UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED January 31, 2014
 
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM              TO              
 
Commission File Number 001-34600
 
OXYGEN BIOTHERAPEUTICS, INC .
(Exact name of registrant as specified in its charter)
 
Delaware
 
26-2593535
(State of incorporation)
 
(I.R.S. Employer Identification No.)
 

ONE Copley Parkway, Suite 490, Morrisville, North Carolina 27560
(Address of principal executive offices)
 
(919) 855-2100
(Registrant’s telephone number, including area code)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   þ      No   ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   þ      No   ¨
 
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
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
þ
       
(Do not check if a smaller reporting company)
     
 
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes   ¨     No   þ
 
As of March 14, 2014, the registrant had outstanding 17,153,510 shares of Common Stock.
 


 
 
 
 

TABLE OF CONTENTS
 
 
   
PAGE
PART I. FINANCIAL INFORMATION
 
Item 1.
Consolidated Financial Statements
3
 
Consolidated Balance Sheets (Unaudited) as of January 31, 2014 and April 30, 2013
3
 
Consolidated Statements of Operations (Unaudited) for the Three and Nine months Ended January 31, 2014 and 2013
4
 
Consolidated Statements of Cash Flows (Unaudited) for the Nine months Ended January 31, 2014 and 2013
5
 
Notes to Consolidated Financial Statements
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
25
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
36
Item 4.
Controls and Procedures
36
     
PART II. OTHER INFORMATION
 
Item 1.
Legal Proceedings
37
Item 1A.
Risk Factors
37
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
49
Item 3.
Defaults Upon Senior Securities
50
Item 4.
Mine Safety Disclosures
50
Item 5.
Other Information
50
Item 6.
Exhibits
50
 
 
 
2

 
 
PART I - FINANCIAL INFORMATION
 
ITEM 1.       CONSOLIDATED FINANCIAL STATEMENTS
 
OXYGEN BIOTHERAPEUTICS, INC.
(a development stage enterprise)
CONSOLIDATED BALANCE SHEETS
 
   
January 31,
2014
   
April 30,
2013
 
   
(Unaudited)
       
             
ASSETS
           
Current assets
           
Cash and cash equivalents
  $ 6,339,657     $ 783,528  
Accounts receivable
    53,106       445,237  
Government grant receivable
    113,184       96,226  
Inventory
    97,437       99,204  
Prepaid expenses
    650,294       247,646  
Other current assets
    135,788       170,410  
Total current assets
    7,389,466       1,842,251  
Property and equipment, net
    149,365       205,389  
Debt issuance costs, net
    53,581       150,043  
Intangible assets, net
    22,982,535       924,698  
Goodwill
    3,303,000       -  
Other assets
    58,262       58,262  
Total assets
  $ 33,936,209     $ 3,180,643  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
               
Current liabilities
               
Accounts payable
  $ 668,671     $ 977,162  
Accrued liabilities
    1,493,198       874,876  
Warrant liabilities
    1,082,941       -  
Current portion of notes payable, net
    368,768       57,539  
Total current liabilities
    3,613,578       1,909,577  
Other liabilities
    21,864       54,660  
Long-term portion of notes payable, net
    -       2,994,442  
Total liabilities
    3,635,442       4,958,679  
                 
                 
Commitments and contingencies; see Note 7.
               
Stockholders' equity (deficit)
               
Preferred stock, undesignated, authorized 9,947,439 and 9,990,400 shares; respectively. See Note 8.
 
Series B Preferred stock, par value $.0001, issued 2,100 shares; outstanding 0 and 987, respectively.
    -       1  
Series C Preferred stock, par value $.0001, issued 5,369 shares; outstanding 255 and 0, respectively.
    1       -  
Series E Preferred stock, par value $.0001, issued 32,992 shares; outstanding 32,992 and 0, respectively.
    3       -  
Common stock, par value $.0001 per share; authorized 400,000,000 shares; issued and outstanding 13,671,105 and 1,930,078,  respectively
    1,367       193  
Additional paid-in capital
    156,471,160       115,265,854  
Deficit accumulated during the development stage
    (126,171,764 )     (117,044,084 )
Total stockholders’ equity (deficit)
    30,300,767       (1,778,036 )
Total liabilities and stockholders' equity (deficit)
  $ 33,936,209     $ 3,180,643  
 
The accompanying notes are an integral part of these Consolidated Financial Statements.
 
 
3

 
 
OXYGEN BIOTHERAPEUTICS, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
 
   
Period from
May 26,
1967
(Inception) to
January 31,
   
Three months ended January 31,
   
Nine months ended January 31,
 
    2014    
2014
   
2013
   
2014
   
2013
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
Product revenue
  $ 623,606     $ 590     $ 2,871     $ 60,669     $ 28,899  
Cost of sales
    383,854       410       1,534       31,275       16,578  
Net product revenue
    239,752       180       1,337       29,394       12,321  
Government grant revenue
    1,689,852       41,684       221,051       233,981       997,035  
Total net revenue
    1,929,604       41,864       222,388       263,375       1,009,356  
                                         
Operating expenses
                                       
Selling, general, and administrative
    54,772,734       1,783,596       1,441,500       4,187,522       3,127,133  
Research and development
    26,742,252       689,666       369,447       2,211,124       1,611,293  
Restructuring expense
    220,715       -       2,941       -       220,715  
Loss on impairment of long-lived assets
    390,970       -       -       -       -  
Total operating expenses
    82,126,671       2,473,262       1,813,888       6,398,646       4,959,141  
                                         
Net operating loss
    80,197,067       2,431,398       1,591,500       6,135,271       3,949,785  
                                         
Interest expense
    46,104,646       69,967       821,777       2,142,627       3,615,204  
Loss on extinguishment of debt
    250,097       -       -       -       -  
Other (income) expense
    67,442       849,556       (323 )     849,782       (8,215 )
Net loss
  $ 126,619,252     $ 3,350,921     $ 2,412,954     $ 9,127,680     $ 7,556,774  
                                         
Preferred stock dividend
    6,700,233       1,095,822               5,742,162       -  
Net loss attributable to common stockholders
  $ 133,319,485     $ 4,446,743     $ 2,412,954     $ 14,869,842     $ 7,556,774  
                                         
                                         
Net loss per share, basic
          $ (0.43 )   $ (1.45 )   $ (2.56 )   $ (4.75 )
Weighted average number of common shares outstanding, basic
      10,260,021       1,658,895       5,811,162       1,591,438  
Net loss per share,  diluted
          $ (0.44 )   $ (2.78 )   $ (2.58 )   $ (5.91 )
Weighted average number of common shares outstanding, diluted
      10,266,601       1,767,640       5,817,819       1,700,183  
 
The accompanying notes are an integral part of these Consolidated Financial Statements.
 
 
4

 
 
OXYGEN BIOTHERAPEUTICS, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
Period from
May 26,
1967
(Inception) to
January 31,
   
Nine months ended January 31,
 
    2014    
2014
   
2013
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES
                 
Net Loss
  $ (126,171,764 )   $ (9,127,680 )   $ (7,556,774 )
Adjustments to reconcile net loss to net cash used in operating activities
                       
Depreciation and amortization
    2,330,844       111,232       110,744  
Amortization of deferred compensation
    336,750       -       -  
Interest on debt instruments
    45,666,003       2,113,677       3,614,137  
Loss on debt settlement and extinguishment
    163,097       -       -  
Loss on impairment, disposal and write down of long-lived assets
    826,846       -       11,563  
Issuance and vesting of compensatory stock options and warrants
    8,475,981       101,053       73,574  
Issuance of common stock below market value
    695,248       -       -  
Issuance of common stock as compensation
    1,121,292       253,502       169,294  
Issuance of common stock for services rendered
    1,440,279       175,000       -  
Issuance of note payable for services rendered
    120,000       -       -  
Contributions of capital through services rendered by stockholders
    216,851       -       -  
Change in the fair value of warrants
    849,905       849,905       -  
Changes in operating assets and liabilities
                       
Accounts receivable, prepaid expenses and other assets
    (669,188 )     370,096       (1,654 )
Inventory
    212,285       1,767       (28,962 )
Accounts payable and accrued liabilities
    882,083       (1,130,205 )     127,253  
Net cash used in operating activities
    (63,503,488 )     (6,281,653 )     (3,480,825 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
Purchase of property and equipment
    (1,788,746 )     (9,804 )     (14,932 )
Proceeds from the sale of property and equipment
    8,307       -       -  
Capitalization of patent costs and license rights
    (2,000,168 )     (103,240 )     (91,003 )
Net cash used in investing activities
    (3,780,607 )     (113,044 )     (105,935 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
Proceeds from sale of common stock and exercise of stock options and warrants, net of related expenses and payments
    51,481,026       7,002,733       -  
Repurchase of outstanding warrants
    (3,216,520 )     -       -  
Proceeds from stockholder notes payable
    977,692       -       -  
Proceeds from issuance of notes payable, net of issuance costs
    7,762,512       141,320       102,671  
Proceeds from convertible notes, net of issuance costs
    13,321,447       -       -  
Proceeds for issuance of convertible preferred stock, net of issuance costs
    12,746,338       4,895,188       2,500,000  
Payments on notes - short-term
    (1,448,743 )     (88,415 )     (66,972 )
Payments on notes - long-term
    (8,000,000 )     -       -  
Net cash provided by financing activities
    73,623,752       11,950,826       2,535,699  
                         
Net change in cash and cash equivalents
    6,339,657       5,556,129       (1,051,061 )
Cash and cash equivalents, beginning of period
    -       783,528       1,879,872  
Cash and cash equivalents, end of period
  $ 6,339,657     $ 6,339,657     $ 828,811  
                         
Cash paid for:
                       
Interest
  $ 296,375     $ 28,949     $ 1,067  
Income taxes
  $ 27,528     $ -     $ -  
 
The accompanying notes are an integral part of these Consolidated Financial Statements.
 
 
5

 
 
OXYGEN BIOTHERAPEUTICS, INC.
(a development stage enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS, Continued
 
Non-cash financing activities during the nine months ended January 31, 2014:
 
  (1) The Company issued 4,631 shares of restricted common stock for the payment of interest accrued on convertible notes. The shares were issued at a conversion price of $45.10 for the payment of $208,792 interest payable on convertible notes with a gross carrying value of $4,900,000.
     
  (2) The Company issued 804,661 shares of its common stock for the payment of $1,227,360 as dividends on the Series C 8% Convertible Preferred stock.
     
  (3) The Company issued 4,600 shares of Series D 8% Convertible Preferred Stock as consideration for cancellation of $4.6 million in outstanding principal amount of a convertible promissory note issued by the Company on July 1, 2011.
     
