

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a GI-safer oral diclofenac and intravenous indomethacin products. Other existing or new drugs in development that may benefit from the PLxGuardTM delivery system will be evaluated either by us or through collaboration agreements with other companies.

Corporate History and Key Milestones

Our company was formed to commercialize technology developed to make NSAIDs GI-safer. Researchers at The University of Texas Health Science Center in Houston had applied for and received a number of patents for this technology over the years, relying primarily on funding from the National Institutes of Health. In January 2003, we licensed the technology and began a rigorous commercial approach to product development. Over time, as our own development efforts yielded new information about lipids and NSAIDs, we applied for and were issued and have pending patents that remain owned solely by us. We continued to seek grant funding and have benefited from over $9 million of non-dilutive funds from the U.S. government, primarily the National Institutes of Health.

Key Milestones

Obtained a license from The University of Texas System for our NSAID and phospholipid technology.
Issued over 60 patents covering the use of the PLxGuardTM Delivery System with multiple classes of drugs.
Completed first manufacturing run and established commercial shelf life for our novel PL2200 Aspirin 325 mg, the first ever liquid fill aspirin capsule.
Completed successful clinical trial establishing improved GI-safety of 200 mg ibuprofen product, PL1200 Ibuprofen.
Completed successful clinical trials establishing improved acute GI-safety and antiplatelet efficacy reliability of PL2200 Aspirin.
Obtained FDA approval for the first-ever liquid-fill aspirin capsule, PL2200 Aspirin 325 mg.
Engaged, as Executive Chairman of our Board of Directors, Mike Valentino, former CEO of Adams Respiratory Therapeutics, Inc.

Our Key Competitive Strengths

Our lead product, PL2200 Aspirin 325 mg, has been approved by the FDA under a traditional NDA process.  We intend to leverage clinical studies and market research to launch PL2200 Aspirin on a commercial scale using a combined prescription and OTC strategy that takes advantage of the existing OTC distribution channels for aspirin while leveraging the FDA approval of PL2200 Aspirin 325 mg for prescription and recommendation by physicians for cardiovascular disease treatment and prevention. We will be seeking approval of the companion PL2200 Aspirin 81 mg dose via an sNDA that should benefit from the prior approval of PL2200 Aspirin 325 mg.
Our management team has extensive experience in development and commercialization of OTC products.  Mr. Valentino, our Executive Chairman of the Board, brings over 30 years of experience in the healthcare industry. Mr. Valentino successfully built Adams Respiratory Therapeutics into a fully integrated specialty pharmaceutical company with more than $490 million in annual revenue and leading OTC brands such as Mucinex® and Delsym®. In December 2007, Adams Respiratory Therapeutics sold to Reckitt Benckiser for approximately $2.3 billion. Ms. Giordano, our President and Chief Executive Officer, has over 20 years in the life science industry and has successfully developed commercialization plans for several new product launches across various therapeutic areas, specifically building physician directed sales teams, including with one of the most successful products in the cardiology sector, Lipitor.

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PL2200 Aspirin 325 mg has demonstrated clinically superior antiplatelet efficacy in diabetic patients when compared to enteric coated aspirin, the current standard of care for cardiovascular disease prevention.  PL2200 Aspirin 325 mg delivers faster and more reliable, predictable and sustained antiplatelet benefits than enteric coated aspirin as clinically demonstrated in diabetic patients at risk for cardiovascular disease with a median time to 99% inhibition of serum Thromboxane B2 of two hours compared with 48 hours and with a 3 – 5 times greater chance of a complete aspirin antiplatelet effect than enteric coated aspirin.
PL2200 Aspirin 325 mg has demonstrated clinically superior GI safety when compared to regular aspirin.  PL2200 Aspirin 325 mg has demonstrated a statistically significant 65% reduction in the risk of acute ulcers compared with regular aspirin in healthy subjects with an age associated risk for cardiovascular disease. Based on physician market research, we believe that our clinical data supporting superior acute GI safety as compared to aspirin is important for physicians who are having difficulty keeping high-risk patients on sustained aspirin use due to lack of tolerability.
Our PLxGuardTM delivery system is a platform technology that may improve the GI safety and efficacy when applied to already approved drugs.  Our PLxGuardTM delivery system is a platform technology that we believe could improve the GI safety of selected NSAIDs that meet specific criteria. According to a report by Evaluate Pharma, the global OTC pain market for NSAIDs was over $12 billion in 2013. We intend to explore new development opportunities and utilize the 505(b)(2) NDA regulatory pathway to decrease the time and costs associated with obtaining FDA approval for new products.
Our PLxGuardTM delivery system may lower development risk and costs by leveraging the 505(b)(2) NDA pathway.  A 505(b)(2) NDA is permitted to reference safety and effectiveness data submitted by the original manufacturer of the underlying approved drug as part of its NDA, to be based on the FDA’s prior conclusions regarding the safety and effectiveness of that previously approved drug, or to rely in part on data in the public domain. Reliance on data collected by others may expedite the development program for our product candidates by potentially decreasing the amount of clinical data that we would need to generate to submit an NDA. As the FDA has previously approved PL2200 Aspirin 325 mg with a 505(b)(2) NDA, we believe that there is a strong likelihood that our future products would similarly qualify. The factors related to this qualification are expected to reduce the time and costs associated with clinical trials when compared to a traditional NDA for a new chemical entity. We also believe the strategy of targeting drugs with proven safety and efficacy provides a better prospect of clinical success of our proprietary development portfolio as compared to de novo drug development. We estimate that the average time to market and cost of clinical trials for our products could be less than that required to develop a new drug.
Our issued patents and patent applications in the United States and worldwide may protect us from generic competition and enable a higher price point than current aspirin products.  We believe our patent portfolio provides strong protection of our delivery platform, drug formulations and manufacturing processes with 60 issued patents and additional pending applications with expirations ranging from December 19, 2021 through September 27, 2032.

Our Strategy

Our goal is to become a leading specialty pharmaceutical company, commercializing both the PL2200 Aspirin 325 mg and PL2200 Aspirin 81 mg dose forms and developing additional branded products using our PLxGuardTM technology. The key elements of our strategy are to:

Successfully commercialize PL2200 Aspirin 325 mg.  Prior to launch, we will need to finalize a brand name and final label with the FDA, scale up our commercial production capabilities, and conduct three validation manufacturing runs required to satisfy FDA pre-launch

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requirements. We will hire, train and deploy a 120- to 150-person sales force to support a national launch to appropriate healthcare providers. This will provide a technical focus on PL2200 Aspirin 325 mg and 81 mg products based upon our compelling clinical results to enhance the value of these products.

Obtain FDA approval for PL2200 Aspirin 81 mg and prepare it for commercial launch.  This will include, in addition to the efforts described above, submission of an sNDA seeking approval to launch PL2200 Aspirin 81 mg simultaneously with the already-approved 325 mg dose form.

Initiate a physician-targeted market launch strategy.  Our market launch strategy will focus on physician detailing by targeting physicians who are seeking reliable and predictable antiplatelet efficacy for their highest risk cardiovascular patients. This strategy is designed to drive product sales professionally with a technical sales approach. We anticipate taking advantage of aspirin’s unique OTC and prescription approval by using a sales force to call on physicians to inform them of the clinically validated attributes of PL2200 Aspirin. This physician sales effort will be designed to create interest in PL2200 Aspirin among healthcare professionals and to influence their recommendations and prescriptions of PL2200 Aspirin over other aspirin products.

Move beyond aspirin to leverage our PLxGuardTM delivery system in new products.  While we are currently focused on PL2200 Aspirin, there is a pipeline of additional opportunities that can be exploited. We are developing novel formulations that combine already-approved selected NSAIDs that meet our specific criteria with our proprietary PLxGuardTM technology to make safer and more effective new products. In addition to PL2200 Aspirin, we have clinical data for a GI-safer OTC ibuprofen product, PL1200 Ibuprofen 200 mg, and preclinical data for a GI-safer diclofenac and a GI-safer intravenous indomethacin. We believe that the PLxGuardTM technology may also prove a novel drug delivery platform for corrosive, acid labile and insoluble and impermeable drugs providing delivery along the GI tract. We believe that by focusing initially on commercializing PL2200 Aspirin we can demonstrate the viability of our PLxGuardTM delivery system as a versatile platform technology.

