Item
1. Business
We were incorporated on December 3, 1998, in
the State of Nevada, and have one wholly-owned subsidiary, Creative Medical Technologies, Inc., a Nevada corporation (“
CMT
”),
which conducts all of our business operations. On September 14, 2016, we formed a limited liability company, Amniostem LLC Inc.,
in Nevada for the purpose of creating and/or licensing intellectual property in the area of amniotic fluid derived stem cells for
therapeutic applications. This entity is a wholly owned subsidiary of CMT and has not commenced any business activities.
We had only limited operations during this
startup phase through June 30, 2008, at which time we ceased all business operations because of increased competition in the industry,
dwindling sales, and elevated costs associated with generating sales.
On May 18, 2016, we closed an Agreement and
Plan of Merger (the “
Merger Agreement
”) with CMT, Mr. White, our principal shareholder and the sole officer
and director, and Jolley Acquisition Corp., a Nevada corporation and wholly owned subsidiary of our company (the “
Merger
Sub
”). As a result of the closing of the Merger Agreement, the Merger Sub was merged with and into CMT with CMT being
the surviving corporation and CMT became our wholly-owned subsidiary. Effective May 18, 2016, we filed Articles of Merger and Articles
of Exchange with the Nevada Secretary of State evidencing the closing and the issuance of our shares to the shareholders of CMT.
Following closing, Mr. White, who was our majority shareholder prior to the closing, sold 15,100,000 shares of our common stock
to us for $5,000, after which the shares were cancelled and returned to our authorized but unissued shares of common stock.
In connection with the closing, CMT caused
Creative Medical Health, Inc., a Delaware corporation and parent of CMT (“
CMH
”), to advance $25,000 to us for
payment of certain obligations. Prior to the execution of the Merger Agreement, CMH advanced to us $8,256 for the payment of certain
accounts payable and $5,000 for repayment of certain notes payable. At closing, CMT caused CMH to advance $5,000 to us for the
purchase of Mr. White’s shares and the balance of the $25,000 for the payment of our remaining accounts payable. The amounts
advanced by the parent of CMT are evidenced by an 8% Promissory Note dated May 18, 2016.
At closing, each share of common stock of CMT
issued and outstanding immediately prior to the closing was converted into 6.4666666 shares of our common stock (97,000,000 shares),
which now constitutes approximately 97%, of our issued and outstanding common stock. The equity of the Company has been retroactively
restated to show the effect of the reverse merger on the common stock outstanding for the periods presented.
As a condition of closing, we delivered Cancellation
of Indebtedness Agreements evidencing the cancellation of all prior outstanding notes payable, except for promissory notes in the
aggregate amount of $20,000 which are payable upon obtaining DTC eligibility for our common stock.
At closing, Timothy Warbington, Donald Dickerson,
Thomas Ichim, PhD, and Amit Patel, MD were appointed as our directors and Mr. White resigned from all positions with our company.
Effective May 18, 2016, in connection with
the closing, we filed Articles of Merger with the Nevada Secretary of State evidencing the change of our name to “Creative
Medical Technology Holdings, Inc.” This merger was between our company and a newly formed Nevada corporation, Creative Medical
Technology Holdings, Inc., which was formed solely to effect our name change.
Our principal executive offices are located
at 2017 W Peoria Avenue, Phoenix, AZ 85029.
Creative Medical Technologies
CMT was created as the urological arm of its
parent company, CMH, to monetize the treatments or products developed or acquired by CMH prior to creation of CMT and transferred
to it after its incorporation. CMT has been engaged in the regenerative medicine field of male and female sexual dysfunction and
infertility, as well as the field of recurrent spontaneous abortions (miscarriages), using stem cells. CMT acquired a patent for
its erectile dysfunction (“
ED
”) treatment from CMH and was granted a license by Los Angeles Biomedical Research
Institute at Harbor-UCLA Medical Center, a non-profit biomedical research and education institute (“
LABIOMED
”),
for the infertility treatment.