  (4) The Company issued 576,084 shares of its common stock for the payment of $1,104,000 as dividends on the Series D 8% Convertible Preferred stock.
     
  (5)  The Company issued 1,366,844 shares of its common stock that had a fair value of approximately $8.7 million and 32,992 shares of its Series E Convertible Preferred Stock, which are convertible into an aggregate of 3,299,200 shares of common stock, that had a fair value of approximately $15.3 million in exchange for the assets of Phyxius Pharma, Inc., as further discussed in Note 4 to these consolidated financial statements. The Company recorded Goodwill of $3,303,000 as a result of this issuance.
 
Non-cash financing activities during the nine months ended January 31, 2013:
 
  (1) The Company issued 12,450 shares of restricted common stock for the payment of interest accrued on convertible notes. The shares were issued at a conversion price of $45.10 for the payment of $561,458 interest payable on convertible notes with a gross carrying value of $4,900,000.
     
  (2) The Company issued 191,934 shares of its common stock upon the conversion of 3,668 shares of Series A Convertible Preferred Stock with a fair value of $4,509,987.
 
The accompanying notes are an integral part of these Consolidated Financial Statements.
 
 
6

 

OXYGEN BIOTHERAPEUTICS, INC.
(a development stage enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

  NOTE 1.     DESCRIPTION OF BUSINESS
 
Oxygen Biotherapeutics, Inc. (the “Company”) was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. On June 17, 2008, the stockholders of Synthetic Blood International approved the Agreement and Plan of Merger dated April 28, 2008, between Synthetic Blood International and Oxygen Biotherapeutics, Inc., a Delaware corporation. Oxygen Biotherapeutics was formed on April 17, 2008, by Synthetic Blood International to participate in the merger for the purpose of changing the state of domicile of Synthetic Blood International from New Jersey to Delaware. Certificates of Merger were filed with the states of New Jersey and Delaware and the merger was effective June 30, 2008. Under the Plan of Merger, Oxygen Biotherapeutics is the surviving corporation and each share of Synthetic Blood International common stock outstanding on June 30, 2008 was converted to one share of Oxygen Biotherapeutics common stock.
 
On October 18, 2013, the Company created a wholly owned subsidiary, Life Newco, Inc., a Delaware corporation (“Life Newco”), to acquire certain assets of Phyxius Pharma, Inc., a Delaware corporation (“Phyxius”) pursuant to an Asset Purchase Agreement, dated October 21, 2013 (the “Asset Purchase Agreement”), by and among the Company, Life Newco, Phyxius and the stockholders of Phyxius (the “Phyxius Stockholders”).  As further discussed in Note 10 below, on November 13, 2013, under the terms and subject to the conditions of the Asset Purchase Agreement, Life Newco acquired certain assets, including a license granting Life Newco an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada.
 
Reverse Stock Split
 
On May 10, 2013, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of the Company’s common stock at a ratio of twenty-to-one with the Secretary of State of the State of Delaware.  The Amendment did not change the number of authorized shares, or the par value, of the Company’s common stock.  The Amendment provides that every twenty shares of the Company’s issued and outstanding common stock were automatically combined into one issued and outstanding share of the Company’s common stock. All shares and per share amounts in the consolidated financial statements and accompanying notes have been retroactively adjusted to give effect to the reverse stock split.
 
Going Concern
 
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit during the development stage of $126 million as of January 31, 2014, and stockholders’ equity (deficit) of $30,300,767 and $(1,778,036) as of January 31, 2014 and April 30, 2013, respectively. The Company requires substantial additional funds to complete clinical trials and pursue regulatory approvals. Management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available on commercially acceptable terms, or at all.
 
In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying January 31, 2014 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
 
NOTE 2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
 
The Company has prepared the accompanying interim consolidated financial statements in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these consolidated financial statements and accompanying notes do not include all of the information and disclosures required by GAAP for complete consolidated financial statements. The consolidated financial statements include all adjustments (consisting of normal recurring adjustments) that management believes are necessary for the fair statement of the balances and results for the periods presented. These interim consolidated financial statements results are not necessarily indicative of the results to be expected for the full fiscal year or any future interim period
 
 
7

 
 
Use of Estimates
 
In preparing the unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the unaudited consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates and the operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.
 
On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted.
 
Principles of Consolidation
 
The accompanying consolidated financial statements include the accounts and transactions of Oxygen Biotherapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation.
 
Goodwill
 
Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired, including identifiable intangible assets, and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized.
 
Goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate potential impairment. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unit’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unit’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, an impairment charge is recognized through a charge to operations based upon the excess of the carrying value of goodwill over the implied fair value.  There was no impairment to goodwill recognized during 2014.
 
Net Loss per Share
 
Basic loss per share, which excludes antidilutive securities, is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, warrants, preferred stock and convertible notes. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share follows.
 
   
Three months ended January 31,
   
Nine months ended January 31,
 
   
2014
   
2013
   
2014
   
2013
 
Historical net loss per share:
                       
Numerator
                       
Net loss, attributable to common stockholders
  $ (4,446,743 )   $ (2,412,954 )   $ (14,869,842 )   $ (7,556,774 )
Less: Effect of amortization of interest expense on convertible notes
    (38,105 )     (2,496,089 )     (133,363 )     (2,496,089 )
Net loss attributable to common stockholders (diluted)
    (4,484,848 )     (4,909,043 )     (15,003,205 )     (10,052,863 )
Denominator
                               
Weighted-average common shares outstanding
    10,260,021       1,658,895       5,811,162       1,591,438  
 Effect of dilutive securities
    6,580       108,745       6,657       108,745  
Denominator for diluted net loss per share
    10,266,601       1,767,640       5,817,819       1,700,183  
                                 
Basic net loss per share
  $ (0.43 )   $ (1.45 )   $ (2.56 )   $ (4.75 )
Diluted net loss per share
  $ (0.44 )   $ (2.78 )   $ (2.58 )   $ (5.91 )
 
The following outstanding options, warrants, convertible preferred stock and convertible note shares were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect.
 
 
8

 
 
   
Nine months ended January 31,
 
   
2014
   
2013
 
             
Convertible preferred shares outstanding
    3,429,969       -  
Warrants to purchase common stock
    2,813,749       237,780  
Options to purchase common stock
    50,728       11,536  
Restricted stock grants
    42,629       2,777  
Convertible note shares outstanding
    -       98  
 
Fair Value
 
The Company records its financial assets and liabilities in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 Fair Value Measurements. The Company's balance sheet includes the following financial instruments: cash and cash equivalents, short-term notes payable, warrant liabilities and convertible notes. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments. The Company did not elect the fair value option and records the carrying value of its convertible notes at amortized cost in accordance with ASC 470-20, but management believes the difference between carrying value and fair value not to be material.
 
Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." The fair value measurement hierarchy consists of three levels:
 
Level one
Quoted market prices in active markets for identical assets or liabilities;
Level two
Inputs other than level one inputs that are either directly or indirectly observable, and
Level three
Unobservable inputs developed using estimates and assumptions; which are developed by the reporting entity and reflect those assumptions that a market participant would use.
 
The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in our consolidated financial statements.
 
The following tables show information regarding assets and liabilities measured at fair value on a recurring basis as of January 31, 2014 and April 30, 2013:
 
         
Fair Value Measurements at Reporting Date Using
 
   
Balance as of
January 31,
2014
   
Quoted prices in Active Markets for Identical Securities (Level 1)
   
Significant Other Observable Inputs (Level 2)
   
Significant Unobservable Inputs (Level 3)
 
Current Assets
                       
Cash and cash equivalents
  $ 6,339,657     $ 6,339,657     $ -     $ -  
                                 
Current Liabilities
                               
Warrant liabilities
  $ 1,082,941     $ -     $ -     $ 1,082,941  
 
         
Fair Value Measurements at Reporting Date Using
 
   
Balance as of
April 30,
2013
   
Quoted prices in Active Markets for Identical Securities (Level 1)
   
Significant Other Observable Inputs (Level 2)
   
Significant Unobservable Inputs (Level 3)
 
Current Assets
                       
Cash and cash equivalents
  $ 783,528     $ 783,528     $ -     $ -  
 
 
9

 
 
There were no transfers between levels in the three months ended January 31, 2014.
 
Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
 
The Warrant liabilities are recorded at fair value with changes in fair value recorded as gains or losses within non-cash interest expense. The estimate of the fair value of the securities noted above, as of the valuation date, is based on the Cox-Ross Binomial Lattice Model using the estimated value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock (unobservable inputs).
 
Recent Accounting Pronouncements
 
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 requires entities to present in the consolidated financial statements an unrecognized tax benefit, or a portion of an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except to the extent such items are not available or not intended to be used at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position. In such instances, the unrecognized tax benefit is required to be presented in the consolidated financial statements as a liability and not be combined with deferred tax assets. This guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
 
NOTE 3.     BALANCE SHEET COMPONENTS
 
Inventory
 
The Company operates in an industry characterized by rapid improvements and changes to its technology and products. The introduction of new products by the Company or its competitors can result in its inventory being rendered obsolete or it being required to sell items at a discount. The Company evaluates the recoverability of its inventory by reference to its internal estimates of future demands and product life cycles. If the Company incorrectly forecasts demand for its products or inadequately manages the introduction of new product lines, the Company could materially impact its consolidated financial statements by having excess inventory on hand. The Company's future estimates are subjective and actual results may vary.
 
Inventories are recorded at cost using the First-In-First-Out ("FIFO") method. Ending inventories are comprised of raw materials and direct costs of manufacturing and are valued at the lower of cost or market. Inventories consisted of the following as of January 31, 2014 and April 30, 2013:
 
   
January 31,
2014
   
April 30,
2013
 
Raw materials
  $ 28,779     $ 28,779  
Finished goods
    68,658       70,425  
    $ 97,437     $ 99,204  
 
 
10

 
 
Other current assets
 
Other current assets consist of the following as of January 31, 2014 and April 30, 2013:
 
   
January 31,
2014
   
April 30,
2013
 
R&D materials
  $ 106,573     $ 159,892  
Deferred cost of sales
    17,500       -  
Other
    8,287       7,090  
Dermacyte samples
    3,428       3,428  
    $ 135,788     $ 170,410  
 
Property and equipment, net
 
Property and equipment consist of the following as of January 31, 2014 and April 30, 2013:
 
   
January 31,
2014
   
April 30,
2013
 
Laboratory equipment
  $ 768,252     $ 768,252  
Computer equipment and software
    144,115       135,697  
Office furniture and fixtures
    130,192       130,192  
      1,042,559       1,034,141  
Less: Accumulated depreciation and amortization
    (893,194 )     (828,752 )
    $ 149,365     $ 205,389  
 
Depreciation and amortization expense was approximately $21,000 and $23,000 for the three months ended January 31, 2014 and 2013, respectively; and $66,000 and $70,000 for the nine months ended January 31, 2014 and 2013, respectively.
 