Hire additional senior management and key personnel to support the formulation and execution of successful product launches.  Though we will continue to evaluate other market launch options, including co-promotion in the United States with one or more existing firms, we currently expect to launch PL2200 Aspirin in the United States using our own sales and marketing team. This will require additional hiring of both management and sales personnel.

Seek strategic partners to commercialize PL2200 Aspirin and other products in global markets.  We have licensed the rights to commercialize PL2200 Aspirin in the People’s Republic of China (including Macao and Hong Kong), along with an option for commercialization in Cambodia, Indonesia, Laos, Malaysia, Myanmar, Papua New Guinea, Philippines, Singapore, Taiwan, Thailand and Vietnam. We will continue to seek partners in other global markets.

Product Pipeline

Our lead product, PL2200 Aspirin 325 mg, is approved by the FDA for OTC distribution and is the first-ever FDA-approved liquid-fill aspirin capsule. All the clinical trials necessary for product launch have been completed. In clinical trials in diabetic patients at risk for cardiovascular disease, PL2200 Aspirin 325 mg demonstrated better antiplatelet efficacy compared with enteric coated aspirin, which is the current standard of care for cardiovascular disease prevention and treatment. PL2200 325 mg delivers faster antiplatelet efficacy than enteric coated aspirin with a median time to 99% inhibition of serum Thromboxane B2 of two hours compared with 48 hours for enteric coated aspirin. Serum Thromboxane B2 is a clinically accepted marker for antiplatelet efficacy (sometimes referred to as “aspirin response”).

PL2200 Aspirin 325 mg provides more reliable, predictable and sustained antiplatelet benefits than enteric coated aspirin with a 3 – 5 times greater chance of a complete aspirin antiplatelet effect than enteric coated aspirin. PL2200 Aspirin 325 mg has demonstrated a statistically

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significant 65% reduction in the risk of acute ulcers compared with immediate release aspirin in healthy subjects with an age-associated risk for cardiovascular disease. This acute GI safety benefit may also be important for acute coronary syndrome (ACS) patients. Moreover, we believe ACS patients who are also diabetics and suffer from gastroparesis, or a lack of digestive stomach motility, could also benefit from PL2200 Aspirin due to its more predictable absorption when compared to enteric coated aspirin. The acute GI safety benefit may also be used to differentiate PL2200 Aspirin 325 mg from products intended for use in conditions associated with pain and inflammation, including other aspirin and NSAID products.

PL2200 Aspirin 81 mg is our lower-dose companion product for PL2200 Aspirin 325 mg (the two dose forms are often referred to in this prospectus collectively as “PL2200 Aspirin”). This product utilizes exactly the same formulation as the 325 mg product (except delivered in a capsule one quarter the size) and will be the subject of an sNDA, which we expect to file with the FDA early in the second half of 2016. We will rely on the clinical results for PL2200 Aspirin 325 mg for the PL2200 81 mg sNDA and do not anticipate any additional clinical trials will be required, effectively positioning this product as an end of Phase 3 status.

We believe our technology may be used with other selected NSAIDs, such as ibuprofen. For the U.S. OTC market, we have used the PLxGuardTM delivery system to create a lipid-based formulation of ibuprofen, PL1200 Ibuprofen 200 mg. We have an Investigational New Drug application (IND) active with the FDA and have demonstrated bioequivalence with OTC 200 mg dose ibuprofen to support a 505(b)(2) NDA in fasted-state clinical trials at three different doses, 200 mg, 400 mg and 800 mg. Using the PL1200 formulation at prescription doses, we demonstrated better GI safety in osteoarthritic patients with equivalent analgesic and anti-inflammatory efficacy, when compared with prescription ibuprofen in a six-week endoscopy pilot clinical trial.

The following table summarizes information regarding our product candidates and development program:

[GRAPHIC MISSING] 

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We have several active INDs related to our aspirin and ibuprofen development programs, as shown below:

Product IND(s) Status Filed On Clinical Trials
Conducted
Under IND
PL2200 Aspirin, 325 mg (OTC) 074290 Active 12/20/2007 PL-ASA-001
PL2200 Aspirin, 325 mg (Rx) 077280 Active 12/20/2007 PL-ASA-002
PL-ASA-003
PL-ASA-004
PL-ASA-005
            PL-ASA-006
PL1200 Ibuprofen, 200 mg (OTC) 102678 Active 10/06/2009 PL-IB-001
PL1100 Ibuprofen, 400 mg (Rx) 062824 Active 12/22/2003 PL-IB-002
PL-IB-003
            PL-IB-004

OTC: Over-The-Counter, Rx: Prescription

Additionally, we have one withdrawn IND related to the naproxen development program, as shown below:

Product IND(s) Status Filed On Clinical Trials
Conducted
Under IND
PL3100 Naproxen, 250 mg (Rx) 103964 Withdrawn 08/29/2009 PL-NAP-001
Development terminated          PL-NAP-002

Rx: Prescription

The Market

Cardiovascular/Aspirin Market

Aspirin is a foundational medicine for the treatment and prevention of cardiovascular disease (CVD) — a collective term for chest pain, coronary artery disease, heart attack, heart failure, high blood pressure and stroke — which is the leading cause of death in the United States. Aspirin is widely used to treat patients exhibiting signs and symptoms of ACS, and is commonly prescribed or recommended by physicians, in addition to other drugs such as cholesterol or blood pressure medications, as the standard of care for treating ACS and preventing recurrent ACS for the duration of a patient’s life.

The 325 mg dose is generally prescribed:

in an acute setting for the treatment of ACS;
following an interventional procedure (such as placement of a stent); and
for preventing heart attack or stroke during the high-risk period following an event or intervention.

Eventually, most patients move to the 81 mg dose for secondary prevention applications and for high-risk primary prevention, as they are typically directed to take aspirin every day for the rest of their life. The 81 mg aspirin dose is the most prevalent, representing approximately 70% to 80% of aspirin sales in the United States, followed by the 325 mg dose and then several other dose forms including powdered and effervescent aspirin products. In the United States, the primary use for aspirin is for the prevention and treatment of cardiovascular disease as evidenced by the predominance of the 81 mg dose.

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Aspirin is also used for pain relief and fever reduction. The most widely used dose for pain is 325 mg. A GI safer PL2200 Aspirin 325 mg may be able to capture market share from other aspirin and NSAID products in the large pain and inflammation market.

Annual global aspirin sales in 2013 were estimated to be $1.6 billion (Euromonitor), including branded products such as Bayer®, Ecotrin® and St. Joseph® together with numerous private label or store brands. Because of the known GI toxicity issues associated with immediate release (or “regular”) aspirin, enteric coated aspirin has evolved to become the leading aspirin dose form, representing over 90% of U.S. aspirin sales in 2013. This success is largely based on early clinical studies suggesting that enteric coated aspirin showed a reduction in superficial gastric lesions as compared with regular aspirin. But when measured using contemporary clinical procedures, enteric coated aspirin has not continued to demonstrate such reductions. These deficiencies create a significant opportunity for the demonstrated efficacy of PL2200 Aspirin.

Pain & Inflammation/Ibuprofen

The global OTC pain market for NSAIDs was over $12 billion in annual sales in 2013 (Evaluate Pharma). Ibuprofen in the United States alone represents $1.6 billion. This class of drugs is one of the most widely used drugs worldwide. Increasing concerns over liver toxicity associated with acetaminophen products coupled with known ibuprofen analgesic superiority over acetaminophen, indicate there is a substantial global opportunity for a GI safer ibuprofen product. While we do not believe our technology will work with the entire NSAIDs class, it is possible that our technology may be successfully applied to other NSAIDs beyond aspirin and ibuprofen. For example, we have preclinical data suggesting that diclofenac — a leading NSAID for pain and inflammation outside the United States — is a viable product candidate.

