Nutriband Inc. (NASDAQ:NTRBW) is a pharmaceutical company focused on developing transdermal drug delivery systems, with a particular emphasis on abuse-deterrent formulations. The company's lead product candidate, AVERSA™ Fentanyl, is an abuse-deterrent fentanyl transdermal system that is currently in the clinical development stage.
Business Overview
Nutriband was founded in 2016 with the goal of entering the health and wellness market by marketing transdermal patches. In 2018, the company acquired 4P Therapeutics, a company engaged in the development of transdermal pharmaceutical products. This acquisition shifted Nutriband's focus towards prescription pharmaceuticals, and the company is now primarily focused on developing and seeking FDA approval for its transdermal drug delivery systems.
The company's lead product candidate, AVERSA™ Fentanyl, is an abuse-deterrent fentanyl transdermal system that is designed to provide clinicians and patients with an extended-release transdermal fentanyl product for the management of chronic pain, while also incorporating properties intended to deter the abuse and misuse of fentanyl patches. Nutriband believes that its abuse-deterrent technology can be broadly applied to various transdermal products, and the company's strategy is to follow the development of AVERSA™ Fentanyl with the development of abuse-deterrent transdermal products for other pharmaceuticals that have a history of abuse.
In addition to its pharmaceutical development activities, Nutriband also provides contract manufacturing and development services through its Pocono Pharmaceuticals subsidiary, which was acquired in 2020. This business segment generates revenue from the sale of consumer health transdermal, topical, and tape products, as well as contract research and development services for pharmaceutical and medical device customers.
Financials
For the fiscal year ended January 31, 2023, Nutriband reported annual revenue of $2,085,314, a decrease of 5.5% compared to the prior year. The company's net loss for the year was $5,485,314, compared to a net loss of $5,229,915 in the previous year. Nutriband's annual operating cash flow was -$3,527,509, and its annual free cash flow was -$3,579,270.
In the first quarter of fiscal year 2024, which ended on April 30, 2023, Nutriband generated revenue of $408,532, a decrease of 14.3% compared to the same period in the prior year. The company reported a net loss of $1,898,077, or $0.21 per share, for the quarter, compared to a net loss of $1,015,229, or $0.13 per share, in the first quarter of the previous year. Nutriband's operating cash flow for the quarter was -$833,926, and its free cash flow was -$840,121.
Liquidity
As of April 30, 2023, Nutriband had $8,347,740 in cash and cash equivalents, and working capital of $7,313,082. The company has relied on sales of securities and the issuance of debt to support its cash flow from operations, and it will continue to use these funds as needed.
In March 2023, Nutriband entered into a three-year, $5,000,000 credit line facility with a related party, which will allow the company to draw down funds to support the development of its AVERSA™ Fentanyl product. Additionally, in April 2023, the company completed an $8,400,000 equity financing with European investors, of which $7.12 million was from related parties.
Regulatory and Development Milestones
Nutriband's lead product candidate, AVERSA™ Fentanyl, is currently in the clinical development stage. The company has entered into a commercial development and clinical supply agreement with Kindeva Drug Delivery, L.P. to perform commercial manufacturing process development and manufacturing of clinical supplies for the human abuse liability clinical study required by the FDA in support of a New Drug Application. The estimated cost to complete this work is approximately $8.1 million, and the expected timing of FDA submission is 12 to 18 months.
In January 2022, Nutriband received a favorable patent issuance from the USPTO for its "Abuse and Misuse Deterrent Transdermal System," which protects the company's AVERSA™ technology platform.
Risks and Challenges
Nutriband faces several key risks and challenges as it continues to develop its pipeline of transdermal pharmaceutical products:
- The FDA regulatory process may take longer and be more expensive than the company anticipates, without any assurance of obtaining FDA approval.
- If Nutriband is not able to obtain FDA approval for its lead product, AVERSA™ Fentanyl, the company may not have the resources to develop any other product, and it may not be able to continue in business.
- The company may not be able to launch any products for which it receives FDA marketing approval.
- Nutriband may not be able to establish a distribution network for the marketing and sale of any products for which it receives FDA approval.
- The company may not be able to establish manufacturing facilities in compliance with FDA good manufacturing practices or to enter into manufacturing agreements for the manufacture of its products in an FDA-approved facility.
- It may be necessary for Nutriband to enter into a joint venture or other strategic relationship in order to develop, perform clinical testing for, manufacture, or market any of its proposed products, and the company may not be able to enter into such a relationship, or any such relationship may not be successful.
Outlook
Nutriband's focus on developing abuse-deterrent transdermal drug delivery systems, particularly its lead product candidate AVERSA™ Fentanyl, presents significant upside potential for the company. The opioid abuse epidemic continues to be a major public health concern, and the availability of abuse-deterrent formulations could be a valuable tool in addressing this issue.
However, Nutriband faces substantial challenges in navigating the FDA approval process, establishing manufacturing and distribution capabilities, and securing the necessary funding to advance its pipeline. The company's reliance on external partnerships and the inherent risks associated with drug development create significant uncertainty around the timing and success of its efforts.
Conclusion
Given the company's early-stage status, limited revenue, and history of losses, Nutriband's stock is likely to remain highly volatile and speculative. Investors should carefully consider the risks and potential rewards before making an investment decision.