Accrued liabilities
 
Accrued liabilities consist of the following as of January 31, 2014 and April 30, 2013:
 
   
January 31,
2014
   
April 30,
2013
 
Operating costs
  $ 1,101,493     $ 19,865  
Employee related
    220,066       66,632  
Deferred revenue
    123,786       185,068  
Restructuring liability
    43,728       43,728  
Convertible note interest payable
    4,125       59,583  
Accrued settlement costs
    -       500,000  
    $ 1,493,198     $ 874,876  
 
Other liabilities
 
As further discussed in Note 9 below, following the closing of the Company’s research and development facility in California, the Company entered into a long-term sublease agreement with an unrelated third party covering the vacated space which extends through the termination date. The Company recorded a liability for the remaining lease payments due under its long-term, non-cancelable operating lease for this facility, net of sublease payments, which expires in July 2015. The table below summarizes the net future minimum payments due under this lease agreement.
 
 
11

 
 
   
January 31,
2014
   
April 30,
2013
 
Net non-cancelable operating lease obligation
  $ 65,592     $ 98,388  
Less: current portion
    (43,728 )     (43,728 )
Long-term portion of net non-cancelable operating lease obligation
  $ 21,864     $ 54,660  
 
NOTE 4.     ACQUISITION
 
On November 13, 2013, the Company, through its wholly owned subsidiary, Life Newco, acquired certain assets of Phyxius pursuant to the Asset Purchase Agreement. The acquisition was accounted for under the acquisition method of accounting for business combinations in accordance with FASB ASC 805,   Business Combinations, which requires, among other things that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.  Acquisition-related costs are not included as a component of the acquisition accounting, but are recognized as expenses in the periods in which the costs are incurred.  Any changes within the measurement period resulting from facts and circumstances that existed as of the acquisition date may result in retrospective adjustments to the provisional amounts recorded at the acquisition date.
 
Under the terms and subject to the conditions of the Asset Purchase Agreement, Life Newco acquired (the “Acquisition”) certain assets, including that certain License Agreement (the “License”), dated September 20, 2013 by and between Phyxius and Orion Corporation, a global healthcare company incorporated under the laws of Finland (“Orion”), and that certain Side Letter, dated October 15, 2013 by and between Phyxius and Orion.  The License grants Life Newco an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial (the “Product”) in the United States and Canada (the “Territory”).  Pursuant to the License, Life Newco must use Orion’s “Simdax®” trademark to commercialize the Product.  The License also grants to Life Newco a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication.  Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the Territory, and certain regulatory participation rights.  Additionally, Life Newco must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by Life Newco under the License.  The License has a fifteen (15) year term, provided, however, that the License will continue after the end of the fifteen year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country (the “Term”).  Orion may terminate the License if the human clinical trial using the Product and studying reduction in morbidity and mortality of cardiac surgery patients at risk of low cardiac output syndrome (LCOS) as described in the US Food and Drug Administration (the “FDA”) agreed upon clinical study protocol (the “Study”) is not started by July 31, 2014.
 
The following table summarizes the consideration transferred to acquire Phyxius and the amounts of identified assets acquired and liabilities assumed at the acquisition date.
 
Fair Value of Consideration Transferred:
 
Common stock     8,747,802  
Series E convertible preferred stock     15,299,198  
Total     24,047,000  
 
The Company issued 1,366,844 shares of its common stock that had a total fair value of approximately $8.7 million based on the closing market price on November 13, 2013, the acquisition date. The Company also issued 32,992 shares of its Series E Convertible Preferred Stock (the “Series E Stock”), which are convertible into an aggregate of 3,299,200 shares of common stock that had a total fair value of approximately $15.3 million.
 
The rights, preferences and privileges of the Series E Stock are set forth in the Certificate of Designation of Series E Convertible Preferred Stock that the Company filed with the Secretary of State of the State of Delaware on November 13, 2013.  Each share of Series E Stock will automatically convert into 100 shares of common stock following receipt of stockholder approval for the transaction.  Approximately 11% of the shares of converted common stock will vest immediately upon receipt of stockholder approval for the transaction, while the remainder will vest upon achievement of certain performance milestones related to the development and commercialization of the levosimendan product in North America.   In addition, all unvested converted common stock will vest if certain change of control transactions or significant equity financings occur within 24 months of the closing of the Acquisition.  The number of shares of common stock into which the Series E Stock converts is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.  The Series E Stock does not carry dividend or a liquidation preference.  The Series E Stock carries voting rights aggregating 4.99% of the Company’s common stock voting power immediately prior to the closing of the Acquisition.
 
 
12

 
 
The Preferred E shares are convertible into restricted common shares using a 100-for-one ratio at anytime and in accordance with a vesting schedule contingent upon achievement of Company-specific non-financial conditions. As a result, the fair value of the Preferred Shares was inferred based on their common stock equivalent value given the conversion terms. The conditional vesting of the Preferred E Shares was accounted for by subtracting the fair value of an equal number of put options that would effectively protect the common stock equivalent stock value as of the closing date. The terms of the put options were as follows:
 
-  
Exercise price equal to the common stock price as of the Valuation Date
 
-  
Term based on Management’s risk-adjusted expected time to meeting the vesting condition, which was further increased by 6 months to reflect the marketability restriction of the unregistered stock, consistent with SEC Rule 144 of the Securities Act.
 
-  
Volatility was consistent with the term for the individual milestone payments derived from the median historical asset volatility for a set of comparable guideline companies. The volatility was then relevered to estimate the equity volatility of the Company.
 
Recognized amounts of identifiable assets acquired and liabilities assumed:
 
IPR&D
    22,000,000  
Trade and other payables
    (256,000 )
Liability arising from a contingency
    (1,000,000 )
   Total identifiable net assets
    20,744,000  
Goodwill
    3,303,000  
 
The fair value of the acquired in-process research and development, (“IPR&D”), intangible asset of approximately $22.0 million was determined using the multi-period excess earnings method. The Company did not acquire any other class of assets as a result of the acquisition.
 
A liability arising from a contingency of $1 million has been recognized at fair value for expected license fee payments due under the acquired license. The Company expects that this expenditure will be payable in the fourth quarter of its fiscal year 2014. Pursuant to the terms of the License, the Company must pay to Orion a non-refundable up-front payment in the amount of $1 million within thirty (30) days of the Company receiving funding for the Study, but in no event later than April 1, 2014.  The License also includes the following development milestones for which the Company shall make non-refundable payments to Orion no later than twenty-eight (28) days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating up to $13.0 million, contingent upon achievement of certain cumulative net sales amounts in the Territory. The Company must also pay Orion tiered royalties based on net sales of the Product in the Territory made by the Company and its sublicensees. After the end of the Term, the Company must pay Orion a royalty based on net sales of the Product in the Territory for as long as the Company sells the Product in the Territory.
 
In connection with the closing of the Acquisition, Phyxius’ co-founder, Chief Executive Officer and stockholder, John Kelley, became the Company’s Chief Executive Officer and two other Phyxius employees and stockholders, Doug Randall and Douglas Hay, PhD became employees of the Company as Vice President, Business and Commercial Operations and Vice President, Regulatory Affairs, respectively.  Michael Jebsen, the Company’s prior Interim Chief Executive Officer and current Chief Financial Officer, continues serving as the Company’s Chief Financial Officer.  In addition, Mr. Kelley was subsequently appointed to the Company’s Board of Directors, while another designee will be appointed to the Board of Directors following receipt of stockholder approval for the transaction.  Pursuant to the Asset Purchase Agreement, the Company agreed to propose that its stockholders approve an amendment to the Company’s 1999 Stock Plan to increase the amount of stock options authorized for issuance under the 1999 Stock Plan to not less than 4,000,000 shares of common stock.
 
The common stock and Series E Stock issued as the consideration in the Acquisition were issued and sold without registration under the Securities Act of 1933 (the “Securities Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws.  Accordingly, the Phyxius Stockholders may sell the shares of common stock and Series E Stock only pursuant to an effective registration statement under the Securities Act covering the resale of those securities, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act.
 
 
13

 
 
The table below presents pro forma information as if the Company's acquisition of Phyxius had occurred at the beginning of the earliest period presented, which was May 1, 2012. The pro forma financial information is not indicative of the results of operations that would have occurred had the transaction been effected on the assumed date:
 
   
Three months ended January 31,
   
Nine months ended January 31,
 
   
2014
   
2013
   
2014
   
2013
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
Total net revenue
    41,864       222,388       263,375       1,009,356  
                                 
Net loss
  $ 3,350,921     $ 2,412,954     $ 9,145,871     $ 7,559,369  
                                 
Net loss attributable to common stockholders
  $ 4,446,743     $ 2,412,954     $ 14,888,033     $ 7,559,369  
                                 
                                 
Net loss per share, basic
  $ (0.38 )   $ (0.80 )   $ (2.07 )   $ (2.56 )
Weighted average number of common shares outstanding, basic
    11,626,865       3,025,739       7,178,006       2,958,282  
Net loss per share,  diluted
  $ (0.39 )   $ (1.57 )   $ (2.08 )   $ (3.28 )
Weighted average number of common shares outstanding,  diluted
    11,633,445       3,134,484       7,184,662       3,067,027  
 
 
NOTE 5.     INTANGIBLE ASSETS
 
The following table summarizes the Company’s intangible assets as of January 31, 2014:
 
Asset Category
 
Value Assigned
   
Weighted Average Amortization Period (in Years)
   
Impairments
   
Accumulated Amortization
   
Carrying Value (Net of Impairments and Accumulated Amortization)
 
                               
IPR&D
  $ 22,000,000       N/A     $ -     $ -     $ 22,000,000  
Patents
    697,074       11.1       -       (281,136 )     415,938  
License Rights
    600,946       15.1       -       (140,735 )     460,211  
Trademarks
    106,386       N/A       -       -       106,386  
Total
  $ 23,404,406             $ -     $ (421,871 )   $ 22,982,535  
 
The following table summarizes the Company’s intangible assets as of April 30, 2013:
 
Asset Category
 
Value Assigned
   
Weighted Average Amortization Period (in Years)
   
Impairments
   
Accumulated Amortization
   
Carrying Value (Net of Impairments and Accumulated Amortization)
 
                               
Patents
  $ 645,918       11.2     $ (27,279 )   $ (258,499 )   $ 360,140  
License Rights
    572,370       15.6       -       (117,969 )     454,401  
Trademarks
    110,157       N/A       -       -       110,157  
Total
  $ 1,328,445             $ (27,279 )   $ (376,468 )   $ 924,698  
 
The aggregate amortization expense on the above intangibles was approximately $16,000 and $14,000, for the three months ended January 31, 2014 and 2013, respectively; and $45,000 and $41,000, for the nine months ended January 31, 2014 and 2013 respectively.
 