CMT is a clinical stage company and intends
to complete the testing of its ED treatment and, if warranted, market treatment kits to physicians for use with their patients
suffering from ED. CMT is currently engaged in a 15-month clinical trial study being conducted at UCLA by LABIOMED on the efficacy
and safety of the ED treatment. The study involves testing on 40 subjects and is intended to have a duration of 15 months. CMT
also intends to test and, if warranted, market licensed stem cell products under its infertility technology license.
In connection with CMT’s organization,
it sold 32,010,000 shares of its common stock to CMH for $49,500, which shares were subsequently distributed as a stock dividend
by CMH pro rata to its shareholders. In connection with the granting of the license by LABIOMED to CMT for the infertility technology,
CMT issued 323,000 shares of its common stock and also recorded an obligation to repay up to $1,800 to LABIOMED (for expenses which
may be incurred in reviving and defending the patent). CMT also issued 64,666,667 shares of its common stock to CMH for the acquisition
of the patent underlying the ED technology. At closing CMT had 97,000,000 shares of its common stock issued and outstanding.
CMT has entered into three loan agreements
with CMH. The first is a line of credit evidenced by a Loan Agreement dated February 2, 2016, with CMH for $50,000, which amount
has been fully borrowed by CMT. The second loan agreement with CMH for an additional $50,000 was entered into on May 1, 2016 and
has been fully borrowed by CMT. The third loan agreement with CMH for an additional $25,000 was entered into on May 18, 2016 and
has been fully borrowed by CMT.
The funds advanced under each line of credit
are evidenced by separate 8% Promissory Notes dated February 2, 2016, May 1, 2016, and May 18, 2016 respectively. The first note
matures on April 30, 2017, the second note matures on July 31, 2017, and the third note matures on May 18, 2018.
As a result of the closing of the Merger Agreement,
we are now a company engaged in stem cell research and applications for use to treat male and female sexual dysfunction, infertility,
miscarriages, and related issues. We are a clinical stage company and intend to complete the testing of the ED treatment and, if
warranted, market the treatment under the name “Caverstem” to physicians for use with their patients suffering from
ED. Following further testing, we also intend to market licensed products under our infertility technology license and the female
sexual dysfunction patent application.
Erectile Dysfunction
Treatment
On February 2, 2016, CMT entered into a Patent
Purchase Agreement with CMH pursuant to which CMH assigned to CMT its rights to US Patent No. 8,372,797, entitled “Treatment
of Erectile Dysfunction by Stem Cell Therapy” which was issued to CMH by the USPTO on February 12, 2013, and related know-how
and technology. The closing of the Patent Purchase Agreement occurred in May 2016, and we issued the 64,666,667 shares of CMT’s
common stock to CMH.
While previous studies have demonstrated that
stem cells can enhance blood vessel function, this patent application was the first to demonstrate that administration of stem
cells can lead to enhanced erections. Aspects of this patent have already been clinically used. In one specific example, FDA approved
bone marrow extraction devices used to concentrate bone marrow and to inject stem cells into the penile bodies. This procedure
has been demonstrated safe and feasible in small patient studies.
Prior to the closing of the Patent Purchase
Agreement, CMH was in the process of commencing clinical trial studies on the efficacy and safety of the ED stem cell treatment.
As a result of the purchase of the ED patent by us, we have now taken over the clinical trial studies. After the trial is completed,
and if the data supports the treatment, we intend to market the technology with complete kits and training to medical doctors,
who can practice the treatment for their patients.
Prior studies on both animals and humans have
been conducted which management believes would support the efficacy and safety of the treatment currently under clinical trials
by the Company. Bone marrow stem cells have been used for over four decades in the area of hematopoietic stem cell transplantation.
Stimulation of angiogenesis using this cell population has been performed in animal models of ischemia, as well as in clinical
trials. One study used bone marrow cells that were isolated for expression of the p75 nerve growth factor receptor using magnetic
activated cell sorting. They chose this population based on possible enhancement of neurogenic potential. Intracavernous administration
of these cells into a rat bilateral cavernous nerve crush injury model was performed. At a four week follow up, improvement in
erectile function as assessed by mean intracavernous-to-mean arterial pressure ratio and total intracavernous pressure was assessed.