Use of Aspirin in Management of Cardiovascular Disease

Aspirin is critical to the management of cardiovascular disease. However, current aspirin products have an elevated risk of GI side effects, such as ulceration and dyspepsia that can lead to discontinuation. Discontinuation of aspirin leads to more than a three-fold increase in risk of recurrent major cardiac events. Enteric coated aspirin is the most commonly used aspirin formulation in the U.S, with greater than 90% market share in 2014. This formulation does not decrease the risk of GI side effects and may have less heart health benefits than immediate release aspirin. We believe the variable and incomplete absorption of aspirin from the enteric coated dose form is responsible for “aspirin resistance” — incomplete antiplatelet activity that has been linked to an elevated risk of cardiovascular disease.

Aspirin remains a critical antiplatelet agent for the treatment and prevention of cardio and cerebrovascular disease. Over 50 million additional Americans who should be using aspirin daily for cardio prevention are not. The primary reason being they cannot tolerate aspirin’s GI toxicity. GI toxicity is a well-known side effect that is manifested as gastroduodenal ulceration, bleeding and dyspepsia. Among these side effects, ulceration and dyspepsia are most frequently reported with incidences of 5 – 15% and 20 – 40%, respectively.

After ischemic stroke or ACS, which is defined as stable or unstable angina or myocardial infarction, aspirin doses of 325 mg/day or less are used on a daily basis for the duration of a patient’s life. Compliance to such a regimen is critically important because discontinuation of aspirin leads to more than a three-fold increase in risk of a major cardiac event such myocardial infarction, stroke, or cardiovascular death.

Aspirin-induced GI mucosal injury, ulceration, and bleeding have been attributed to contact injury to the hydrophobic surface of the gastroduodenal tract, leading to an aberrant back-diffusion of acid into the mucosa that can trigger ulcerogenesis. EC formulations of aspirin and co-therapy with antisecretory drugs have been developed to mitigate such injury. However, such approaches may attenuate antiplatelet activity.

Due to increasing concern over aspirin GI bleeding, ulceration, and dyspepsia enteric coated aspirin has become the leading aspirin dose form in the United States with greater than 90% of

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aspirin sales. Despite its widespread adoption there have not been successful multiple large outcome studies supporting its use for secondary prevention. There is a growing body of evidence that suggests the absorption of aspirin from enteric coated aspirin products is highly variable and markedly reduced, resulting in reduced antiplatelet activity. This is in addition to the FDA’s opinion that the enteric coated aspirin results in “erratic absorption.” Moreover, there is no evidence of a decreased risk of clinically relevant ulceration or dyspepsia for enteric coated aspirin.

The basis for the use of aspirin for prevention of a cardiac event is largely derived from a meta-analysis consisting almost entirely of immediate-release formulations. The EMA acknowledges that sufficient efficacy and safety data for a modified release formation (e.g. enteric coated aspirin) are absent, going so far as to state “…all valid clinical studies proving the efficacy and safety of ASA for the secondary prevention of cardiovascular events have been performed using immediate release formulations of ASA”. This is further supported by a recently published study in Japan that demonstrated once-daily, low-dose enteric coated aspirin did not significantly reduce the risk of the composite outcome of cardiovascular death, nonfatal stroke, and nonfatal myocardial infarction among Japanese patients 60 years or older with atherosclerotic risk factors.

Over time, with increasing recognition of the elevated risk of life threatening gastrointestinal bleeding and the elevated risk of secondary cardiovascular events upon aspirin discontinuation, enteric coated aspirin has become the prominent dose form because of the conceptually attractive mechanism of the selective release of ASA in the intestine while sparing the surface of the stomach from superficial injury. Although EC products have been shown to decrease the risk of superficial lesions, enteric coated aspirin has not been shown to decrease the risk of clinically relevant mucosal damage such as ulceration and bleeding. While commonly assumed to decrease the risk of dyspepsia, the rate of aspirin-induced incident dyspepsia appears no different among enteric coated aspirin and immediate release aspirin users.

In addition to the lack of evidence of improved GI safety or dyspepsia profile of enteric coated aspirin, at least one study has shown that enteric coated aspirin is the primary cause of reduced antiplatelet activity or “aspirin resistance” (Grosser et al., “Drug Resistance and Pseudoresistance: An Unintended Consequence of Enteric Coating Aspirin”, Circulation, 2013;127:377 – 385). We have extended these findings and shown that aspirin resistance is mediated by decreased absorption of aspirin in diabetics. Except for non-compliance, we believe the lower bioavailability mediated by enteric coated aspirin is the major mechanism of aspirin resistance.

This provides a significant market opportunity for an OTC aspirin product that has predictable antiplatelet activity and lower risk of acute GI injury. To address the need for an aspirin product with improved safety and predictable absorption, PL2200 Aspirin 325 mg has been developed and approved by the FDA in the United States. PL2200 Aspirin is an aspirin product that selectively releases aspirin in the duodenum through its lipid-based formulation, a process that requires high pH and bile to emulsify the lipid matrix and release ASA. Unlike enteric coated aspirin whose release is only pH dependent, PL2200 Aspirin has pH as well as bile sensitivity which (i) reduces the risk to the stomach of acute ulcers compared with current immediate release aspirin products, (ii) increases the rate and extent of absorption and antiplatelet activity compared to enteric coated aspirin, and (iii) reduces hyper-variable absorption when concomitantly administered with food.

Of the over 250 cardiovascular outcome studies done with aspirin, the seminal studies, which show a remarkable 21% to 51% decrease in mortality, have been done with immediate release aspirin products, with only one such study purportedly testing enteric coated aspirin. In that lone EC study, however, patients were instructed to chew the initial dose, which essentially voids the purpose of the enteric coating, making the dose, in effect, immediate release aspirin. The European Medicines Agency (EMA) — the EU’s equivalent of the FDA — concluded, as a result, that all valid clinical studies proving the efficacy and safety of aspirin for secondary prevention of cardiovascular events have been performed using immediate release formulations of aspirin.

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Enteric coated aspirin was heavily marketed to cardiologists and consumers in 1980s and 1990s as “safer.” The marketing was based on endoscopic findings that showed lower risk of gastric mucosal injury. In spite of the evidence to the contrary, most physicians that we have interacted with still equate signs and symptoms of dyspepsia to the presence of peptic ulcer disease. As such, physicians have erroneously presumed that enteric coated aspirin has a lower risk of dyspepsia. There have been no randomized prospective studies comparing enteric coated aspirin and immediate release aspirin induced gastrointestinal symptoms. Studies using enteric coated aspirin showed no difference in the rate of incidence of dyspepsia with enteric coated aspirin, and concluded that the choice to substitute enteric coated aspirin for regular aspirin for the prevention of dyspepsia was based on expert opinion, not on evidence available in medical literature.

Although there is some evidence that minor erosive damage is decreased with enteric coated aspirin, these products do not decrease the risk of clinically relevant ulceration or the risk of upper GI bleeding. In the early studies of enteric coated aspirin, ulcers were defined as superficial mucosal breaks without depth. In contrast, the contemporary definition of an ulcer as a mucosal break that penetrates the muscularis, is associated with life-threatening GI bleeding. Based on this definition, enteric coated aspirin has been associated with clinically relevant gastroduodenal ulceration.

Enteric coating markedly increases the inter-individual and intra-individual variability of the rate and extent of aspirin bioavailability due to “erratic absorption” of enteric coated aspirin. This variability is further exacerbated by concomitant administration of enteric coated aspirin with food, which is commonly employed to decrease the risk of dyspepsia.

Comparison of inter- and intra-individual variability of
immediate release aspirin (Alka Seltzer) with enteric coated aspirin (Ecotrin)

[GRAPHIC MISSING]

Dosing:  1g single dose given 1 week apart to 10 fasted volunteers. Scatter plot depicts plasma salicylate levels. [GRAPHIC MISSING] = 1hr, [GRAPHIC MISSING] = 2hr, [GRAPHIC MISSING] = 4hr, [GRAPHIC MISSING] = 6hr, and [GRAPHIC MISSING] = 8hr

Source:  Leonards, J.R. and G. Levy, Absorption and Metabolism of Aspirin Administered in Enteric-Coated Tablets. JAMA, 1965. 193: p. 99 – 104.

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Food further increases the variability of the rate
and extent of bioavailability of enteric coated aspirin

[GRAPHIC MISSING]

Source:  Bogentoft, C., et al., Influence of food on the absorption of acetylsalicylic acid from enteric-coated dosage forms. European Journal of Clinical Pharmacology, 1978. 14(5): p. 351 – 355.