In Process Research and Development
 
The Simdax product in Phase III clinical trial represents an IPR&D asset. The IPR&D asset is a research and development project rather than a product or processes already in service or being sold. Research and development intangible assets are considered indefinite-lived until the abandonment or completion of the associated research and development efforts. If abandoned, the assets would be impaired. Research and development expenditures that are incurred after the acquisition, including those for completing the research and development activities related to the acquired intangible research and development assets, are generally expensed as incurred.
 
Patents and License Rights
 
The Company currently holds, has filed for, or owns exclusive rights to, U.S. and worldwide patents covering 13 various methods and uses of its perfluorocarbon (“PFC”) technology. It capitalizes amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of its patent applications. These capitalized costs are amortized on a straight-line method over their useful life or legal life, whichever is shorter. The Company capitalized patent costs of approximately $107,000 and $89,900, for the nine months ended January 31, 2014 and 2013, respectively.
 
Trademarks
 
The Company currently holds, or has filed for, trademarks to protect the use of names and descriptions of its products and technology. It capitalizes amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of its trademark applications. These trademarks are evaluated annually for impairment in accordance with ASC 350, Intangibles – Goodwill and other. The Company evaluates (i) its expected use of the underlying asset, (ii) any laws, regulations, or contracts that may limit the useful life, (iii) the effects of obsolescence, demand, competition, and stability of the industry, and (iv) the level of costs to be incurred to commercialize the underlying asset. The Company capitalized trademark costs of approximately $0 and $1,100, for the nine months ended January 31, 2014 and 2013, respectively.
 
 
14

 
 
NOTE 6.     NOTES PAYABLE
 
The following table summarizes our outstanding notes payable as of January 31, 2014 and April 30, 2013:
 
   
January 31,
2014
   
April 30,
2013
 
Current portion of notes payable, net
  $ 110,445     $ 57,539  
Current portion of convertible notes payable
    300,000       -  
Less: Unamortized discount
    (41,677 )        
Current portion of notes payable, net
  $ 368,768     $ 57,539  
                 
Long-term portion of convertible notes payable
  $ -     $ 4,900,001  
Less: Unamortized discount
    -       (1,905,559 )
Long-term portion of notes payable, net
  $ -     $ 2,994,442  

Convertible Note
 
On June 29, 2011, the Company issued a note (the “June Note”) with a principal amount of approximately $300,000 and Warrants to purchase 6,652 shares of common stock. On July 1, 2011, the Company issued a separate note (together with the June Note, the “Notes”) with a principal amount of $4,600,000 and warrants to purchase 101,996 shares of common stock. The aggregate gross proceeds to the Company from the offering were approximately $4.9 million, excluding any proceeds from the exercise of any warrants. The aggregate placement agent fees were $297,000 and legal fees associated with the offering were $88,839. These costs have been capitalized as debt issue costs and will be amortized as interest expense over the life of the Notes. The Company recorded amortization of debt issue costs of $32,154 the three months ended January 31, 2014 and 2013 and $96,462 for the nine months ended January 31, 2014 and 2013.
 
Interest on the Notes accrues at a rate of 15% annually and will be paid in quarterly installments commencing on the third month anniversary of issuance. The Notes will mature 36 months from the date of issuance. The Notes may be converted into shares of common stock at a conversion price of $45.10 per share (subject to adjustment for stock splits, dividends and combinations, recapitalizations and the like) (the "Conversion Price") at any time, in whole or in part, at any time at the option of the holders of the Notes. The Notes also will automatically convert into shares of common stock at the Conversion Price at the election of a majority-in-interest of the holders of notes issued under the purchase agreement or upon the acquisition or sale of all or substantially all of the assets of the Company. The Company may make each applicable interest payment or payment of principal in cash, shares of common stock at the Conversion Price, or any combination thereof. The Company may elect to prepay all or any portion of the Notes without prepayment penalties only with the approval of a majority-in-interest of the note holders under the purchase agreement at the time of the election.   The Notes contain various events of default such as failing to timely make any payment under the Note when due, which may result in all outstanding obligations under the Note becoming immediately due and payable.
 
As further discussed in Note 8 below, on August 22, 2013 holders of $4.6 million of the Notes received 4,600 shares of the Company’s Series D 8% Convertible Preferred Stock (the “Series D Stock”) as consideration for cancelling their outstanding Note. On that date, the Company recognized non-cash interest expense of $1,311,847 for the remaining unamortized debt discount associated with this Note.
 
The Company recorded interest expense of $68,653 and $628,321 for the three months ended January 31, 2014 and 2013, respectively; and $2,113,677 and $1,884,962 for the nine months ended January 31, 2014 and 2013, respectively.
 
The total value allocated to the warrants was $1,960,497 and was recorded as a debt discount against the proceeds of the notes.  In addition, the beneficial conversion features related to the notes were determined to be $2,939,504.  As a result, the aggregate discount on the notes totaled $4,900,001, and is being amortized over term of the notes.  The Company recorded interest expense for the amortization of debt discount of $24,999 and $408,333 for the three months ended January 31, 2014 and 2013, respectively; and $1,863,882 and $1,225,000 for the nine months ended January 31, 2014 and 2013, respectively.
 
 
15

 
 
NOTE 7.     COMMITMENTS AND CONTINGENCIES
 
Simdax license agreement
 
As further discussed in Note 4 above, on November 13, 2013 the Company acquired the License which granted it an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan in the United States and Canada.  Pursuant to the License, the Company must use Orion’s “Simdax®” trademark to commercialize the Product.  The License also grants to the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication.  Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the Territory, and certain regulatory participation rights.  Additionally, the Company must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by the Company under the License.  The License has a fifteen (15) year term, provided, however, that the License will continue after the end of the fifteen year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country.  Orion may terminate the License if the Study is not started by July 31, 2014.
 
Pursuant to the terms of the License, the Company must pay to Orion a non-refundable up-front payment in the amount of $1 million within thirty (30) days of the Company receiving funding for the Study, but in no event later than April 1, 2014.  The License also includes the following development milestones for which the Company shall make non-refundable payments to Orion no later than twenty-eight (28) days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating up to $13.0 million, contingent upon achievement of certain cumulative net sales amounts in the Territory.  The Company must also pay Orion tiered royalties based on net sales of the Product in the Territory made by the Company and its sublicensees. After the end of the Term, the Company must pay Orion a royalty based on net sales of the Product in the Territory for as long as Life Newco sells the Product in the Territory.
 
As of January 31, 2014, the Company has not met any of the developmental milestones and, accordingly, has not recorded any liability for the contingent payments due to Orion.
 
Agreement with Virginia Commonwealth University
 
In May 2008 the Company entered into a license agreement with Virginia Commonwealth University (“VCU”) whereby it obtained a worldwide, exclusive license to valid claims under three of the VCU's patent applications that relate to methods for non-pulmonary delivery of oxygen to tissue and the products based on those valid claims used or useful for therapeutic and diagnostic applications in humans and animals. The license includes the right to sub-license to third parties. The term of the agreement is the life of the patents covered by the patent applications unless the Company elects to terminate the agreement prior to patent expiration.  Under the agreement the Company has an obligation to diligently pursue product development and pursue, at its own expense, prosecution of the patent applications covered by the agreement. As part of the agreement, the Company is required to pay to VCU nonrefundable payments upon achieving development and regulatory milestones. As of January 31, 2014, the Company has not met any of the developmental milestones.
 
The agreement with VCU also requires the Company to pay royalties to VCU at specified rates based on annual net sales derived from the licensed technology. Pursuant to the agreement, the Company must make minimum annual royalty payments to VCU totaling $70,000 as long as the agreement is in force. These payments are fully creditable against royalty payments due for sales and sublicense revenue earned during the fiscal year as described above. This fee is recorded as an other current asset and is amortized over the fiscal year. Amortization expense was $17,500 and $52,500 for each of the three and nine months ended January 31, 2014 and 2013, respectively.
 
NOTE 8.     STOCKHOLDERS’ EQUITY
 
Preferred Stock
 
Under the Company’s Certificate of Incorporation, the Board of Directors is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof. As of January 31, 2014, 9,947,439 shares of preferred stock are undesignated.
 
On November 13, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 32,992 shares of its authorized but unissued shares of preferred stock as Series E Stock
 
On August 22, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 4,600 shares of its authorized but unissued shares of preferred stock as Series D Stock
 
On July 22, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 5,369 shares of its authorized but unissued shares of preferred stock as Series C 8% Convertible Preferred Stock (the “Series C Stock”).
 
 
 
16

 
 
On February 25, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 1,600 shares and 500 shares of its authorized but unissued shares of preferred stock as Series B-1 Convertible Preferred Stock (the “Series B-1 Stock”) and Series B-2 Convertible Preferred Stock (the “Series B-2 Stock” and together with the Series B-1 Stock, the “Series B Stock”), respectively.
 
On December 8, 2011, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 7,500 shares of its authorized but unissued shares of preferred stock as Series A Convertible Preferred Stock (the “Series A Stock”).
 
Series E Stock
 
As further discussed in Note 4 above, on November 13, 2013 the Company issued 32,992 shares of its Series E Stock, which are convertible into an aggregate of 3,299,200 shares of common stock, as partial consideration to acquire certain assets of Phyxius Pharma, Inc. pursuant to the Asset Purchase Agreement.
 
The rights, preferences and privileges of the Series E Stock are set forth in the Certificate of Designation of Series E Convertible Preferred Stock (the “Certificate of Designation”) that the Company filed with the Secretary of State of the State of Delaware on November 13, 2013.  Each share of Series E Stock will automatically convert into 100 shares of common stock following receipt of stockholder approval for the transaction.  Approximately 11% of the shares of converted common stock will vest immediately upon receipt of stockholder approval for the transaction, while the remainder will vest upon achievement of certain performance milestones related to the development and commercialization of the levosimendan product in North America.   In addition, all unvested converted common stock will vest if certain change of control transactions or significant equity financings occur within 24 months of the closing of the Acquisition.  The number of shares of common stock into which the Series E Stock converts is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.  The Series E Stock does not carry dividend or a liquidation preference.  The Series E Stock carries voting rights aggregating 4.99% of the Company’s common stock voting power immediately prior to the closing of the Acquisition.
 
As of January 31, 2014 there were 32,992 shares of Series E Stock outstanding.
 