Significant improvements were observed in animals receiving the p75 selected cells as compared to those receiving an equal concentration
of bone marrow derived multipotent stromal cells, fibroblasts, or saline. Significantly higher levels of FGF-2 were found in the
cavernosum of animals receiving the p75 selected cells.
Clinical use of stem cells in treatment of
ED has been reported in a study outside the U.S. which treated seven patients with diabetes associated ED which was unresponsive
to medication for at least six months with an average of 1.5 × 10(7) cord blood mononuclear cells injected intracavernously.
Three additional patients with similar characteristics were used as controls. No treatment associated abnormalities were reported
despite the allogeneic nature of the cells in absence of immune suppression. One month after treatment, morning erections were
regained in three participants. By the third month post treatment six of the seven patients had regained morning erections. In
all patients rigidity increased as the result of cord blood administration, but was not sufficient for penetration. When the patients
were administered PDE5 inhibitor before coitus, two achieved penetration and experienced orgasm, and maintained for more than six
months; however, one participant could not achieved penetration at ninth month. An increase in sexual desire was reported in six
of the seven patients. No improvements were observed in any of the three control patients.
In 2013, Dr. Thomas Ichim, one of our directors,
conducted a pilot study on a single subject where a total of 60 ml of bone marrow aspirate was obtained and processed in a closed-system
concentration device. Bone marrow mononuclear cells were concentrated to a volume of 2 ml, with 1 ml administered into each side
of the smooth muscle of the penis using a 25 gauge syringe. A tourniquet was placed around the base of the penis during the injection
procedure and held for five minutes to allow for maximal retention. No immediate injection-associated adverse events were noted.
The patient reported a morning erection two days after cell administration. Although blood vessel and smooth muscle growth could
not occur during this short time period, the possibility of bone marrow released nitric oxide stimulating erections via vasodilation
may be postulated. Three weeks after treatment, the patient reported erection strong enough for penetration, but did not have ability
to sustain the erection until orgasm. At three month follow-up the patient reported having intercourse until orgasm several times
and a marked increase in morning erections. No adverse effects or ectopic tissue formation was observed.
CMH entered into a Clinical Trial Agreement
dated May 18, 2015, with LABIOMED and conducted by Dr. Jacob Rajfer with UCLA Harbor Hospital as its principal investigator. An
IRB (Institutional Review Board) application has been submitted and approved. The purpose of the clinical trials is to evaluate
the safety and efficacy of the ED stem cell treatment. Enrollment in the clinical trials began in December 2015 and the clinical
trial began during first quarter 2016 with approximately 40 participants. In October 2015 CMH entered into a Master Services Agreement
dated November 15, 2015, with Professional Research Consulting, Inc., doing business as PRC Clinical, a contract research organization,
to oversee the clinical trials. The primary outcome measures for these clinical trials include the following: (i) improvement in
erectile function as measured by total score in the International Index of Erectile Function; (ii) change in Doppler Ultrasound
(papaverine induced color duplex Doppler) for evaluating blood flow; (iii) change in dynamic infusion cavernosometry that measures
veno-occlusive pressure, each of which should require approximately six months from baseline; and (iv) adverse events, which should
require approximately 12 months from baseline. The secondary outcome measures includes improvement in erectile function as measured
by total score in the International Index of Erectile Function, which should require approximately 12 months from baseline. Under
the terms of the Patent Purchase Agreement, CMH assigned these agreements to us and we have assumed the duties and obligations
under these agreements.
Procedures for use of our ED stem cell treatment
consist of a one-hour out-patient visit in a physician’s office. The physician would harvest a patient’s bone marrow
from the hip using local anesthetic and separate the stem cells using a cell separator. The separated and cleansed stem cells would
then be injected into the patient’s venus cavernosa to stimulate muscle and generate blood vessel regeneration. Management
believes that such treatment should result in a marked increase in duration and frequency of erections and the ability to sustain
erections until orgasm, with no known treatment-associated adverse events. The current clinical trial is being conducted to validate
the efficacy and safety of the treatment.
Management projects the completion of the study
and publication of results to occur by late-2017. If the study results are positive, management expects to commence commercialization
of the Caverstem procedure to U.S. urologists in the second half of 2017.
