Part I Business Overview INVO Bioscience is a commercial-stage fertility company expanding ART with its INVOcell product, offering an affordable and natural IVF alternative - INVO Bioscience is a commercial-stage fertility company focused on expanding assisted reproductive technology (ART) with its INVOcell product21186285 - INVOcell is a medical device allowing in vivo fertilization and early embryo development, offering a more natural, intimate, and affordable experience compared to traditional IVF21186285 - The commercialization strategy includes opening dedicated 'INVO Centers' (three operational in North America) and selling INVOcell to existing fertility clinics21186285 - Recent developments include the termination of a stock purchase agreement with Paradigm Opportunities Fund, LP and a joint venture agreement with Medesole Healthcare and Trading Private Limited, India, both due to unfulfilled commitments2425382383 - The company operates with a core internal team and outsources manufacturing, packaging/labeling, and sterilization to contract medical manufacturing companies26188 - As of December 31, 2021, INVO Bioscience had ten full-time and two part-time employees28 - The global ART market is a multi-billion industry growing due to increased infertility rates and patient awareness, yet remains vastly underserved due to capacity and cost barriers29192 - In the U.S., 10-15% of childbearing-age couples experience infertility, with approximately 6.7 million women having impaired fertility, yet only about 326,000 IVF cycles were performed in 2020, indicating a large underserved population30193 - INVOcell offers lower costs than traditional IVF (IVC procedure: $5,000-$11,000 vs. IVF: $12,000-$17,000+), improved efficiency for greater capacity (up to 30% increase in fertility cycle volume), and greater patient involvement through in-body incubation31323435194195196199 - The company's sales and marketing efforts focus on identifying distributors, establishing INVO Centers, and selling directly to U.S. fertility clinics, having re-assumed direct control of U.S. market distribution after the Ferring International Center S.A. agreement termination on January 31, 2022363839200202203228 International Distribution Agreements (as of December 31, 2021) | Market | Distribution Partner | Date | Initial Term | INVOcell Registration Status in Country | | :--- | :--- | :--- | :--- | :--- | | Canada | Invaron Pharmaceuticals Inc. | July 2020 | 1-Year | Completed | | Mexico (a) | Positib Fertility, S.A. de C.V. | Sept 2020 | TBD** | Completed | | Malaysia | iDS Medical Systems | Nov 2020 | 3-year | Completed | | Jordan | Biovate | Sept 2019 | 1-year | Completed | | Pakistan | Galaxy Pharma | Dec 2020 | 1-year | In process | | Thailand | IVF Envimed Co., Ltd. | April 2021 | 1-year | Complete | | Sudan | Quality Medicines, Cosmetics & Medical Equipment Import | Sept 2020 | 1-year | In process | | Ethiopia | Quality Medicines, Cosmetics & Medical Equipment Import | Sept 2020 | 1-year | In process | | Uganda | Quality Medicines, Cosmetics & Medical Equipment Import | Sept 2020 | 1-year | Not required | | Nigeria | G-Systems Limited | Sept 2020 | 5-year | Completed | | Togolese Republic | INVOSOLUX TOGO | Nov 2019 | 1-year | In process | | Iran | Tasnim Behboud | Dec 2020 | 1-year | Complete | | Sri Lanka | Alsonic Limited | July 2021 | 1-year | In process | Current Joint Venture Arrangements (as of December 31, 2021) | Affiliate Name | Country | Percent (%) Ownership | | :--- | :--- | :--- | | HRCFG INVO, LLC | United States | 50% | | Bloom Invo, LLC | United States | 40% | | Positib Fertility, S.A. de C.V. | Mexico | 33% | | SNS MURNI INVO Bioscience Malaysia Sendirian Berhad | Malaysia | 50% | | Ginekalix INVO Bioscience LLC Skopje | Republic of North Macedonia | 50% | Current Partnership Arrangements (as of December 31, 2021) | Partner | Country | Partnership Split | | :--- | :--- | :--- | | Lyfe Medical | United States | 40% | - The fertility industry is highly competitive, with INVOcell competing against drug-only stimulation, IUI, and conventional IVF, and its principal ART medical device competitor is AneVivo™ by Anecova5960 - INVOcell received de novo Class II clearance from the FDA in November 2015 for 3-day incubation, and the company is pursuing a 510(k) effort to expand labeling to a 5-day incubation period62197 - The company relies on patent, copyright, and trademark laws to protect its intellectual property, with one INVOcell device patent expiring on July 14, 2024, and a new patent application filed in November 2020 for redesigns6970 Risk Factors The company faces significant risks from operating losses, capital needs, joint venture performance, competitive pressures, global instability, regulatory hurdles, and financial market volatility - The company has an accumulated net loss of $38.9 million as of December 31, 2021, and requires additional capital to finance growth and operations, posing a high-risk investment7879 - Joint ventures, essential for INVO Centers, carry risks such as partners not performing obligations, disputes over payments, non-compliance with regulations, intellectual property issues, and potential termination8081 - The fertility industry is highly competitive, with risks of new ART services rendering INVOcell obsolete and competition based on pregnancy rates, requiring adequate pregnancy rates and patient satisfaction to compete effectively82 - Global operations are subject to risks including currency fluctuations, exchange controls, political/economic instability, governmental pricing directives, trade restrictions, and compliance with laws like the U.S. Foreign Corrupt Practices Act8485 - The company's intellectual property, including patents, may be challenged, invalidated, or circumvented, and laws in some foreign countries offer limited protection, making defending IP rights costly888990 - As a medical device provider, the company faces substantial tort injury claims, especially in artificial reproduction, and insurance coverage may not be adequate, with risks including long-term effects of fertility medication and potential regulatory bans9193 - Reliance on third-party manufacturers and package delivery services introduces risks of quality lapses, supply disruptions, and increased costs9495 - The company is subject to significant domestic and international governmental regulations, including FDA clearance processes, continuing compliance (MDR, QSR), and potential enforcement actions for improper marketing or off-label use104106107108111112113114115116 - Compliance with the EU's Medical Device Regulation (MDR) is increasingly stringent, requiring significant resources and potentially causing delays in commercialization in foreign jurisdictions118119 - The success of INVOcell and the IVC procedure depends on adequate coverage and reimbursement from third-party payers, which varies significantly and is subject to cost-containment efforts123124[125](index=12
INVO BioScience(INVO) - 2021 Q4 - Annual Report