Series D Stock
 
On August 22, 2013, the Company closed its private placement of an aggregate of $4.6 million of shares of the Company’s Series D Stock to JP SPC 3 obo OXBT FUND, SP (“OXBT Fund”).  In connection with the purchase of shares of Series D Stock, OXBT Fund received a warrant to purchase 2,358,975 shares of common stock at an exercise price equal to $2.60 (the “Series D Warrant”).  As consideration for the sale of the Series D Stock and Series D Warrant, $4.6 million in outstanding principal amount of a Note issued by the Company on July 1, 2011 and held by OXBT Fund was cancelled.  The Note carried interest at a rate of 15% per annum and matured on July 1, 2014.  Mr. Gregory Pepin, one of the Company’s directors, is the investment manager of OXBT Fund.  Pursuant to the terms of a lock-up agreement (the “Lock-Up Agreement”) executed prior to the closing, OXBT Fund and its affiliates are prohibited from engaging in certain transactions with respect to shares of the Company’s common stock and common stock equivalents until such time as the lead investor in the Company’s offering of Series C Stock ceases to own at least 25% of the shares of Series C Stock originally issued to such investor.
 
The table below sets forth a summary of the designation, powers, preferences and rights of the Series D Stock.
 
Conversion
Subject to certain ownership limitations, the Series D Stock is convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion ratio determined by dividing the stated value of the Series C Stock (or $1,000) by a conversion price of $1.95 per share. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.
Until such time that for at least 25 trading days during any 30 consecutive trading days, the volume weighted average price of the Company’s common stock exceeds 250% of the initial conversion price, if the Company sells or grants any option to purchase or sell any common stock or common stock equivalents entitling any person to acquire shares of common stock at an effective price per share that is lower than the then conversion price, or the Base Conversion Price, then the conversion price shall be reduced to equal the Base Conversion Price
   
Dividends and Make-Whole Payment
 
Until the third anniversary of the date of issuance of the Series D Stock, the holder of the Series D Stock is entitled to receive dividends at the rate of 8% per annum of the stated value for each share of Series D Stock held by such holder payable quarterly on January 1, April 1, July 1 and October 1, beginning on the first such date after the original issue date, and on each dividend payment date.  The Company can elect to pay the dividends in cash or in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination thereof.  If the Company pays the dividends in shares of common stock, the shares used to pay the dividends will be valued at 90% of the average volume weighted average price for the 20 consecutive trading days ending on the trading day immediately prior to the applicable dividend payment date.  From and after the third anniversary of the date of issuance of the Series D Stock, the holder of Series D Stock will be entitled to receive dividends equal, on an as-if-converted to common stock basis, to and in the same form as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock.  The Company has never paid dividends on its common stock and the Company does not intend to do so for the foreseeable future.
In the event OXBT Fund converts its Series D Stock prior to the third anniversary of the date of issuance of the Series D Stock, the Company must also pay to OXBT Fund in cash, or at the Company’s option in common stock valued as described above, or a combination of cash and shares of common stock, with respect to the Series D Stock so converted, an amount equal to $240 per $1,000 of the stated value of the Series D Stock, less the amount of any dividends paid in cash or in common stock on such Series D Stock on or before the date of conversion.
 
 
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Liquidation
Upon any liquidation, dissolution or winding up of the Company after payment or provision for payment of debts and other liabilities of the Company, but before any distribution or payment is made to the holders of any junior securities, the holder of Series D Stock shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount equal to $1,000 per share, after which any remaining assets of the Company shall be distributed among the holders of the other class or series of stock in accordance with the Company’s Certificate of Incorporation.
   
Voting rights
Shares of Series D Stock will generally have no voting rights, except as required by law and except that the consent of the holder of the outstanding Series D Stock will, among other things, be required to amend the terms of the Series D Stock.

During the nine months ended January 31, 2014, 4,600 shares of Series D Stock were converted into 2,358,974 shares of Common Stock and the Company issued 576,084 shares of its common stock in the form of Series D Stock dividends. As of January 31, 2014 there were no shares of Series D Stock outstanding.
 
Series C Stock
 
On July 21, 2013, the Company entered into a Securities Purchase Agreement with certain investors providing for the issuance and sale by the Company (the “Series C Offering”) of an aggregate of approximately $5.4 million of shares of the Company’s Series C Stock, which are convertible into a combined total of 2,753,348 shares of common stock (the “Conversion Shares”).  In connection with the purchase of shares of Series C Stock in the Series C Offering, each investor will receive a warrant to purchase a number of shares of common stock equal to 100% of the number of Conversion Shares at an exercise price equal to $2.60 (the “Warrants”).  On July 23, 2013, the Company sold 5,369 units for net proceeds of approximately $4.9 million.
 
The table below sets forth a summary of the designation, powers, preferences and rights of the Series C Stock.
 
 Conversion
Subject to certain ownership limitations, the Series C Stock is convertible at any time at the option of the holder into shares of the Company’s common stock at a conversion ratio determined by dividing the stated value of the Series C Stock (or $1,000) by a conversion price of $1.95 per share. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.
Until such time that for at least 25 trading days during any 30 consecutive trading days, the volume weighted average price of the Company’s common stock exceeds 250% of the initial conversion price, if the Company sells or grants any option to purchase or sell any common stock or common stock equivalents entitling any person to acquire shares of common stock at an effective price per share that is lower than the then conversion price, or the Base Conversion Price, then the conversion price shall be reduced to equal the Base Conversion Price
   
Dividends and Make-Whole Payment
 
Until the third anniversary of the date of issuance of the Series C Stock, each holder of the Series C Stock is entitled to receive dividends at the rate of 8% per annum of the stated value for each share of Series C Stock held by such holder payable quarterly on January 1, April 1, July 1 and October 1, beginning on the first such date after the original issue date, and on each dividend payment date.  The Company can elect to pay the dividends in cash or in duly authorized, validly issued, fully paid and non-assessable shares of common stock, or a combination thereof.  If the Company pays the dividends in shares of common stock, the shares used to pay the dividends will be valued at 90% of the average volume weighted average price for the 20 consecutive trading days ending on the trading day immediately prior to the applicable dividend payment date.  From and after the third anniversary of the date of issuance of the Series C Stock, each holder of Series C Stock will be entitled to receive dividends equal, on an as-if-converted to common stock basis, to and in the same form as dividends actually paid on shares of common stock when, as, and if such dividends are paid on shares of common stock.  The Company has never paid dividends on its common stock and the Company does not intend to do so for the foreseeable future.
In the event a holder converts his, her or its Series C Stock prior to the third anniversary of the date of issuance of the Series C Stock, the Company must also pay to the holder in cash, or at the Company’s option in common stock valued as described above, or a combination of cash and shares of common stock, with respect to the Series C Stock so converted, an amount equal to $240 per $1,000 of the stated value of the Series C Stock, less the amount of any dividends paid in cash or in common stock on such Series C Stock on or before the date of conversion.
   
Liquidation
Upon any liquidation, dissolution or winding up of the Company after payment or provision for payment of debts and other liabilities of the Company, but before any distribution or payment is made to the holders of any junior securities, the holders of Series C Stock shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount equal to $1,000 per share, after which any remaining assets of the Company shall be distributed among the holders of the other class or series of stock in accordance with the Company’s Certificate of Incorporation.
   
Voting rights
Shares of Series C Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series C Stock will, among other things, be required to amend the terms of the Series C Stock.
 
 
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The Company will not affect any conversion of the Series C Stock, nor shall a holder convert its shares of Series C Stock, to the extent that such conversion would cause the holder to have acquired, through conversion of the Series C Stock or otherwise, beneficial ownership of a number shares of common stock in excess of 4.99% of the common stock outstanding immediately preceding the conversion.
 
During the nine months ended January 31, 2014, 5,114 shares of Series C Stock were converted into 2,622,558 shares of common stock and the Company issued 804,661 shares of its common stock for the payment of $1,227,360 as dividends on the Series C Stock. As of January 31, 2014 there were 255 shares of Series C Stock outstanding.
 
Series B Stock
 
On February 22, 2013, the Company entered into a Securities Purchase Agreement with an institutional investor providing for the issuance and sale by the Company of $1.6 million of shares of the Company’s Series B-1 Stock and $0.5 million of shares of the Company's Series B-2 Stock which are convertible into a combined total of 420,000 shares of common stock, subject to adjustment for subsequent equity sales.
 
On February 27, 2013, the Company sold 2,100 units for net proceeds of approximately $1.9 million. Each unit sold consisted of (i) one share of the Company’s Series B Stock and (ii) a Warrant representing the right to purchase 300 shares of common stock at a price of $1,000 per unit, less issuance costs. The shares of Series B Stock were immediately convertible upon issuance.
 
The table below sets forth a summary of the designation, powers, preferences and rights of the Series B Stock.
 
Dividends
No dividends shall be paid on shares of Preferred Stock.
 
Conversion
Holders may elect to convert shares of Series B Stock into shares of common stock at the then-existing conversion price at any time.  The initial conversion price is $5.00 per share of common stock, and is subject to certain adjustments, including an anti-dilution provision that reduces the conversion price upon the issuance of any common stock or securities convertible into common stock at an effective price per share less than the conversion price and a one-time price reset following the effectiveness of a reverse split of the Company’s outstanding common stock.
 
Liquidation preference
In the event of the Company’s voluntary or involuntary dissolution, liquidation or winding up, each holder of Series B Stock will be entitled to be paid a liquidation preference equal to the initial stated value of such holder’s Series B Stock of $1,000 per share, plus accrued and unpaid dividends and any other payments that may be due on such shares, before any distribution of assets may be made to holders of capital stock ranking junior to the Series B Stock.
 
Voting rights
Shares of Series B Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series B Stock will among other things, be required to amend the terms of the Series B Stock.
 
 
 
 
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The Company will not affect any conversion of the Series B Stock, nor shall a holder convert its shares of Series B Stock, to the extent that such conversion would cause the holder to have acquired, through conversion of the Series B Stock or otherwise, beneficial ownership of a number shares of common stock in excess of 4.99% of the common stock outstanding immediately preceding the conversion.
 
During the nine months ended January 31, 2014, 987 shares of Series B Stock were converted into 644,915 shares of common stock.  As of January 31, 2014 there were no shares of Series B Stock outstanding.
 
 
Series A Stock
 
On December 12, 2011, the Company sold 3,500 units for net proceeds of approximately $3.2 million. Each unit sold consisted of (i) one share of the Company’s Series A Stock and (ii) a warrant representing the right to purchase 11.275 shares of common stock (the “2011 Warrants”), at a price of $1,000 per unit, less issuance costs. The shares of Series A Stock were immediately convertible and the 2011 Warrants are exercisable on the one-year anniversary of the closing date.
 