Male Infertility Treatment
The patent application for our infertility
treatment covers novel means for treating male infertility using stem cells. The methods claimed in this patent describe implantation
of stem cells into the testes of a mammal whereby stem cells may serve to address a deficiency of germ cells (developmental precursors
of sperm cells), Sertoli cells (somatic cells that aid in sperm development) and/or Leydig cells (testosterone-producing cells).
This invention was based on the discovery that bone marrow-derived stem cells can differentiate into germ cells, Sertoli cells
and/or Leydig cells when transplanted into the testes of experimental animals.
We believe the administration of stem cells
using the methods described in this patent application can be used to improve conditions related to male infertility and/or testosterone
deficiency caused by aging, disease or trauma, including individuals with cancer that have undergone irradiation of the pelvic
area or chemotherapy. Other conditions involving abnormalities of the testes and/or low sperm counts could also be addressed using
these methods. We believe there is great interest in leveraging the therapeutic potential of bone marrow-derived stem cell populations,
especially to address male fertility issues. According to a study by the CDC, of an estimated 3.3-4.6 million men in the U.S. that
sought medical advice for fertility issues, 18% were diagnosed with infertility, with deficiencies in sperm numbers of quality
being the primary underlying causes of male infertility.
We are in the process of designing a clinical
trial for the infertility treatment and intend to continue to prosecute the patent application. Management does not anticipate
proceeding with clinical trains or commercialization of treatments from this technology until the patent claims are granted. While
there may be some trial design or other pre-work performed, the trial will not commence until the claims are granted. Thus, the
developmental timeline are dependent upon when, and if, the patent claims are granted. We anticipate that prosecuting the patent
claims could require from one to five years. Following patent approval, the projected timeline for commercialization is anticipated
to be between three and four years.
Female Sexual Dysfunction
Treatment
There are many types of female sexual arousal
disorders, some of which manifest as mental obstacles to sex. CMT’s current patent application would focus on physical manifestations
of sexual arousal disorder, as an extension of their work with stem cell therapies for ED. The technology specifically targets
atherosclerotic tissue, which basically means tissue and vessels through which blood cannot pass. Sometimes, lack of blood flow
to the vagina and clitoris can make sex painful or even impossible. Research has demonstrated that vaginal engorgement and clitoral
erection are important facets of sexual interaction for women. The technique developed by CMT uses regenerative cells (such as
stem cells) to help encourage the process. We plan to design a trial and execute that trial in the future after we pursue the male
infertility procedure. Management does not anticipate commercialization of treatments from this technology until the patent claims
are granted. While there may be some trial design or other pre-work performed, the trial will not commence until the claims are
granted. Thus, the developmental timeline are dependent upon when, and if, the patent claims are granted. We anticipate that prosecuting
the patent claims could require from one to five years. Following patent approval, the projected timeline for commercialization
is anticipated to be between three and four years.
Miscarriage Treatment
On June 9, 2016, CMT scientists Drs. Amit Patel
and Thomas Ichim, two of our directors, filed a US Patent entitled “
Adipose Derived Immunomodulatory Cells for Immunotherapy
of Recurrent Spontaneous Abortions
”, which covers the use of a woman’s own fat derived stem cells for prevention
of pregnancy loss. It is believed that more than 30% of all pregnancies result in a loss and that in many cases miscarriage is
repetitive. Recurrent spontaneous abortion (miscarriage) is defined by the American Congress of Obstetricians and Gynecologists
as two or more miscarriages in the first trimester. Approximately 1% to 5% of women of reproductive age suffer from recurrent spontaneous
abortion.
The patent is based on animal data in which
mice genetically bred to replicate human spontaneous recurrent miscarriages were shown to achieve much higher frequency of live
births after administration of fat derived stem cells. Specifically, in mice prone to pregnancy failure that were treated with
saline, an average of two living fetuses and six resorbed fetuses were detected per mouse. In mice receiving the fat derived stem
cells, an average of six living fetus’s and one resorbed fetus were detected per mouse. The average litter size of mice is
six to eight offspring per pregnancy.