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It is a generally accepted practice to take enteric coated aspirin with food in order to improve tolerability and increase compliance. However, this reduces the rate and extent of absorption, as illustrated below.

[GRAPHIC MISSING]

Source:  Bogentoft, C., et al., Influence of food on the absorption of acetylsalicylic acid from enteric-coated dosage forms. European Journal of Clinical Pharmacology, 1978. 14(5): p. 351 – 355.

Randomized clinical studies suggest that enteric coated aspirin may exhibit an attenuated antiplatelet activity. Such reduced antiplatelet efficacy may be due to lower bioavailability of aspirin from these delayed-release preparations. Enteric coated aspirin at a cardiovascular (CV) dose (81 – 325 mg) or an analgesic dose (325 – 1000 mg) has an acetylsalicylic acid T max that is approximately 3 hours later, a C max that is four times lower, and an area under the curve (AUC) that is two times lower than those for immediate-release aspirin formulations. Taking enteric coated aspirin with food may delay the rate of absorption and reduce the amount of aspirin absorption even greater. In the Bogentoft study, which is represented above, three of the

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eight subjects (37.5%) did not register any meaningful aspirin absorption after taking enteric coated aspirin with food and thus were not receiving any antiplatelet benefit for cardiovascular disease prevention.

PL2200 Aspirin

PL2200 Aspirin 325 mg has been developed and approved by the FDA in the United States. PL2200 is an aspirin product that selectively releases aspirin in the duodenum through its lipid-based formulation, a process that requires high pH and bile to emulsify the lipid matrix and release ASA. Unlike enteric coated aspirin whose release is only pH dependent, PL2200 has pH as well as bile sensitivity which (i) reduces the risk to the stomach of acute ulcers compared with current immediate release aspirin products, (ii) increases the rate and extent of absorption and antiplatelet activity compared to enteric coated aspirin, and (iii) reduces hyper-variable absorption when concomitantly administered with food.

Aspirin (≤ 325 mg) is one of the most frequently used drugs in the world for CVD prevention. However, 45% of patients with multiple CVD factors are not treated with antiplatelet agents including aspirin because the risk of GI bleeding may outweigh the vascular benefit.

The primary risk factors for GI bleeding induced by aspirin include the following:

A history of peptic ulcers, especially complicated ulcers, was associated with a three-fold increase in the risk.
Advanced age and gender. The relative increase of the risk starts at age 60 years and rises in a nonlinear fashion with age. In patients aged 60 and over, the risk is slightly higher in males than in females.
Presence of severe CVD.
Use of high doses of aspirin or concomitant use of other NSAID, including cyclo-oxygenase-2 selective inhibitors
Concomitant use of clopidogrel. Combination therapy with clopidogrel and aspirin is associated with a two-fold increased risk of upper GI complications compared to aspirin alone.

Daily aspirin administration frequently induces gastric mucosal damage, with an incidence of 40 – 50% in healthy volunteers and in cardiovascular patients. In addition, it is ulcerogenic even at a very low dose of 10 mg per day, and increases the risk of GI bleeding. Advancing age and concomitant use of other NSAIDs and antiplatelet agents further increase the risk of life-threatening aspirin-induced GI bleeding. In secondary prevention of CVD, the addition of the antiplatelet agent clopidogrel to aspirin prophylaxis further decreases the rate of recurrent vascular events and mortality, but with elevated risk of GI bleeding. Moreover, the concomitant use of aspirin with other NSAIDs, cyclo-oxygenase-2 (COX-2) selective inhibitors, and with anticoagulant drugs also leads to synergistic increases in GI bleeding. Therefore, patients at risk for a GI bleed or ulceration are often co-prescribed gastric anti-secretory drugs, H2 receptor antagonists (H2RAs) or PPIs to decrease upper GI injury.

However, this is confounded by the FDA warning against the use of certain PPIs, such as omeprazole, with clopidogrel (Plavix). These drugs are associated with increased risk of:

Drug interactions (e.g. Plavix-clopidogrel)
Osteoporosis related fractures of the hip, wrist or spine
Clostridium difficile associated diarrhea; and
Hypomagnesemia.

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In the US, ACS patients are typically discharged from the hospital and prescribed, per practice guidelines:

Enteric coated aspirin
Adenosine diphosphate (ADP) receptor inhibitor such as clopidogrel (Plavix)
Heparin; and
Proton pump inhibitors such as omeprazole.

The highest risk of a recurrent vascular event and GI damage is within 30 days of a revascularization procedure. As these procedures induce marked damage to the arterial endothelium, there is a high risk of focal thromboxane generation and thrombus formation leading re-occlusion. This increased risk of recurrent vascular events during this sub-acute period is associated with the risk of life threatening GI bleeding. The primary risk factors for such bleeding are:

dual antiplatelet agents (e.g. ADP inhibitors and aspirin)
age
diabetes
anticoagulant agents; and
severity of vascular disease.

To decrease this sub-acute risk of GI bleeding induced by aspirin mucosal injury, enteric coated aspirin is the most predominately used chronic use aspirin product in the United States for the prevention of ACS, and specifically designated as the aspirin formulation of choice in clinical guidelines, such as in China. As detailed herein, enteric coated aspirin has highly variable antiplatelet activity, and no evidence of lower risk of serious mucosal damage that leads to life threatening GI bleeding. As such, there is a clear need for an aspirin product that provides predictable antiplatelet activity and a lower risk of mucosal injury, which may improve cardiovascular outcome during this sub-chronic period.

The importance of GI risk upon initiation of aspirin therapy is supported by quantitative market research. A survey conducted by Weinman Schnee Morais, Inc. of 201 cardiologists — 40% of whom were interventional cardiologists — and 100 neurologists, yielded positive results. When the survey participants were shown a product profile of PL2200 Aspirin:

About 80% said it is extremely/very important to them that PL2200 Aspirin reduces the risk of acute gastric erosions and acute gastric ulcers.
About 67 – 77% said that reducing these acute lesions could improve compliance and therefore lead to better outcomes for their patients
About 30 – 35% said that patients are most at risk to discontinue aspirin use due to tolerability issues in the first 10 days.

PL2200 Aspirin has the potential to be better than enteric coated aspirin as the primary aspirin product for those with the greatest risk of cardiovascular disease, including the treatment and prevention of ACS and ischemic stroke. This is primarily because:

PL2200 Aspirin has more predictable pharmacokinetics and antiplatelet activity than enteric coated aspirin. The FDA recognizes all enteric coated aspirin products have “erratic absorption” in the monograph Professional Labeling. PL2200 Aspirin has clinical evidence of superior bioavailability and antiplatelet activity.

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PL2200 Aspirin has a lower risk of acute GI ulceration than immediate release aspirin, which is the gold standard product for aspirin heart health benefits. Ulcers are a validated surrogate marker for risk of GI bleeding. As the risk of GI bleeding is highest within 30 days after ACS, PL2200 Aspirin could become an important aspirin product for hospital use and discharge from the hospital after ACS.

In two separate endoscopy trials involving healthy subjects with an age-associated risk for cardiovascular disease, PL2200 Aspirin 325 mg demonstrated a statistically significant reduction of at least 65% in the risk of ulcers compared with 325 mg regular aspirin when taken once a day over a seven-day period. In an acute setting, PL2200 Aspirin 325 mg is demonstrably GI safer than regular aspirin for patients in our target market. PL2200 Aspirin 325 mg while demonstrating a statistically significant reduction in mucosal damage at 42 days similar to the endpoint used for enteric coated aspirin early studies, PL2200 Aspirin 325 mg did not demonstrate a difference in the risk of getting an ulcer.

PL2200 Aspirin 325 mg has also demonstrated increased effectiveness over enteric coated aspirin. We have successfully completed two pharmacokinetic and pharmacodynamic studies using diabetic patients with an increased risk for cardiovascular disease. The first study (PL-ASA-004) used a crossover study design where all the patients took both PL2200 Aspirin 325 mg and a leading 325 mg enteric coated aspirin product once a day for three days. The second study (PL-ASA-006) compared both products again in all patients taking the products daily for ten days. Both studies demonstrated that PL2200 Aspirin 325 mg was faster acting and provided more reliable, predictable and sustainable antiplatelet efficacy than the enteric coated aspirin 325 mg.