On June 15, 2012, the Company sold an additional 2,500 units for net proceeds of approximately $2.3 million. Each unit sold consisted of (i) one share of the Company’s Series A Stock and (ii) a 2011 Warrant, at a price of $1,000 per unit, less issuance costs. The shares of Series A Stock were immediately convertible and the 2011 Warrants are exercisable beginning on the one-year anniversary of the closing date.
 
Interest expense on the outstanding Series A Stock was approximately $0 and $1.7 million for the nine months ended January 31, 2014 and 2013, respectively. The recorded interest for the prior period was comprised of approximately $657,000 for the calculated fair value of the warrants issued with the Series A Stock and $763,000 for the excess of the fair-value of the shares issued upon conversion over the fair value of the Series A Stock.
 
Interest expense recorded for the payment of dividends on the Series A Stock was approximately $0 and $310,000 for the nine months ended January 31, 2014 and 2013, respectively.
 
No Series A Stock was outstanding during the nine months ended January 31, 2014.
 
Common Stock
 
The Company’s Certificate of Incorporation authorizes it to issue 400,000,000 shares of $0.0001 par value common stock. As of January 31, 2014, there were 13,671,105 shares of common stock issued and outstanding.
 
Warrants
 
Series D Warrants
 
On August 22, 2013, the Company closed its previously announced private placement of an aggregate of $4.6 million shares of the Company’s Series D Stock to OXBT Fund.  In connection with the purchase of shares of Series D Stock, OXBT Fund received the Series D Warrant to purchase 2,358,975 shares of common stock at an exercise price equal to $2.60 and contractual term of 6 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,531,167 was recognized as a deemed dividend on the Series D Stock during the nine months ended January 31, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.  
 
 
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The Series D Warrant is exercisable beginning on the date of issuance and expires on August 22, 2019.  The exercise price and the number of shares issuable upon exercise of Series D Warrant is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock, and also upon any distributions of assets, including cash, stock or other property to the Company’s stockholders.  In addition, if stockholder approval for the transaction is obtained, the Series D Warrant will be subject to anti-dilution provisions until such time that for 25 trading days during any 30 consecutive trading day period, the volume weighted average price of the Company’s common stock exceeds $6.50 and the daily dollar trading volume exceeds $350,000 per trading day.
 
On January 30, 2014, the Company entered into an agreement with the OXBT Fund to amend the terms of the outstanding Series D Warrants. The amendment replaced the price protection anti-dilution provision of each warrant with a covenant that the Company will not issue common stock or common stock equivalents at an effective price per share below the exercise price of such warrant without prior written consent, subject to certain exceptions.
 
The Series D Stock and the Series D Warrant were issued and sold without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws.  Accordingly, OXBT Fund may exercise the Warrant and sell the Series D Stock and underlying shares only pursuant to an effective registration statement under the Securities Act covering the resale of those securities, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act.
 
Series C Warrants
 
On July 23, 2013, the Company issued common stock warrants in connection with the issuance of Series C Stock (the “Series C Warrants”). As part of the offering, the Company issued 2,753,348 warrants at an exercise price of $2.60 per share and contractual term of 6 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,867,991 was recognized as a deemed dividend on the Series C Stock during the nine months ended January 31, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.
 
In connection with the Series C Offering described above, the Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Placement Agent”) pursuant to which the Placement Agent agreed to act as the Company’s exclusive placement agent for the Series C Offering. In accordance with the Placement Agency Agreement, on July 23, 2013 the Company issued to the Placement Agent warrants to purchase 53,539 shares of common stock at an exercise price of $2.4375 per share and a contractual term of 3 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $51,231 was recognized as additional paid in capital during the nine months ended January 31, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.
 
On August 23, 2013, the Company entered into agreements with certain institutional investors to amend the terms of certain outstanding warrants to purchase an aggregate of 2,681,283 shares of the Company’s common stock issued by the Company on February 27, 2013 and July 27, 2013 (collectively, the “Warrant Amendments”).  The Warrant Amendments replace the price protection anti-dilution provision of each warrant with a covenant that the Company will not issue common stock or common stock equivalents at an effective price per share below the exercise price of such warrant without prior written consent, subject to certain exceptions. As of January 31, 2014, none of these amended warrants remain outstanding.
 
During the nine months ended January 31, 2014, the Company received cash of approximately $6.4 million and issued 2,461,542 shares of common stock upon the exercise of outstanding Series C Warrants. As of January 31, 2014, 291,806 Series C Warrants are outstanding.
 
In accordance with ASC 815-40-35-8, the company reassessed the classification of the remaining Series C Warrants. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, On November 11, 2013, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,380,883 which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the change in fair value was recorded as a component of other expense.
 
The estimated fair value is determined using the Cox-Ross Binomial Lattice Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.
 
 
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As of January 31, 2014, the fair value of the warrant liability was $1,082,941. The Company recorded a loss of $849,905 for the change in fair value on the consolidated statement of operations for the three months ended January 31, 2014.
 
The following table summarizes the Company’s warrant activity for the nine months ended January 31, 2014:
 
   
Warrants
   
Weighted Average Exercise Price
 
Outstanding at April 30, 2013
    759,410     $ 11.00  
Issued
    5,165,862       2.60  
Exercised
    (3,109,862 )     2.25  
Forfeited
    (1,661 )     126.00  
Outstanding at January 31, 2014
    2,813,749     $ 4.25  
 
During the three and nine months ended January 31, 2014, the Company received approximately $6.4 million and $7.0 million and issued 2,479,862 and 3,109,862 shares of common stock, respectively, upon the exercise of outstanding warrants.
 
1999 Amended Stock Plan
 
In October 2000, the Company adopted the 1999 Stock Plan, as amended and restated on June 17, 2008 (the “Plan”). Under the Plan, with the approval of the Compensation Committee of the Board of Directors, the Company may grant stock options, restricted stock, stock appreciation rights and new shares of common stock upon exercise of stock options. On September 30, 2011, the Company’s stockholders approved an amendment to the Plan which increased the amount of shares authorized for issuance under the Plan to 300,000, up from 40,000 previously authorized. As of January 31, 2014 the Company had 152,499 shares of common stock available for grant under the Plan.
 
The following table summarizes the shares available for grant under the Plan for the nine months ended January 31, 2014:
 
   
Shares Available for Grant
 
Balances, at April 30, 2013
    282,726  
Options granted
    (39,913 )
Options cancelled/forfeited
    550  
Restricted stock granted
    (135,662 )
Restricted stock cancelled/forfeited
    44,798  
Balances, at January 31, 2014
    152,499  
 
Plan Stock Options
 
Stock options granted under the Plan may be either incentive stock options (“ISOs”), or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the Plan may be granted with a term of up to ten years and at prices no less than fair market value for ISOs and no less than 85% of the fair market value for NSOs. Stock options granted generally vest over one to three years.
 
 
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The following table summarizes the outstanding stock options under the Plan for the nine months ended January 31, 2014:
 
   
Outstanding Options
 
   
Number of Shares
   
Weighted Average Exercise Price
 
Balances, at April 30, 2013
    11,336     $ 57.00  
Options granted
    39,942     $ 4.69  
Options cancelled
    (550 )   $ 38.76  
                 
Balances, at January 31, 2014
    50,728     $ 16.01  
 
The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value.
 
The Company used the following assumptions to estimate the fair value of options granted under its stock option plans for the nine months ended January 31, 2014 and 2013:
 
   
For the nine months ended January 31
 
   
2014
   
2013
 
Risk-free interest rate (weighted average)
    1.12 %     1.29 %
Expected volatility (weighted average)
    86.24 %     79.30 %
Expected term (in years)
    7       7  
Expected dividend yield
    0.00 %     0.00 %

Risk-Free Interest Rate
The risk-free interest rate assumption was based on U.S. Treasury instruments with a term that is consistent with the expected term of the Company’s stock options.
   
Expected Volatility
The expected stock price volatility for the Company’s common stock was determined by examining the historical volatility and trading history for its common stock over a term consistent with the expected term of its options.
   
Expected Term
The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. It was calculated based on the Company’s historical experience with its stock option grants.
   
Expected Dividend Yield
The expected dividend yield of 0% is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not anticipate paying any dividends in the near future.
   
Forfeitures
Stock compensation expense recognized in the statements of operations for the nine months ended January 31, 2014 and 2013 is based on awards ultimately expected to vest, and it has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on the Company’s historical experience.
 
As of January 31, 2014, there were unrecognized compensation costs of approximately $40,000 related to non-vested stock option awards granted after May 1, 2004 that will be recognized on a straight-line basis over the weighted average remaining vesting period of 3.78 years.
 
 
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Restricted Stock Grants
 
The following table summarizes the restricted stock grants under the Plan for the nine months ended January 31, 2014 .
 
   
Outstanding Restricted Stock Grants
 
   
Number of Shares
   
Weighted Average Grant Date Fair Value
 
Balances, at April 30, 2013
    1,917     $ 48.40  
Restricted stock granted
    135,662     $ 3.00  
Restricted stock vested
    (50,152 )   $ 2.30  
Restricted stock cancelled
    (31,435 )   $ 1.66  
Restricted stock forfeited
    (13,363 )   $ 4.49  
Balances, at January 31, 2014
    42,629     $ 6.37  
 
The Company recorded compensation expense for these restricted stock grants of $173,613 and $295,767 for the three and nine months ended January 31, 2014, respectively.
 
As of January 31, 2014, there were unrecognized compensation costs of approximately $66,000 related to the non-vested restricted stock grants that will be recognized on a straight-line basis over the remaining vesting period.
 
NOTE 9.     RESTRUCTURING EXPENSE
 
In May 2012, the Company decided to consolidate its operations and relocate its research and development function to North Carolina from Costa Mesa, California. To allow for this transition period, all existing development work had been completed and all of the manufacturing of the Company’s PFC-based products had been transferred to contract manufacturers. As part of these initiatives, the Company terminated all related research and development activities and a workforce reduction was implemented.  In September 2012, the Company entered into a sublease agreement with an unrelated third party that extends throughout the remaining term of the existing lease for the vacated facility.
 
The following table summarizes the impact of the work force reductions and other associated costs on operating expenses and payments for the nine months ended January 31, 2014, and the liability remaining on the balance sheet as of January 31, 2014.
 
   
Charges Incurred During the Nine Months Ended
January 31,
2014
 
Amounts Paid Through January 31,
2014
 
Amounts Accrued at January 31,
2014
 
Future lease obligations, net of sublease revenue
  $ -     $ 76,292     $ 65,592  
 
The Company recorded all restructuring expenses as operating expenses on the consolidated statement of operations. All restructuring costs were paid by January 31, 2014, with the exception of approximately $66,000 of future lease obligations, net of sublease revenue.
 