Given that use of patient’s fat derived
stem cells is common practice in the U.S., management believes the potential of applying this existing procedure to recurrent pregnancy
loss represents a material development opportunity for us.
Multipotent Amniotic
Fetal Stem Cells
On August 25, 2016, CMT entered into a License
Agreement which grants us the exclusive right to all products derived from US Patent No. 7,569,385 for multipotent amniotic fetal
stem cells. This patent covers methods for identifying, isolating, expanding and differentiating a novel population of therapeutic
stem cells, specifically, stem cells derived from amniotic fluid. In the scope of available stem cell technologies, this invention
describes compositions of fetal-derived stem cells and methods for generating these cells that can allow for tissue regeneration
without raising the ethical concerns that are inherent to embryonic/fetal-derived cell types. The source of these stem cells is
amniotic fluid harvested during routine amniocentesis of pregnant women, whereby the isolated cell population is subsequently cultured
and expanded to create a bank of therapeutic stem cells.
With future funding, we intend to leverage
this technology to advance our proposed program for treating male and female infertility indications where there are unmet needs
for new treatment options. In this context, we anticipate that amniotic fluid-derived stem cells could be implemented in order
to improve or repair the dysfunctional cellular pathways that contribute to disorders of sexual function and fertility. If we are
successful in securing additional funding, we intend to complete in vitro characterization and optimization of stem cell production,
to initiate toxicity and dose escalation studies for a selected indication, to submit an Investigational New Drug application with
the FDA, and, subsequently, to progress to clinical studies using this therapeutic cell population.
Management plans to develop both this and the
miscarriage treatment technologies as a new regenerative medicine platform for use with multiple indications. Given amniotic stem
cells are allogenic (someone else’s), the development of this cell platform will fall within the jurisdiction of the The
Center for Biologics Evaluation and Research (“
CBER
”). This organization regulates products under a variety
of regulatory authorities including the Public Health Service Act and the Food Drug and Cosmetic Act. CBER manages the Biologics
License Application (“
BLA
”) process which is a request for permission to introduce, or deliver for introduction,
a biologic product into interstate commerce. This process validates safety and efficacy through animal studies, first-in-human
(Phase I), safety and initial efficacy (Phase II) and pivotal trials (Phase III). The projected time frame to complete this process
is seven to ten years and will require significant investments or partnering with a larger firm to fully fund the trials up to
and including marketing approval. Management intends to file a BLA on the amniotic stem cell with recurring miscarriages as the
first indication to be commercialized.
Multipotent Amniotic
Fetal Stem Cells for Stroke Therapy
On Dec. 13, 2016
CMT filed US patent application #62/400557 entitled “Treatment of Stroke by Amniotic Fluid Derived Stem Cell Conditioned
Media and Products Derived Thereof.”. The patent application covers the use of the Company’s newly licensed AmnioStem
stem cell as a production means for generation of nanoparticles termed “exosomes,” which regenerate damaged brain tissue
after stroke. This novel stem cell based therapeutic option by using products derived from stem cells as opposed to the stem cells
themselves. The patent provides means of leveraging growth factors and nucleic acids generated by AmnioStem stem cells, in order
to provide a “drug like” product that overcomes many of the hurdles associated with administration of stem cells.
It is known that intravenous injection of stem cells usually results in accumulation in lungs, leading
to reduced therapeutic efficacy. Concentrating and purifying regenerative factors produced by this unique stem cell type will accelerate
development of this novel therapy, as well as develop combination therapies to provide the highest probability of success to patients
suffering from this debilitating condition. The AmnioStem stem cell is subject to issued US patent #7,569,385 and was licensed
exclusively from University of California San Diego (“
UCSD
”). Management plans to develop both the AmnioStem
cell and the stroke treatment technologies as a new regenerative medicine platform for use with multiple indications.
Marketing
The first product we intend to market is the
treatment for ED, which, if current clinical trials prove successful, would be ready to market approximately third quarter 2017.