Statistical significance is important and when used herein is denoted by p-values. The p-value is the probability that the reported result was achieved purely by chance (for example, a p-value <0.001 means that there is a less than a 0.1% chance that the observed change was purely due to chance). Generally, a p-value less than 0.05 is considered to be statistically significant.

FDA Interactions Related to PL2200 Aspirin

PL2200 Aspirin 325 mg was approved by the FDA on January 14, 2013. Upon approval, the FDA published the NDA approval letter as well as reviewers’ comments on the application. We noted in the published reviewer comments a mistake in a reviewer’s interpretation of the PL-ASA-002 endoscopy study results which suggested the trial was not successful. However, this trial was successful and the reviewer misinterpreted the results. This trial was not used as a basis for approval but was submitted to the FDA as part of the application and thus, it was commented on by the clinical reviewer. On October 3, 2014, we submitted a response to correct the reviewer’s misinterpretation of the PL-ASA-002 results.

On April 5, 2013 our regulatory legal counsel submitted a request on our behalf to the Office of Chief Counsel of the FDA to ask for their assistance in interacting with the Office of Drug Evaluation and Research regarding their decision to not approve a heart graphic and the words ‘safe’ and ‘reliable’ on the proposed label for PL2200 Aspirin 325 mg. We brought to the attention of the Office of Chief Counsel that our NDA approval was subject to an unfair burden on limitations being put on our label which other OTC Monograph products that had no prior label approval were not subject to. On January 3, 2014, the FDA agreed with our position, allowed the heart graphic to be included on the label, and provided guidance on requesting language such as “safe” and “reliable.” We intend to finalize the label for PL2200 Aspirin 325 mg when a proprietary (brand) name is determined and submit the proposed name and final label to the FDA.

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PL2200 Aspirin Clinical Studies

OTC
Market Access
Studies

PL-ASA-001 — Pivotal PK study for 505(b)(2) NDA

 – 

Study bridged PL2200 to the only aspirin formulation with valid CV outcome studies (immediate release aspirin)

PL-ASA-003 — Food effect PK study for OTC, which showed:

 – 

Food does not affect rate and extent of absorption

Physician Marketing Studies to Support Product Launch Best
Antiplatelet
Activity

PL-ASA-004 — PK/PD in Type II Diabetics without CV disease, which showed:

 – 

PK and PD bioequivalent to IR release aspirin

PL-ASA-004 & PL-ASA-006 PK/PD in Type II Diabetics without CV disease, which showed:

 – 

Aspirin resistance is due to enteric coated aspirin because it decreases aspirin absorption

 – 

PL2200 is more reliable than enteric coated aspirin because of 1) faster onset, 2) greater chance of complete response — i.e. lower risk of aspirin resistance, 3) less variable absorption and antiplatelet activity

Faster Onset
No Resistance
   Less Variability
   Safer than
Immediate
Release Aspirin

PL-ASA-002 & PL-ASA-005 endoscopic studies in subjects with CV disease age associate risk, which showed:

 – 

PL2200 has a lower risk of sub-chronic gastroduodenal ulceration than immediate release aspirin

Further detail regarding the PL2200 Aspirin 325 mg clinical trials is provided below:

Protocol Number Study Arms (Number of
Subjects Treated per Arm, n)
Dosing Protocol
and Duration
Study Center
Location(s)
Study Population
PL-ASA-001
Crossover design

 – 

325 mg PL2200 (n=16)

Single 325 mg dose of study drug or single 650 mg dose of study drug Houston, TX Healthy volunteers at least 21 years of age.
 
Avg. age: 36.8 ± 9.6
12 male, 20 female

 – 

325 mg Immediate Release Aspirin Tablets (n=16)

 – 

650 mg PL2200 (n=16)

 – 

650 mg Immediate Release Aspirin Tablets (n=16)

Study Initiation:
02/11/2008
Study Completion: 06/10/2008
  

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Protocol Number Study Arms (Number of
Subjects Treated per Arm, n)
Dosing Protocol
and Duration
Study Center
Location(s)
Study Population
PL-ASA-002

 – 

325 mg PL2200 (n=97)

325 mg dose of study drug once daily for 7 days Dallas, TX
Duncansville, PA
Houston, TX
Oklahoma City, OK
Miami, FL
Jupiter, FL
Healthy volunteers between 50 and 75 years old.
 
Avg. age: 57.3 ± 6.20
116 male, 118 female

 – 

325 mg Immediate-Release (IR) Aspirin Tablets (n=101)

Study Initiation:
12/15/2008
Study Completion: 06/12/2009
  
PL-ASA-003
Crossover design

 – 

650 mg PL2200 in the fed state (n=20)

Single 650 mg dose of study drug Houston, TX Healthy volunteers between 21 and 65 years old, with a body mass index (BMI) between 20 and 32 kg/m2.
 
Avg. age: 36.8 ± 8.55
11 male, 9 female

 – 

650 mg PL2200 in the fasted state (n=20)

Study Initiation:
10/23/2010
Study Completion: 12/05/2010   
PL-ASA-004
Crossover design

 – 

325 mg PL2200 (n=30)

325 mg dose of study drug once daily for 3 days Cincinnati, OH
Boston, MA
Jacksonville, FL
Type II diabetes without previous history of vascular disease between 21 to 79 years old.
 
Avg. age: 52.9 ± 10.12
26 male, 14 female

 – 

325 mg Enteric-Coated (EC) Aspirin Caplets (n=30)

 – 

325 mg Immediate-Release (IR) Aspirin Tablets (n=30)

Study Initiation:
02/20/2012
Study Completion:
06/16/2012
  
PL-ASA-005

 – 

325 mg PL2200 (n=110)

325 mg dose of study drug once daily for six (6) weeks (42 days) New York, NY
Raleigh, NC
Dallas, TX
Ventura, CA
Houston, TX
Chesapeake, VA
Oklahoma City, OK
High Point, NC
San Diego, CA
San Antonio, TX Anaheim, CA
Miami, FL
Jupiter, FL
Healthy volunteers between 50 and 75 years of age, with a body mass index (BMI) between 20 and 32 kg/m2.
 
Avg. age: 57.3 ± 5.77
94 male, 153 female

 – 

325 mg Immediate-Release (IR) Aspirin Tablets (n=120)

Study Initiation:
09/04/2012
Study Completion:
06/24/2013
  

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Protocol Number Study Arms (Number of
Subjects Treated per Arm, n)
Dosing Protocol
and Duration
Study Center
Location(s)
Study Population
PL-ASA-006
Crossover design

 – 

325 mg PL2200 (n=57)

325 mg dose of study drug once daily for 10 days Cincinnati, OH
Marlton, NJ
Miami, FL
Lenexa, KS
Type II diabetes without previous history of vascular disease between 20 to 79 years old.
 
Avg. age: 54.8 ±10.06
21 male, 36 female

 – 

325 mg Enteric-Coated (EC) Aspirin (n=57)

Study Initiation:
12/23/2013
Study Completion:
04/07/2014
  

We have engaged two separate firms, Weinman Schnee Morais, Inc. and Healogix, LLC to conduct qualitative and quantitative physician market research regarding the significance of our findings, and in our most recent market study of 500 physicians (including cardiologists, neurologists and endocrinologists), more than 80% of the physicians surveyed expressed interest in prescribing or recommending PL2200 Aspirin for their high-risk patients. This level of interest, when taken into account with both HHS estimates of potential aspirin users and the increased efficacy and GI safety offered by our product, suggests a very important role for PL2200 to play in the prevention of cardiovascular disease in both the over-the-counter and prescription markets.

How the PLxGuardTM delivery system differs from enteric coating technology

The enteric coating of aspirin tablets utilize methacrylic polymers that release the contents of the tablet at pH 5.5 or greater. As the release is solely dependent on pH, the release of any API from coated tablets, granules, or capsules are dependent on the highly variable physiologic process of gastric emptying and the pH of intestinal fluids. These processes are markedly affected by the presence of food and disease specific factors.