NOTE 10.     SUBSEQUENT EVENTS
 
On February 10, 2014, the remaining 255 shares of Series C Stock were converted into 130,796 shares of common stock and the Company issued 26,740 shares of its common stock for the payment of $61,200 as dividends on the Series C Stock.
 
On March 13, 2014, at a special meeting of stockholders, the Company received stockholder approval of the issuance of the Series E Stock to the Phyxius Stockholders, and pursuant to the terms of the Series E Stock, the 32,992 shares of Series E Stock were converted into an aggregate of 3,299,200 shares of common stock.
 
In addition, on March 13, 2014, at the special meeting of stockholders, the Company’s stockholders approved an amendment to the Plan to increase the number of shares of common stock authorized for issuance under the Plan to 4,000,000 shares of common stock.
 
 
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ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to them. In some cases you can identify forward-looking statements by words such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. Examples of these statements include, but are not limited to, statements regarding: the implications of interim or final results of our clinical trials, the progress of our research programs, including clinical testing, the extent to which our issued and pending patents may protect our products and technology, our ability to identify new product candidates, the potential of such product candidates to lead to the development of commercial products, our anticipated timing for initiation or completion of our clinical trials for any of our product candidates, our future operating expenses, our future losses, our future expenditures for research and development, and the sufficiency of our cash resources. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us and described in Part II, Item 1A of this Quarterly Report on Form 10-Q,and our other filings with the Securities and Exchange Commission, or SEC. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from those we expect. Except as required by law, we assume no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise.
 
The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with the audited consolidated financial statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended April 30, 2013.
 
All references in this Quarterly Report to “Oxygen Biotherapeutics”, “we”, “our” and “us” means Oxygen Biotherapeutics, Inc.
 
Overview
 
Strategy
 
We are a specialty pharmaceutical company focused on developing and commercializing drugs for critical care patients. Our principal business objective is to acquire, or discover, develop, and commercialize novel therapeutic products for disease indications that represent significant areas of clinical need and commercial opportunity. Our lead product is levosimendan, which was acquired in an asset purchase agreement with Phyxius Pharma, Inc., or Phyxius.  Levosimendan is a calcium sensitizer developed for intravenous use in hospitalized patients with acutely decompensated heart failure. The treatment is currently approved in more than 50 countries for this indication.  The United States Food and Drug Administration or FDA has granted Fast Track status for levosimendan for the reduction of morbidity and mortality in cardiac surgery patients at risk for developing Low Cardiac Output Syndrome or LCOS.  In addition, the FDA has agreed to the Phase 3 protocol design under Special Protocol Assessment (SPA), and provided guidance that a single successful trial will be sufficient to support approval of levosimendan in this indication.
 
We are also developing Oxycyte®, a systemic perfluorocarbon, or PFC, product we believe is a safe and effective oxygen carrier for use in situations of acute ischemia. Oxycyte has been successful in two clinical trials and is currently being evaluated in a Phase II-b clinical trial for the treatment of traumatic brain injury, or TBI.
 
Our current strategy is to:
 
  
Efficiently conduct clinical development to establish clinical proof of concept with our lead product candidates;
 
  
Advance the development of the perfluorocarbon, or PFC, therapeutic modality and supporting capabilities;
 
  
Efficiently explore new high-potential therapeutic applications, leveraging third-party research collaborations and our results from related areas;
 
  
Continue to expand our intellectual property portfolio; and
 
  
Enter into licensing or product co-development arrangements in certain areas, while out-licensing opportunities in non-core areas.
 
We believe that this strategy will allow us to develop a portfolio of high quality product development opportunities, expand our clinical development and commercialization capabilities, and enhance our ability to generate value from our proprietary technologies
 
 
25

 

Third Quarter 2014 Highlights
 
The following summarizes certain key financial measures for the three months ended January 31, 2014:
 
  
Warrants to purchase 2,479,862 shares of common stock were exercised for net proceeds of $6.44 million.
 
  
Cash and cash equivalents were $6.3 million at January 31, 2014.
 
  
Revenue earned under our research grant was $42,000 for the third quarter of 2014 compared to $221,000 for the three months ended January 31, 2013.
 
  
Our loss from operations was $2.4 million for the third quarter of 2014 compared to $1.6 million for the three months ended January 31, 2013.
 
  
Net cash used in operating activities was $6.3 million and $3.5 million for the nine months ended January 31, 2014 and 2013, respectively.
 
Consistent with our strategy, during the three months ended January 31, 2014, we (i) acquired the rights to develop and commercialize levosimendan, a calcium sensitizer developed for intravenous use in hospitalized patients with acutely decompensated heart failure , (ii) submitted the results of the immunocompetency studies funded under the U.S. Army cost reimbursement grant to the FDA, and (iii) continued with the enrollment of patients in the second cohort of our traumatic brain injury or TBI clinical trials.
 
Opportunities and Trends
 
We are moving forward with plans to initiate the phase 3 trial for levosimendan. Duke University’s Duke Clinical Research Institute or DCRI has been selected to conduct the Phase 3 trial. DCRI is the world’s largest academic clinical research organization, with substantial experience in conducting cardiac surgery trials. The DCRI will serve as the coordinating center and Drs. John H. Alexander and Rajendra Mehta as lead investigators for the Phase 3 trial.
 
The Phase 3 trial will be conducted in approximately 50 major cardiac surgery centers in North America.  The trial will enroll patients undergoing coronary artery bypass graphs, or CABG and/or mitral valve surgery who are at risk for developing LCOS.  The trial will be a double blind, randomized, placebo controlled study seeking to enroll 760 patients.  It is expected that enrollment will begin in the third quarter of 2014, and will take approximately 18 months to complete.  We are currently in the planning phase of the program.
 
We continue to execute on our strategic plan, which calls for resuming our Phase II-B clinical trials for STOP-TBI (Safety and Tolerability of Oxycyte in Patients with Severe non-Penetrating Traumatic Brain Injury); supporting our collaborations to gather proof-of-concept data for additional therapeutic areas with unmet medical needs; and continuing our business development efforts to expand our product portfolio. We also continue to progress Oxycyte through the regulatory approval process by conducting a comprehensive group of preclinical studies to confirm the safety profile of our product.  These studies are particularly focused on platelet activity and immunocompetence. We believe these actions position us well to drive future growth and create stockholder value.
 
As we focus on the development of our existing products and product candidates, we also continue to position ourselves to execute upon licensing and other partnering opportunities. In order to do so, we will need to continue to maintain our strategic direction, manage and deploy our available cash efficiently and strengthen our collaborative research development and partner relationships.
 
During fiscal year 2014 we are focused on the following four key initiatives:
 
  
Conducting well-designed studies early in the clinical development process to establish a robust foundation for subsequent development, partnership and expansion into complementary areas;
 
  
Working with collaborators and partners to accelerate product development, reduce our development costs, and broaden our commercialization capabilities;
 
  
Gaining regulatory approval for the continued development and commercialization of our products in the United States; and
 
  
Developing new intellectual property to enable us to file patent applications that cover new applications of our existing technologies and product candidates.
 
Critical Accounting Policies and Significant Judgments and Estimates
 
There have been no significant changes in critical accounting policies during the three months ended January 31, 2014, as compared to the critical accounting policies described in “ Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013.
 
 
26

 
 
Financial Overview
 
Results of Operations- Comparison of the Three Months Ended January 31, 2014 and 2013
 
Revenue
 
Product Revenue and Gross Profit
 
We generate revenue through the sale of Dermacyte® through distribution agreements, on-line retailers and direct sales to physician and medical spa facilities.  Product revenue and percentage changes for the three months ended January 31, 2014 and 2013 are as follows:
 
   
The three months ended January 31,
             
   
2014
   
2013
    Increase/ (Decrease)     % Increase/ (Decrease)  
Product revenue
  $ 590     $ 2,871     $ (2,281 )     (79 ) %
Cost of sales
    410       1,534       (1,124 )     (73 ) %
Gross profit
  $ 180     $ 1,337     $ (1,157 )     (87 ) %
 
The decrease in product revenue for the three months ended January 31, 2014 was primarily due to our amendment to the terms of the license agreement for the development and commercialization of Dermacyte in the current period.
 
Government Grant Revenue
 
We earn revenues through a cost-reimbursement grant sponsored by the United States Army, or Grant Revenue. Grant Revenue is recognized as milestones under the Grant program are achieved. Grant Revenue is earned through reimbursements for the direct costs of labor, travel, and supplies, as well as the pass-through costs of subcontracts with third-party contract research organizations or CROs.
 
   
Three months ended January 31,
             
   
2014
   
2013
    Increase/ (Decrease)     % Increase/ (Decrease)  
Government grant revenue
  $ 41,684     $ 221,051     $ (179,367 )     (81 ) %
 
For the three months ended January 31, 2014, we recorded approximately $42,000 in revenue under the grant program as compared to approximately $221,000 in revenue during the same period in the prior year. In addition to the revenue earned, we have recorded approximately $124,000 in deferred revenue associated with the grant. Deferred revenue under the grant represents pass-through costs that have been reimbursed in advance of performing the studies underlying the subcontracts. The decrease in revenue earned under the grant is due primarily to our completion of multiple studies in the prior year.
 
Marketing and Sales Expenses
 
Marketing and sales expenses consisted primarily of personnel-related costs, including salaries, commissions, and the costs of marketing programs aimed at increasing revenue, such as advertising, trade shows, public relations and other market development programs. Marketing and sales expenses and percentage changes for the three months ended January 31, 2014 and 2013, respectively, are as follows:
 
   
Three months ended January 31,
             
   
2014
   
2013
    Increase/ (Decrease)     % Increase/ (Decrease)  
Marketing and sales expense
  $ -     $ 14,121     $ (14,121 )     (100 ) %
 
The decrease in marketing and sales expenses for the three months ended January 31, 2014 was driven by the elimination of costs incurred for compensation and direct advertising following the execution of the Dermacyte distribution agreement in the prior year.
 
 
27

 
 
General and Administrative Expenses
 
General and administrative expenses consist primarily of compensation for executive, finance, legal and administrative personnel, including stock-based compensation. Other general and administrative expenses include facility costs not otherwise included in research and development expenses, legal and accounting services, other professional services, and consulting fees. General and administrative expenses and percentage changes for the three months ended January 31, 2014 and 2013, respectively, are as follows:
 
   
Three months ended January 31,
             
   
2014
   
2013
    Increase/ (Decrease)     % Increase/ (Decrease)  
Personnel costs
  $ 922,356     $ 371,027     $ 551,329       149 %
Legal and professional fees
    710,793       916,623       (205,830 )     (22 ) %
Other costs
    83,945       75,409       8,536       11 %
Facilities
    39,055       36,496       2,559       7 %
Depreciation and amortization
    27,447       27,824       (377 )     (1 ) %
 
Personnel costs:
 
Personnel costs increased approximately $551,000 for the three months ended January 31, 2014 compared to the same period in the prior year. The increase was due primarily to increases in headcount including the Chief Executive Officer, and executive bonuses paid in cash and stock.
 