We intend to implement a multifaceted marketing approach which focus primarily on urologists. We anticipate attending conferences
sponsored by the American Urological Association across the country beginning second quarter 2017. We also plan to attend physician
seminars and training in Los Angeles, New York, Florida, and Texas. We further propose to create a print and television advertising
campaign and print in-clinic handouts, posters, and white papers. During second calendar quarter of 2017 we intend to establish
our marketing staff to implement our marketing strategy fully. Prior to then, our executive officers will be involved in marketing
efforts. We also plan to publish the results of our clinical studies, if favorable, in prominent urological journals.
Intellectual Property
ED Patent
. CMH acquired
the use patent application for treatment of ED by stem cell therapy in July 2011 and prosecuted the application until the ED patent
was issued in 2013. We have closed a Patent Purchase Agreement dated February 2, 2016, with CMH to acquire the ED patent and related
know-how and technology for 64,666,667 shares of our common stock. The assignment documents have been filed with the U.S. Patent
and Trademark Office.
Male Infertility License
Agreement
. Effective January 29, 2016, we entered into a License Agreement with LABIOMED granting us an exclusive license in
the U.S. and its territories and possessions to make and market products or services authorized under LABIOMED’s U.S. use
Patent Application 14/508,763 (filed October 7, 2014, and claiming priority back to U.S. Ser. No. 60/790,085 filed on 4/7/2006).
We also have the right, with LABIOMED’s consent, to grant sublicenses. Subject to early termination provisions, the license
agreement expires on the last to expire of the patents under which the license was granted. We have the right to terminate the
agreement at any time upon 90 days’ prior written notice. LABIOMED has the right to terminate the agreement upon the breach
of certain covenants under the agreement, including the failure to make required payments to LABIOMED, failure to obtain and maintain
required insurance coverage, our failure to meet performance milestones, our insolvency or bankruptcy, underreporting or underpayment
of royalties in excess of 20% for any 12-month period, our challenge to the patent rights underlying the license, or our default
in the performance of any obligations under the agreement not cured within 90 days following receipt of notice. The agreement obligates
us to use our commercially reasonable efforts to develop and commercialize the licensed products and to initiate human clinical
trials within specified times. If we fail to meet these milestones within the designated periods, LABIOMED may terminate the license
or convert it to non- exclusive. Under the terms of the agreement we paid $5,000 to LABIOMED as a non-refundable license issue
royalty, agreed to reimburse them up to $1,800 for its expenses in reviving the patent application, and issued 323,333 shares of
CMT’s common stock. We are subject to a 6% royalty to LABIOMED on net sales of any licensed products and 25% on any non-royalty
sublicense income. Commencing three years after the date of the agreement, and each subsequent year thereafter, we are required
to pay annual maintenance royalties of $20,000, unless during the prior one-year period we paid $50,000 or more in actual royalty
payments. Finally, we have agreed to pay them certain milestone payments upon achieving the milestones set forth in the agreement,
which in the aggregate we estimate to be approximately $300,000.
Female Sexual Dysfunction
Patent Application
. Drs. Patel and Ichim, two of our directors, have assigned to CMT for nominal consideration use their patent
application (U.S. Patent Application 62319753) for the use of regenerative cells as a treatment option for women who experience
sexual desire, but have difficulty reaching the arousal stage. The patent application was filed with the U.S. Patent and Trademark
Office on April 7, 2016. This patent was assigned to CMT on August 28, 2016.
Miscarriage Treatment
Patent Application
. CMT scientists Drs. Patel and Ichim have also assigned to CMT for nominal consideration their U.S. use
Patent entitled “
Adipose Derived Immunomodulatory Cells for Immunotherapy of Recurrent Spontaneous Abortions
”,
(U.S. Patent Application 62/347,898) which covers the use of a woman’s own fat derived stem cells for prevention of pregnancy
loss. The patent application was filed with the U.S. Patent and Trademark Office on June 9, 2016. This patent was assigned to CMT
on August 28, 2016.
Multipotent Amniotic
Fetal Stem Cells License Agreement
. On August 25, 2016, CMT entered into a License Agreement dated August 25, 2016, with The
Regents of The University of California, represented by its San Diego campus of the University of California, San Diego, Office
of Innovation and Commercialization. This license agreement grants to CMT the exclusive right to all products derived from U.S.
