Business Overview and History

Nutriband Inc. (NTRB) is a pharmaceutical company at the forefront of developing innovative transdermal drug delivery solutions, with a specific focus on addressing the critical issue of opioid abuse and misuse. Through its proprietary AVERSA™ technology, Nutriband is poised to transform the safety and accessibility of transdermal opioid patches, aiming to alleviate the devastating impact of the opioid epidemic.

Nutriband was incorporated in Nevada on January 4, 2016, with the initial goal of entering the health and wellness market by marketing transdermal patches. This vision came from the acquisition of Nutriband Ltd, an Irish company formed in 2012 by the company’s chief executive officer. However, the company’s trajectory changed significantly on August 1, 2018, when it acquired 4P Therapeutics LLC for $2.25 million. This acquisition, which included 250,000 shares of common stock valued at $1.85 million and a 6% royalty on all revenue generated from abuse deterrent intellectual property, marked Nutriband’s shift towards developing prescription pharmaceuticals and seeking FDA approval for transdermal products.

Further expanding its capabilities, on August 31, 2020, Nutriband acquired all the assets of Pocono Coated Products (PCP) associated with its Transdermal, Topical, Cosmetic and Nutraceutical business for $6 million in company stock and a $1.5 million promissory note, which was fully repaid in October 2021. This strategic move enabled Nutriband to offer contract manufacturing and consulting services to third-party brands.

A significant milestone in Nutriband’s history occurred in October 2021 when its common stock and warrants began trading on the Nasdaq Capital Market following a successful public offering that raised $5.84 million in net proceeds. This listing on a national securities exchange marked a new chapter for the company, enhancing its visibility and access to capital markets.

Throughout its development, Nutriband has faced challenges typical of pre-revenue startups, including undercapitalization and cash shortages. The company has relied on the sale of securities and debt issuance to support its operations while working towards developing its pharmaceutical products and obtaining FDA approvals.

The centerpiece of Nutriband’s business is its AVERSA™ platform, a proprietary abuse-deterrent technology that can be incorporated into transdermal patches to prevent the abuse, diversion, misuse, and accidental exposure of drugs with abuse potential, particularly opioids. This innovative approach employs aversive agents, such as the intensely bitter compound Bitrex®, to deter the oral abuse of transdermal patches.

Nutriband’s lead product candidate, AVERSA™ Fentanyl, is a transdermal fentanyl patch that incorporates the AVERSA™ technology. This product is designed to provide the benefits of extended-release fentanyl while significantly reducing the risk of abuse and misuse. Nutriband is pursuing a streamlined 505(b)(2) regulatory pathway for AVERSA™ Fentanyl, which aims to accelerate the product’s development and potential commercialization.

Financial Performance

Nutriband’s financial performance has been characterized by modest revenues and significant investments in research and development (R&D) to advance its pharmaceutical pipeline. For the fiscal year ended January 31, 2024, the company reported total revenue of $2.09 million and a net loss of $5.49 million. The company’s focus on R&D has resulted in operating expenses of $5.73 million, with a significant portion allocated to research and development activities.

For the most recent quarter (Q2 2024), Nutriband reported revenue of $442.83K, a net loss of $1.71M, operating cash flow of -$1.54M, and free cash flow of -$1.58M. The company experienced a year-over-year revenue decline of 32.4%, primarily due to a decrease in demand for its transdermal patch products, which was partially offset by an increase in contract manufacturing services.

Nutriband operates in two main business segments: Sale of Goods and Services. The Sale of Goods segment, which consists of contract development and manufacturing services for consumer health transdermal, topical, and tape products, generated $851.36K in revenue for the six months ended July 31, 2024, compared to $967.83K in the same period the prior year. The decrease in revenue was due to the company ordering additional equipment to meet new demand, which will be implemented in the third quarter. An increase in demand is expected in the balance of the current year.

The Services segment previously included contract research and development services for pharmaceutical and medical devices for life sciences customers. However, during the six months ended July 31, 2024, this segment did not generate any revenue, as the company’s main contract with Sorrento Therapeutics was completed and 4P Therapeutics, the subsidiary that provided these services, devoted most of its time to the development of the company’s lead product, Aversa.

For the six months ended July 31, 2024, Nutriband incurred $1.75 million in research and development expenses related to Aversa, primarily consisting of salaries and increases in development costs from its manufacturing partner, Kindeva. The company reported a net loss of $3.60 million, or $0.36 per share, for this period, compared to a net loss of $1.84 million, or $0.24 per share, in the same period the prior year. The increase in net loss was primarily due to the higher research and development expenses for Aversa, as well as a $368.04 thousand loss on extinguishment of debt.