Low-dose enteric coated aspirin products have lower bioavailability than regular aspirin

       
PK Parameters   Immediate-Release Aspirin
Products (Dose)
  Enteric Coated Aspirin
Products (Dose)
(N=14 per group)   Cardiprin
(100 mg)
  Platin
(100 mg)
  Astrix
(100 mg)
  Cartia
(100 mg)
Cmax (ug/L)   1979 ± 580   2721 ± 761   411 ± 133   186 ± 202
Tmax (h)   0.48 ± 0.35   0.35 ± 0.10   3.73 ± 0.94   6.84 ± 2.71
AUC (mg/L*h)   1.60 ± 0.41   1.54 ± 0.27   0.73 ± 0.17   0.56 ± 0.26

Source:  Bochner, F., A.A. Somogyi, and K.M. Wilson, Bioinequivalence of four 100 mg oral aspirin formulations in healthy volunteers. Clin Pharmacokinet, 1991. 21(5): p. 394-9.

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The mechanism by which aspirin bioavailability from enteric coated aspirin is reduced compared to plain aspirin in patients is unknown, but may be related to factors that affect tablet disintegration, as illustrated in Figure 5 below

Enteric coated aspirin decreases absorption and increases variability

[GRAPHIC MISSING]

As illustrated above, enteric coated aspirin tablets are coated with a polymer that selectively releases at pH 5.5 or greater. As the normal fasted pH of the stomach is typically less than 3, the tablets remain intact in the stomach (Panel A). In the fasted state, gastric fluid is buffered by pancreatic bicarbonate in the duodenum (Panel B). The unfavorable pH for aspirin dissolution and unpredictable gastro-duodenal transit in the duodenum results in lower extent and increased variability of absorption. Disease factors that affect GI motility, as in diabetic patients with gastroparesis, may further increase the incidence of erratic release and absorption (Panel C). Concomitant administration of enteric coated aspirin tablets with food, which can markedly affect gastric emptying, further decreases the rate and extent of absorption, and increases the variability of the absorptive process (Panel D).

Aspirin absorption is clearly dissolution-limited, as pre-dissolved solutions or sodium salts of acetylsalicylic acid result in a faster rate and extent of absorption than that observed for aspirin tablets. The release and dissolution of aspirin from EC dose forms is dependent on the normally stochastic process of gastric emptying. Thus, aspirin absorption from EC formulations is highly erratic, with marked inter- and intra-individual variability compared to solutions or immediate-release dose forms, including PL2200 Aspirin. The unpredictable nature of ASA absorption from enteric coated aspirin is exacerbated by concomitant administration of food.

This intrinsic variability is confounded by co-morbidities found in diabetics. The incidence of gastroparesis in patients with diabetes may be as high as 30 – 40%. Because blood glucose is important in regulating gastric emptying, it is possible that patients treated with enteric coated

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aspirin have variable gastric emptying and a higher frequency of prolonged tablet retention in the stomach. With a greater residence time and susceptibility of ASA to hydrolyze in the GI tract, the amount of ASA available to be dissolved and absorbed in the upper GI tract, with its favorable pH for ASA dissolution, may be lower after enteric coated aspirin than after plain aspirin or PL2200 Aspirin.

To address the need for an aspirin product with improved GI safety as well as predictable pharmacokinetics and pharmacodynamics, PL2200 Aspirin Capsules, 325 mg has been developed and approved in the United States. PL2200 is a product that selectively releases aspirin in the duodenum through its lipid-based formulation.

PL2200 provides predictable absorption and lower variability

[GRAPHIC MISSING]

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As illustrated above, in PL2200 Aspirin capsules, aspirin is suspended in a high solid content lipidic carrier. Release of aspirin from this matrix requires pH > 5.5, bile acid, and pancreatic enzymes. In the fasted state, as gastric fluid has a pH typically less than 3, and is generally devoid of any lipolytic enzymes and bile acids, the lipid matrix remains intact in the stomach (Panel A). In the fasted state, gastric fluid is buffered by pancreatic secretions including bicarbonate and lipase in the duodenum, which emulsify the oil matrix and release aspirin (Panel B). In spite of the unfavorable and unpredictable gastro-duodenal transit in the duodenum, aspirin is solvated and absorbed with minimal variability. As the emulsification process is generally independent of gastric emptying, patients with gastroparesis have predictable absorption (Panel C). Concomitant administration of PL2200 Aspirin with food, which can markedly affect gastric emptying, does not affect aspirin absorption (Panel D).

The in vivo site of release of aspirin from PL2200 Aspirin Capsules and from a leading immediate release aspirin tablets was estimated by in vitro dissolution in simulated gastric fluid, upper duodenal fluid, and lower duodenal fluid. The typical gastric, duodenal, and duodenojejunal residence times are approximately 30, 40, and 60 minutes, respectively. Over the typical residence times, the release and dissolution of aspirin from PL2200 Aspirin was minimal (approximately 20%) in simulated gastric and upper duodenal fluid, in spite of high agitation. However, the release of aspirin was rapid in simulated lower duodenal fluid, resulting from the high pH and emulsification of PL2200 Aspirin lipid by bile acids and pancreatic enzymes.

In contrast, the release and dissolution of aspirin from immediate-release aspirin tablets, under the same dissolution conditions as used for PL2200 Aspirin, was rapid and non-selective with near complete release by 7.5 minutes in both simulated gastric and upper duodenal fluid. These data suggest that aspirin in the PL2200 Aspirin matrix remains lipid-bound and therefore highly hydrophobic in the low pH environment of the stomach and upper duodenum. Coupled with observations of reduced gastric injury and increased hydrophobicity at gastroduodenal pH, these data further support that lipid-bound aspirin at low pH reduces the risk of gastric surface injury and there is selective release of aspirin in lower duodenum.

The selective release in the duodenum results in reduced exposure of the aspirin to the gastric mucosa leading to lower gastric ulcerations in two clinical studies (PL-ASA-002 and PL-ASA-005). In an acute endoscopic study, PL-ASA-002, use of PL2200 Aspirin has been shown to decrease the incidence of acute gastroduodenal ulceration in volunteers with an age-associated risk of GI bleeding.

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PL2200 has a lower incidence of gastroduodenal ulceration in at-risk subjects

[GRAPHIC MISSING]

Source:  Cryer, B., et al., Low-dose aspirin-induced ulceration is attenuated by aspirin-phosphatidylcholine: a randomized clinical trial. Am J Gastroenterol, 2011. 106(2): p. 272-7.

In this PL-ASA-002 study, subjects with an age-associated risk of NSAID gastropathy were randomized to PL2200 Aspirin 325 mg or immediate release aspirin. These subjects were H. pylori negative and free from any gastroduodenal erosions or ulcers prior to enrollment. Subjects were treated with either 325 mg of PL2200 or immediate release aspirin once daily for 7 days. Ulcers were defined as lesions of 3mm or grater with unequivocal depth as assessed by esophageal gastroduodenal endoscopy. The presence or absence of ulceration was independently evaluated by a blinded central review, and ulcer diagnoses were further subjected to rigorous blinded adjudication. In the intent to treat population, PL2200 Aspirin 325 mg treatment had a 71% lower incidence of ulcers (95% confidence interval, 22.85 – 100%) than seen with immediate release aspirin at the day 7 endoscopy: Ulcers developed in 5 subjects (5.1%) in the PL2200 Aspirin 325 mg group and in 18 subjects (17.6%) in the aspirin group. This risk reduction was largely driven by a decrease in gastric ulceration. Four gastric and two duodenal ulcers were found in the PL2200 Aspirin 325 mg group, and twelve gastric and six duodenal ulcers were found in the aspirin group.

The decreased risk of acute ulceration (over 7 days of dosing) was confirmed in a similarly designed second endoscopic study (PL-ASA-005). In this study, all the major inclusion and exclusion criteria were identical. This study included two notable designed differences: (i) mucosal damage was measured by serial endoscopy at day 7 and day 42 after the same dose and schedule of PL2200 Aspirin 325 mg and immediate release aspirin, and (ii) the diagnosis of ulceration was only confirmed by a blinded central reviewer. PL2200 Aspirin 325 mg showed a 65% lower risk of ulceration than regular aspirin over 7 days and cumulatively over day 42. The decrease in cumulative risk reduction was driven by a marked decrease in gastric ulceration on day 7 findings because no difference in duodenal ulcerations were found at day 7 and no difference in either locations was found at day 42.