Patent No. 7,569,385 for use of multipotent amniotic fetal stem cells composition of matter throughout the world during the period
ending on the expiration date of the longest-lived patent rights under the patent. The license agreement also permits CMT to grant
sublicenses. Under the terms of the license agreement, CMT is required to diligently develop, manufacture, and sell any products
licensed under the agreement. We are required to pay the University an initial license fee within 30 days of entering into the
agreement. We are also required to pay annual license maintenance fees on each anniversary date of the agreement, which maintenance
fees would be credited toward any earned royalties for any given period. The License Agreement provides for payment of various
milestone payments, which in the aggregate are estimated at approximately $2,000,000, and earned royalties on the net sales of
licensed products by CMT or any sublicensee of between approximately 5% and 20%. CMT is also required to reimburse the University
for any future costs associated with maintaining the patent. CMT may terminate the license agreement for any reason upon 90 days’
written notice and the University may terminate the agreement in the event CMT fails to meet its obligations set forth therein,
unless the breach is cured within 30 days of the notice from the University specifying the breach. CMT is also obligated to indemnify
the University against claims arising due to the exercise of the license by CMT or any sublicensee. CMT is also required to maintain
adequate general liability insurance.
Multipotent Amniotic
Fetal Stem Cells for Stroke Therapy
. On Dec. 13, 2016 CMT filed US patent application #62/400557 entitled “Treatment
of Stroke by Amniotic Fluid Derived Stem Cell Conditioned Media and Products Derived Thereof.”. The patent application covers
the use of the Company’s newly licensed AmnioStem stem cell as a production means for generation of nanoparticles termed
“exosomes,” which regenerate damaged brain tissue after stroke.
Trademark and Trade
Name.
On April 14, 2015, CMH was granted a trademark by the U.S. Patent and Trademark Office for the name “Caverstem.”
On February 23, 2016 CMH applied for a trademark for the name “Creative Medical Technologies.” Under the terms of the
Patent Purchase Agreement CMH has assigned these trademarks to us. We are in the process of assigning these trademarks to CMT.
Trademark and Trade
Name.
On Sept 7, 2016, we filed an application with the U.S. Patent and Trademark Office for the name “Amniostem”.
The application number is 87163455, The USPTO has searched and considers the application allowable. They published it to give third
parties a chance to challenge it. Assuming this doesn’t happen a Notice of Allowance is expected in the April 2017 time frame.
Government Regulation
Human cells, tissues or cellular or tissue-based
products (“
HCT/Ps
”) intended for implantation, transplantation, infusion or transfer into a human recipient
are regulated by the Center for Biologics Evaluation and Research at the Food and Drug Administration (the “
FDA
”)
under the authority of section 361 of the Public Health Service Act (the “
PHSA
”) Act under which the FDA established
regulations for HCT/Ps to prevent the introduction, transmission, and spread of communicable diseases. Specifically, Section 361
states that “human cells, tissues, and cellular or tissue-based products” (HCT/Ps) are regulated solely under this
section if it meets all of the following criteria: (i) minimally manipulated; (ii) for homologous use only; (iii) do not involve
the combination of the cells or tissues with another articles; and (iv) are for autologous use. The FDA has recently published
draft guidance to the industry (
Homologous Use of Human Cells, Tissues, and Cellular and Tissue-Based Products – Draft
Guidance for Industry and FDA Staff
10/2015) that further clarifies the FDA’s position on what constitutes homologous
use of HCT/Ps. The FDA in this guidance states, “As defined in 21 CFR 1271.3(c), homologous use means the repair, reconstruction,
replacement, or supplementation of a recipient’s cells or tissues with an HCT/P that performs the same basic function or
functions in the recipient as in the donor”. A key function of bone marrow derived mesenchymal and endothelial stem cells
such as are used in our treatments are to stimulate cellular regrowth and repair and is consistent with the repair function the
cells perform as they circulate through the body. These cells not only secrete growth factors and other intercellular signals to
command and coordinate the repair process, they can also replace and regenerate tissues by themselves directly.