Liquidity

As of July 31, 2024, Nutriband had a strong cash position of $6.76 million and working capital of $6.14 million. This liquidity, bolstered by a recent $8.4 million private placement with European investors in April 2024, provides the company with the necessary resources to continue the development of its lead product, AVERSA™ Fentanyl, through the planned New Drug Application (NDA) submission to the U.S. Food and Drug Administration (FDA) in the first half of 2025.

Nutriband’s financial ratios demonstrate a robust liquidity profile that should enable the company to fund its ongoing operations and clinical development initiatives. The company has a current ratio of 6.57 and a quick ratio of 6.36, indicating a strong ability to meet short-term obligations. The debt-to-equity ratio stands at a low 0.017, suggesting a conservative capital structure.

In March 2023, Nutriband entered into a $5 million credit line facility with a related party, which it can draw on to fund the Aversa development. This three-year facility provides additional financial flexibility for the company as it progresses through its development pipeline.

Product Pipeline and Regulatory Milestones

Nutriband’s primary focus is the development of its lead product, AVERSA™ Fentanyl, a transdermal fentanyl patch that incorporates the company’s proprietary abuse-deterrent technology. The AVERSA™ platform has the potential to improve the safety profile of transdermal drugs susceptible to abuse, such as fentanyl, while ensuring that these medications remain accessible to patients who need them.

Nutriband is pursuing a 505(b)(2) regulatory pathway for AVERSA™ Fentanyl, which allows the company to leverage existing data on the safety and efficacy of fentanyl, potentially expediting the development and approval process. The company has made significant progress, having recently completed a feasibility agreement and entered into a commercial development and clinical supply agreement with Kindeva Drug Delivery to manufacture product for the human abuse potential clinical study required for the NDA submission.

Nutriband’s development timeline for AVERSA™ Fentanyl aims to submit the NDA to the FDA in the first half of 2025, following the completion of the necessary scale-up of the commercial manufacturing process and the single Phase 1 human abuse potential study.

In addition to the development of AVERSA™ Fentanyl, Nutriband has also received positive news regarding the protection of its intellectual property. The company has recently received a Notice of Allowance from the Chinese National Intellectual Property Administration (CNIPA) for its patent application covering the AVERSA™ abuse-deterrent transdermal technology. This milestone strengthens Nutriband’s position as it continues to navigate the regulatory landscape and advance its pipeline.

Competitive Landscape and Risks

Nutriband operates in the highly competitive pharmaceutical industry, where it faces challenges from larger, well-established companies with significant resources. The development and approval of new drugs, especially those with abuse-deterrent properties, require substantial investments and extensive regulatory processes, posing risks and uncertainties for Nutriband.

The company’s ability to successfully commercialize AVERSA™ Fentanyl, should it receive FDA approval, will also depend on its ability to establish effective distribution channels and secure market acceptance among healthcare providers and patients. The company’s reliance on third-party manufacturers and potential supply chain disruptions could also impact its operations.

Additionally, the regulatory environment surrounding opioid-based products remains complex and subject to evolving policies, which could present additional hurdles for Nutriband’s product development and commercialization efforts.

The transdermal drug delivery market, in which Nutriband operates, is expected to grow at a compound annual growth rate (CAGR) of 5.23% from 2022 to 2029, reaching $9.30 billion by 2029. This growth trajectory presents opportunities for Nutriband to capitalize on its innovative technologies and expand its market presence.

Legal and Regulatory Matters

Nutriband is currently involved in a lawsuit initiated by Joseph Gunnar, LLC and Lucosky Brookman LLP related to the termination of an engagement letter. The company denies the allegations and has filed counterclaims. While legal proceedings can be unpredictable and potentially costly, there have been no reports of major scandals, short seller attacks, or CEO departures that might significantly impact the company’s operations or reputation.

Geographic Presence

At present, Nutriband operates and sells its products exclusively in the United States. As the company continues to develop its product pipeline and potentially receives regulatory approvals, it may explore opportunities for international expansion, particularly given its recent patent allowance in China for the AVERSA™ technology.

Conclusion

Nutriband’s unwavering focus on developing abuse-deterrent transdermal technologies, exemplified by its AVERSA™ platform, positions the company at the forefront of addressing the critical issue of opioid abuse and misuse. With a strong cash position, a streamlined regulatory strategy for its lead product, AVERSA™ Fentanyl, and a diversified business model that includes contract manufacturing, Nutriband is poised to make a significant impact in the pharmaceutical industry and contribute to the ongoing battle against the opioid crisis.

As Nutriband continues to navigate the regulatory landscape and advance its pipeline, investors should closely monitor the company’s progress, regulatory milestones, and its ability to execute on its strategic objectives. The success of AVERSA™ Fentanyl and the broader adoption of Nutriband’s abuse-deterrent technologies could unlock substantial value for the company and its shareholders, particularly as the transdermal drug delivery market continues to grow.

Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.