The risk of non-ulcerative erosive damage was measured by mean erosion number over a 42-day period in PL-ASA-005 study. Collectively, these data suggest that in subjects at risk for an age associated risk of GI bleeding (age 55 – 75), PL2200 Aspirin 325 mg (i) has a lower risk of

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general erosive damage for at least a period of 42 days after aspirin initiation, and (ii) is particularly useful for decreasing the risk of life-threatening upper-GI mucosal injury for at least 7 days.

Combining the seven day endoscopy results for both PL-ASA-002 and PL-ASA-005 studies suggests a minimum reduction of 65% in the risk of upper GI ulcers.

Two studies demonstrate a 65% reduction in acute ulcer risk

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As the majority of aspirin-induced life-threatening upper-GI bleeding is due to mucosal lesions in the stomach and the greater risk of GI bleeding falls with 10 days after an ACS, PL2200 Aspirin may be an alternative to enteric coated aspirin for use after an ACS when predictable and reliable antiplatelet activity is required.

As modified release aspirin products such as enteric coated aspirin can markedly affect pharmacokinetics (PK) and antiplatelet effects, the PK and onset of antiplatelet activity of PL2200 Aspirin 325 mg were compared to that of enteric coated aspirin in patients with diabetes mellitus without cardiovascular disease in two crossover studies (PL-ASA-004 and PL-ASA-006). This population was selected because diabetes may be a univariant risk factor for aspirin-induced GI bleeding and diabetic hypercoagulability and obesity may be risk factors for aspirin non-responsiveness.

In these crossover studies, the rate and extent of aspirin were measured based on plasma levels of acetylsalicylic acid. The rate and extent of antiplatelet activity was measured by serum thromboxane generation, which is a direct and most accurate method of assessing the Cycloxygenase I (COX-1) in platelets. The same diabetic patients were either initially dosed with enteric coated aspirin or PL2200 Aspirin 325 mg, or vice versa, with a 2 week intervening washout period. All potential confounders, such as compliance, timing of food, concomitant drugs, drug interactions, and other factor were controlled.

Single dose pharmacokinetic/pharmacodynamic study (PK/PD)

The comparison of the rate and extent of single dose aspirin absorption in diabetics from PL2200 Aspirin 325 mg and a leading 325 mg enteric coated aspirin product is illustrated below. Compared to enteric coated aspirin, PL2200 Aspirin 325 mg had 4.0 to 5.5, and 3.3 to 5.6 fold greater AUC 0-t and Cmax respectively, of ASA with significantly greater incidence of patients with complete depletion of platelet COX-1 (?99.0% Inhibition of thromboxane generation over baseline or ≤ 3.1ng/mL). This greater rate and extent of absorption and enzymatic inhibition was associated with markedly less variability.

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A. Comparison of Single Dose Aspirin Absorption

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B. Incidence of Complete Aspirin Response

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Single dose A) acetylsalicylic acid and B) thromboxane depletion. Note that in these crossover studies enteric coated aspirin treated patients have minimal absorption of aspirin and reduced responsiveness. After a single dose, the greater rate and extent of absorption of PL2200 Aspirin 325 mg was associated with statistically significant greater incidence of a complete aspirin response in diabetic patients as compared with treatment with enteric coated aspirin. The incidence and 95% confidence interval of complete aspirin response of PL2200 Aspirin 325 mg and enteric coated aspirin were, respectively, 83.6% (72.78, 91.94) and 41.8% (30.10, 55.92). Source: Reliable Inhibition of Thrombocyte Activity: Comparison of PL2200 Aspirin Capsules, 325 MG and Enteric-Coated Aspirin (RITE Study), September 24, 2014

Interestingly, many of the same patients that had complete absorption and complete inhibition of TXB2 after PL2200, had negligible absorption after enteric coated aspirin, with consequently lower COX-1 inhibition. The incidence of negligible absorption, defined as Cmax < 150ng/ml, after enteric coated aspirin was 40% (14/35) in PL-ASA-004, and 24.1% (13/54) in PL-ASA-006. These data strongly suggest aspirin resistance may be simply mediated by formulation dependent bioavailability.

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In a suspected ACS patient in the United States, a loading of 325 mg Aspirin is administered to enable rapid absorption and antiplatelet activity. Aspirin may be administered in the form of a chewed enteric coated aspirin, effervescent aspirin and in the case of nil per os patients, via rectal suppository. After this loading dose, maintenance doses (81 to 325 mg) are administered to perpetuity, with ≥90% of the doses as EC coated tablets.

Aspirin’s antiplatelet effects are known to be cumulative and may require at least 24 hours to elicit a maximal response. As such, we compared the antiplatelet activity of PL2200 Aspirin 325 mg with enteric coated aspirin, the rate and extent of COX-1 inhibition up to 4 days (in PL-ASA-004) and up to 11 days (in PL-ASA-006). In both studies, PL2200 had greater probability of eliciting an aspirin response than enteric coated aspirin, suggesting that when rapid and complete antiplatelet activity is required, as in ACS, PL2200 Aspirin may be a better choice than enteric coated aspirin; PL2200 has a 3.4x to 5.0x greater chance of achieving a complete antiplatelet response than EC ASA in two replicate studies. Although the rate of a complete aspirin response is clearly slower, enteric coated aspirin treated patients do eventually elicit a complete response after multiple doses. The 75th percentile indicated that by 3 hours after the first administration of PL2200 Aspirin 325 mg, at least 75% of the patients reached 99.0% inhibition, but it took over 96 hours (and 4 doses) before 75% of the patients reached 99.0% inhibition when administered enteric coated aspirin.

These complete aspirin responses were eventually achieved after perfect compliance to therapy and after administration of every dose in a carefully controlled fasted state. Even after multiple doses, the variability of COX-1 inhibition is 2 – 3 times higher with enteric coated aspirin than with PL2200 Aspirin. In clinical practice, only approximately 50% of patients adhere to their aspirin regimen. As previously discussed, enteric coated aspirin has about 3 – 4 times lower bioavailability than PL2200 Aspirin, which is further exacerbated by concomitant use of food, and 25 – 37% of fasted doses have intrinsically no bioavailability. With approximately 63% of cardiologists (out of 504 surveyed) recommending aspirin be taken with food, coupled with the high rate of non-compliance, the use of enteric coated aspirin with these clinical realities may not be the ideal choice of aspirin to constitutively suppress the generation of thromboxane.

For both the high risk clinical setting where the risks of cardiovascular and GI events are high, and in real clinical practice where compliance is generally poor, PL2200 Aspirin may be a more attractive choice of an aspirin dose form than enteric coated aspirin to constitutively suppress platelet derived thromboxane generation.

PL2200 has a greater chance of achieving a complete aspirin response in two studies

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Hazard ratios, a measure of risk, for two studies reveal PL2200 Aspirin has a 3.4x to 5.0x greater chance of achieving a complete antiplatelet response than enteric coated aspirin. Source: A Randomized, Actively Controlled, Crossover Pharmacodynamic Evaluation of PL2200 Versus Enteric-Coated and Immediate-Release Aspirin in Patients with Type II Diabetes, May 15,

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2013; PL-ASA-004 CSR and Reliable Inhibition of Thrombocyte Activity: Comparison of PL2200 Aspirin Capsules, 325 MG and Enteric-Coated Aspirin (RITE Study).

Overall, these studies show that PL2200 Aspirin 325 mg depletes platelet COX-1 activity in diabetics at a rate and extent that is significantly greater than enteric coated aspirin and with less variability. Enteric coated aspirin is associated with a high risk of non-responsiveness, due to lower bioavailability. For patients with cardiovascular disease and at risk for acute GI damage, PL2200 Aspirin may be an alternative with a lower risk for upper GI acute ulceration and more predicable PK and PD than enteric coated aspirin. Our findings, which show highly variable and incomplete antiplatelet activity associated with enteric coated aspirin as well as others’ studies demonstrating minimal or no evidence of improved GI safety, does not support the use of enteric coated aspirin in patients with diabetes mellitus.