Management believes that its stem cell treatments
for ED, male infertility, and female sexual dysfunction would meet the criteria for inclusion under Section 361. Under certain
circumstances, an establishment may qualify for an exception from the requirements of Section 361 the PHSA. Section 1271.15(b)
provides the following exception from Section 361 regulation: “You are not required to comply with the requirements of this
part if you are an establishment that removes HCT/P’s from an individual and implants such HCT/P’s into the same individual
during the same surgical procedure.” For the exception to apply, an establishment must meet three criteria: (i) remove and
implant the HCT/Ps into the same individual from whom they were removed; (ii) implant the HCT/Ps within the same surgical procedure;
and (iii) the HCT/Ps remain in their original form, which means that they are only rinsed, cleaned, sized, or shaped in the procedure.
If the FDA were to modify its regulations or
significantly change their guidance, the products mentioned above would be subject to traditional premarket and post-market requirements
arising under section 351 of the PHSA Act. “351 HCT/Ps” require approval of a Biologic License Application, and their
manufacture must comply with Current Good Manufacturing Practices (“
GMPs
”). This would extend the research and
development timelines on these products from three years to seven to ten years. Additionally, significantly greater capital resources
would be required to complete the efforts.
Management expects and plans to pursue the
regulatory pathway consistent with a new biological drug for our Amniotic stem cell, stroke and recurring miscarriage products.
As such, we will fall under the jurisdiction of CBER. This organization regulates products under a variety of regulatory authorities
including the Public Health Service Act and the Food Drug and Cosmetic Act. CBER manages the BLA process which is a request for
permission to introduce, or deliver for introduction, a biologic product into interstate commerce (21 CFR 601.2). This process
validates safety and efficacy through animal studies, first-in-human (Phase I), Safety and initial efficacy (Phase II) and pivotal
trials (Phase III).
Competition
There are a number of public and private companies
engaged in stem cell research and applications for use to treat ED, infertility and other issues. Many of these have been engaged
in this field for a significant period.
In the ED marketplace there are a few private
companies engaged in stem cell research and applications. This research and the possible treatments are aimed at the approximately
9,000,000 men in the U.S. who, due to damage to the blood vessels and smooth muscle tissue in the penis, do not respond to PDE5
inhibitors such as Viagra or Cialis, do not respond to or cannot tolerate penis injections containing Alprostadil such as Averject
or Edex, or are not one of approximately 25,000 men in the U.S. who elect invasive, non-reversible rod or pump implantation into
the penis. Currently, management’s research has determined that there are fewer than a dozen private clinics in the U.S.
that offer stem cell treatments for ED. None of these firms is believed to have filed for patent protection or conducted clinical
trials using bone marrow to validate safety and efficacy. By comparison, we are conducting an IRB-approved clinical trial to validate
safety and efficacy, using a patented procedure, at a leading research institution, performed by an accomplished researcher. Management
believes that the combination of patent protection, a validated “standard of care” procedure, and competitively priced
equipment and disposable kits will allow the Company to compete successfully in this marketplace.
In the marketplaces for male infertility, female
sexual dysfunction, stroke and recurring miscarriages, management believes little competition exists. While there is a significant
body of academic research in vitro and in animal models on the benefits of treating male infertility, female sexual dysfunction
and recurring miscarriages with stem cells, management is not aware of any public or private U.S. firms pursuing human research
or commercialization of these treatments. Based upon management’s research, there are fewer than five private clinics in
the U.S. that offer any form of stem cell treatment for these indications. Therefore, it is management’s expectation that
we will be the first entrant in the market space upon completion of our research and commercialization efforts.
Employees
We have no employees, but we use and pay for
the services of employees of our parent, CMH. We have agreed to reimburse our parent company a flat monthly rate for the time spent
by their management team on our business operations.
Research and Development
Research and development expenses for the year
ended December 31, 2016, totaled $85,334. We also incurred license fees under a royalty agreement of $7,300 for the year ended
December 31, 2016. Pending completion of the development of the patented technology included in our license agreement, we will
not have additional license fees until we have a saleable product. There was no research and development expense for the period
ended December 31, 2015.