FDA Approval for PL2200 Aspirin 325 mg

Aspirin, the active ingredient in PL2200 Aspirin 325 mg, was classified into the therapeutic class for Internal Analgesic, Antipyretic, Antirheumatic Drug Products for Over-the-Counter Human Use (IAAA). The Advance Notice for Proposed Rulemaking (ANPR) was published in 1977, and in 1988, the FDA published the tentative final monograph (TFM) for IAAA. The IAAA TFM recommends appropriate labeling, including therapeutic indications, dosage instructions, and warnings about side effects and ways of preventing misuse. Although it has been updated and amended since its original publication, the IAAA monograph has not been finalized.

PL2200 Aspirin 325 mg is different from the IAAA TFM aspirin products, as our product is the first ever liquid-filled capsule containing a lipidic suspension of aspirin. The lecithin excipient used in the drug product exceeds the approved amount listed in the FDA inactive ingredients guide (IIG) for an orally administered drug product. As a result, PL2200 Aspirin 325 mg was considered a new drug which required NDA approval for marketing. We used the 505(b)(2) NDA path. Upon FDA approval of the 505(b)(2) NDA, PL2200 Aspirin 325 mg was granted OTC labeling similar to that of monograph aspirin products. OTC aspirin, including PL2200 Aspirin 325 mg, is indicated for the temporary relief of minor aches and pains associated with a cold, headache backache, toothache, premenstrual and menstrual cramps, minor pain of arthritis, and to temporary reduce fever.

All aspirin products available on the market today are being sold via the OTC monograph process. When PL2200 Aspirin 325 mg is commercialized we believe it will be the only NDA-approved OTC aspirin product available.

PL2200 Aspirin 325 mg FDA Approved OTC Indications

For the temporary relief of minor aches and pains associated with:

a cold headache backache toothache premenstrual & menstrual cramps minor pain of arthritis
temporarily reduces fever

Although the IAAA TFM is still pending finalization, professional labeling for aspirin was finalized in 1998 to allow physicians to prescribe aspirin for cardiovascular and rheumatologic uses. With the approval of the PL2200 325 mg Aspirin (505)(b)(2) NDA, PL2200 is also eligible to be marketed to physicians for professional uses, as summarized below.

In the “Drug Facts” section that is a required part of labeling for all aspirin products, PL2200 Aspirin will have an additional alert unique to PL2200 Aspirin — “This product contains soy.”

PL2200 Aspirin 325 mg Professional Labeling Indications

Vascular Indications (Ischemic Stroke, (Transient Ischemic Attack (TIA), Acute Myocardial Infarction (MI), Prevention of Recurrent MI, Unstable Angina Pectoris, and Chronic Stable Angina Pectoris): Aspirin is indicated to: (1) Reduce the combined risk of death and nonfatal stroke in

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patients who have had ischemic stroke or transient ischemia of the brain due to fibrin platelet emboli, (2) reduce the risk of vascular mortality in patients with a suspected acute MI, (3) reduce the combined risk of death and nonfatal MI in patients with a previous MI or unstable angina pectoris, and (4) reduce the combined risk of MI and sudden death in patients with chronic stable angina pectoris.

Revascularization Procedures (Coronary Artery Bypass Graft (CABG), Percutaneous Transluminal Coronary Angioplasty (PTCA), and Carotid Endarterectomy): Aspirin is indicated in patients who have undergone revascularization procedures (i.e., CABG, PTCA, or carotid endarterectomy) when there is a preexisting condition for which aspirin is already indicated.

Rheumatologic Disease Indications (Rheumatoid Arthritis, Juvenile Rheumatoid Arthritis, Spondyloarthropathies, Osteoarthritis, and the Arthritis and Pleurisy of Systemic Lupus Erythematosus (SLE)): Aspirin is indicated for the relief of the signs and symptoms of rheumatoid arthritis, juvenile rheumatoid arthritis, osteoarthritis, spondyloarthropathies, and arthritis and pleurisy associated with SLE.

We are currently completing the development of an 81 mg strength of PL2200, which is expected to have similar indications.

Other Pipeline Opportunities Using PLxGuardTM Delivery System

We are developing novel formulations that combine already-approved nonsteroidal anti-inflammatory drugs (NSAIDs) with our patented PLxGuardTM technology to make safer and more effective new products. We are using the PLxGuardTM delivery system to create a lipid-based formulation of ibuprofen, PL1200 Ibuprofen Capsules, 200 mg. We have an IND active with the FDA and have demonstrated bioequivalence with OTC 200 mg dose ibuprofen to support a 505(b)(2) NDA in fasted-state clinical trials at three different doses, 200 mg, 400 mg and 800 mg. Using the PL1200 formulation at Rx doses, we demonstrated better GI safety in osteoarthritic patients with equivalent analgesic and anti-inflammatory efficacy, when compared with Rx ibuprofen in a six-week endoscopy pilot clinical trial, PL-IB-002 (Lanza et al.).

GI Safety Trial Comparing PL1200 Ibuprofen 200 mg with Regular Ibuprofen Using the PLxGuardTM Delivery System

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Source: Lanza et al., Clinical trial: comparison of ibuprofen-phosphatidylcholine and ibuprofen on the gastrointestinal safety and analgesic efficacy in osteoarthritic patients. Aliment Pharmacol Ther, 2008, 28(4):431-42).

ZavrylTM is a potential trademark for PL1200 Ibuprofen. This trademark has not been submitted to the FDA and there is no assurance it will be approved by the FDA.

While we do not believe our technology will work with the entire NSAIDs class, it is possible that our technology may be successfully applied to other NSAIDs beyond aspirin and ibuprofen.

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For example there is preclinical data suggesting diclofenac is a viable product candidate. Diclofenac is a leading NSAID for pain and inflammation outside the United States. In addition, the National Institutes of Health has provided funding to support preclinical efforts for a GI-safer intravenous indomethacin (PL4100). We believe PL4100 for Patent Ductus Arteriosus (PDA), a heart condition primarily affecting newborns, may be able to qualify for orphan drug designation, because PDA affects fewer than 200,000 individuals in the United States. (The number of registered births in the United States for 2013 was 3,932,181, while the estimated incidence of PDA in children born in the United States at term is between 0.02% and 0.006% of births. Assuming the higher percentage of 0.02%, this represents 78,644 infants per year). An evaluation and determination will occur later in this product’s development, should the product advance further.

We have attempted to expand the technology to other NSAIDs with limited success. A two week endoscopy trial with naproxen (PL3100 250 mg) failed to demonstrate better GI safety. From these efforts we have learned which NSAIDs are more likely to benefit from the technology. In our view, the PLxGuardTM technology may also prove a novel drug delivery platform for corrosive, acid labile and insoluble and impermeable drugs providing delivery along the GI tract for many non-NSAID drugs.

Commercialization Strategy

We plan to commercialize our branded PL2200 Aspirin products in the United States using our own commercial infrastructure. As described above in the section entitled “Risk Factors,” we have little experience with commercialization, and have no existing marketing or distribution operation. We intend to use a specialty sales force of sales representatives targeting the highest prescribers of antiplatelet medication. This includes specialists whose practices consist primarily of patients with a high risk of cardiovascular disease including cardiologists, neurologists and endocrinologists (diabetologists). We will also evaluate co-promotion opportunities with companies that have an existing sales force targeting physician groups that prescribe or recommend aspirin. We will employ appropriate medical education, direct marketing, journal advertising, electronic health record communication and social media in addition to personal promotion.

Our focus will be on secondary prevention patients and high risk primary prevention patients, those most at risk for cardiovascular disease. We anticipate selling PL2200 Aspirin 81 mg and PL2200 Aspirin 325 mg, at retail prices of $15.00 per month and $22.50, respectively, for a thirty 30-count bottle representing a month’s supply. These potential prices may change prior to the product launches. Applying this potential pricing to the target market in the table below demonstrates an implied market opportunity. It is estimated based upon this potential pricing and an expected mix of 81 mg and 325 mg sales that each 1% market share of this target high cardiovascular risk market may represent approximately $100 million in potential annual retail sales.

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PL2200 Initially Targets 4 Sizeable U.S. Patient Populations;
Focus is on Highest Risk Populations that Can Benefit the Most from PL2200 Aspirin.