Legal and professional fees:
 
Legal and professional fees decreased approximately $206,000 for the three months ended January 31, 2014 compared to the same period in the prior year. This decrease was primarily due to legal fees associated with the $600,000 accrual for settlement of the Tenor matter in the same period in the prior year partially offset by an increase in the current period of approximately $300,000 of fees associated with outsourced corporate communications and approximately $85,000 increase in legal fees associated with the acquisition of certain assets of Phyxius.
   
Other costs:
 
Other costs include costs incurred for travel, supplies, insurance and other miscellaneous charges. The approximately $8,500 increase in other costs was due primarily to travel expenses in the current period.
 
Facilities:
 
Facilities include costs paid for rent and utilities at our corporate headquarters in North Carolina. The approximately $2,600 increase during the three months ended January 31, 2014 compared to the same period in the prior year was the result of an increase in the pass-through costs for maintenance and utility charges.
 
Depreciation and Amortization:
 
Depreciation and amortization costs remained relatively consistent for the three months ended January 31, 2014 and 2013.
 
Research and Development Expenses
 
Research and development expenses include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our pre-clinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, laboratory and other supplies. All research and development expenses are expensed as incurred. Research and development expenses and percentage changes for the three months ended January 31, 2014 and 2013, respectively, are as follows:
 
   
Three months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Clinical and preclinical development
  $ 511,426     $ 204,091     $ 307,335       151 %
Personnel costs
    156,110       143,333       12,777       9 %
Depreciation
    12,256       9,939       2,317       23 %
Consulting
    4,369       5,790       (1,421 )     (25 ) %
Other costs
    3,100       3,697       (597 )     (16 ) %
Facilities
    2,405       2,597       (192 )     (7 ) %
 
 
28

 
 
Clinical and preclinical development:
 
The increase of approximately $307,000 in clinical and preclinical development costs for the three months ended January 31, 2014 compared to the same period in the prior year was primarily due to increases of $223,000 associated with the Phase II-b trials for Oxycyte and $153,000 associated with FtBu and Oxycyte manufacturing related expenses, offset partially by a decrease of $108,000 in costs incurred for preclinical safety studies and quality assurance for Oxycyte.
 
Personnel costs:
 
Personnel costs increased approximately $13,000 for the three months ended January 31, 2014 compared to the same period in the prior year primarily due to personnel changes in the current period.
 
Depreciation:
 
Depreciation expense remained relatively consistent for the three months ended January 31, 2014 and 2013. 
 
Consulting fees:
 
Consulting fees decreased approximately $1,400 for the three months ended January 31, 2014 compared to the same period in the prior year primarily due to a reduction in fees incurred to plan and prepare for regulatory submissions, clinical trial expansions and other clinical support activities.
 
Other costs:
 
Other costs remained relatively consistent for the three months ended January 31, 2014 and 2013.
 
Facilities:
 
Facilities expense remained relatively consistent for the three months ended January 31, 2014 and 2013.
 
Conducting a significant amount of research and development is central to our business model. Product candidates in later-stage clinical development generally have higher development costs than those in earlier stages of development, primarily due to the significantly increased size and duration of clinical trials. We plan to incur substantial research and development expenses for the foreseeable future in order to complete development of our most advanced product candidate, levosimendan, and to continue with the development of Oxycyte and other potential product candidates.
 
The process of conducting preclinical studies and clinical trials necessary to obtain approval from the FDA is costly and time consuming. The probability of success for each product candidate and clinical trial may be affected by a variety of factors, including, among other things, the quality of the product candidate’s early clinical data, investment in the program, competition, manufacturing capabilities and commercial viability. As a result of the uncertainties discussed above, uncertainty associated with clinical trial enrollment and risks inherent in the development process, we are unable to determine the duration and completion costs of current or future clinical stages of our product candidates or when, or to what extent, we will generate revenues from the commercialization and sale of any of our product candidates. Development timelines, probability of success and development costs vary widely. We are currently focused on developing our most advanced product candidate, levosimendan, however, we will need substantial additional capital in the future in order to complete the development and potential commercialization of levosimendan and to continue with the development of Oxycyte and other potential product candidates.
 
 
29

 
 
Restructuring expense
 
   
Three months ended January 31,
             
   
2014
   
2013
    Increase/ (Decrease)     % Increase/ (Decrease)  
Restructuring expense
  $ -     $ 2,941     $ (2,941 )     %
 
During the three months ended January 31, 2013, the Company recorded one-time charges of approximately $3,000 of severance and benefits related charges that were not incurred in the current period.
 
Interest expense
 
Interest expense includes the interest payments due under our long-term debt, amortization of debt issuance costs and accretion of discounts recorded against our outstanding convertible notes, and noncash interest charges related to our Series A Stock. Interest expense and percentage changes for the three months ended January 31, 2014 and 2013, respectively, are as follows:
 
   
Three months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Interest expense
  $ 69,967     $ 821,777     $ (751,810 )     (91 ) %
 
 
During the three months ended January 31, 2014, interest expense decreased approximately $752,000 compared to the same period in the prior year. The decrease was due primarily to approximately $559,000 of discount amortization associated with our convertible notes and $193,000 of noncash interest charges to our Series A Stock recorded in the prior period.
 
Other income and expense
 
Other income and expense includes non-operating income and expense items not otherwise recorded in our consolidated statement of operations. These items include, but are not limited to, revenue earned under sublease agreements for our California facility, changes in the fair value of financial assets and liabilities, interest income earned and fixed asset disposals. Other expense for the three months ended January 31, 2014 and 2013, respectively, is as follows:
 
   
Three months ended January 31,
       
   
2014
   
2013
    Increase/ (Decrease)  
Other (income) expense, net
  $ 849,556     $ (323 )   $ 849,879  
 
Other (income) expense increased approximately $850,000 for the three months ended January 31, 2014 compared to the same period in the prior year primarily due to change in fair value of our warrants in the current period.
 
Results of Operations- Comparison of the Nine months Ended January 31, 2014 and 2013
 
Revenue
 
Product Revenue and Gross Profit
 
We generate revenue through the sale of Dermacyte® through distribution agreements, on-line retailers and direct sales to physician and medical spa facilities.  Product revenue and percentage changes for the nine months ended January 31, 2014 and 2013 are as follows:
 
   
The nine months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Product revenue
  $ 60,669     $ 28,899     $ 31,770       110 %
Cost of sales
    31,275       16,578       14,697       89 %
Gross profit
  $ 29,394     $ 12,321     $ 17,073       139 %
 
 
30

 
 
The increase in product revenue for the nine months ended January 31, 2014 was primarily due to license fees earned in accordance with our distribution agreement for Dermacyte.
 
Gross profit as a percentage of revenue was 48% and 43% for nine months ended January 31, 2014 and 2013, respectively. The increase for the nine months ended January 31, 2014, as compared to the same period in the prior year, was due to license fee payments due in accordance with the existing Dermacyte distribution agreement.
 
Government Grant Revenue
 
Grant Revenue is recognized as milestones under the Grant program are achieved. Grant Revenue is earned through reimbursements for the direct costs of labor, travel, and supplies, as well as the pass-through costs of subcontracts with third-party CROs.
 
   
Nine months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Government grant revenue
  $ 233,981     $ 997,035     $ (763,054 )     (77 ) %
 
For the nine months ended January 31, 2014, we recorded approximately $234,000 in revenue under the grant program as compared to approximately $997,000 in revenue during the same period in the prior year. In addition to the revenue earned, we have recorded approximately $124,000 in deferred revenue associated with the grant. Deferred revenue under the grant represents pass-through costs that have been reimbursed in advance of performing the studies underlying the subcontracts. The decrease in revenue earned under the grant is due primarily to our completion of multiple studies in the prior year.
 
Marketing and Sales Expenses
 
Marketing and sales expenses consisted primarily of personnel-related costs, including salaries, commissions, and the costs of marketing programs aimed at increasing revenue, such as advertising, trade shows, public relations and other market development programs. Marketing and sales expenses and percentage changes for the nine months ended January 31, 2014 and 2013, respectively, are as follows:
 
   
Nine months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Marketing and sales expense
  $ 102     $ 106,019     $ (105,917 )     (100 ) %
 
The decrease in marketing and sales expenses for the nine months ended January 31, 2014 was driven by the elimination of costs incurred for compensation and direct advertising following the execution of the Dermacyte distribution agreement in the prior year.
 
General and Administrative Expenses
 
General and administrative expenses consist primarily of compensation for executive, finance, legal and administrative personnel, including stock-based compensation. Other general and administrative expenses include facility costs not otherwise included in research and development expenses, legal and accounting services, other professional services, and consulting fees. General and administrative expenses and percentage changes for the nine months ended January 31, 2014 and 2013, respectively, are as follows:
 
   
Nine months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Personnel costs
  $ 1,875,786     $ 1,121,660     $ 754,126       67 %
Legal and professional fees
    1,872,365       1,965,200       (92,835 )     (5 ) %
Other costs
    240,497       (275,046 )     515,543       187  %
Facilities
    114,136       127,312       (13,176 )     (10 ) %
Depreciation and amortization
    84,636       81,988       2,648       3 %
 
 
31

 
 
Personnel costs:
 
Personnel costs increased approximately $754,000 for the nine months ended January 31, 2014 compared to the same period in the prior year. The increase was due primarily to increases in headcount including the Chief Executive Officer, and executive bonuses paid in cash and stock.
 
Legal and professional fees:
 
Legal and professional fees decreased approximately $93,000 for the nine months ended January 31, 2014 compared to the same period in the prior year. This decrease was primarily due to legal fees associated with the $600,000 accrual for settlement of the Tenor matter and approximately $111,000 in board stock compensation recognized in the prior year, partially offset by an increase in the current period of approximately $433,000 of fees associated with outsourced corporate communications and approximately $193,000 increase in legal fees associated with the acquisition of certain assets of Phyxius.
 
Other costs:
 
Other costs include costs incurred for travel, supplies, insurance and other miscellaneous charges. The approximately $516,000 increase in other costs was due primarily to the reversal of a contingent liability in the prior period.
 
Facilities:
 
Facilities include costs paid for rent and utilities at our corporate headquarters in North Carolina. The approximately $13,000 reduction compared to the same period in the prior year was the result of the elimination of allocated costs from the closure of the California lab facility in the prior year.
 
Depreciation and Amortization:
 
Depreciation and amortization costs remained relatively consistent for the nine months ended January 31, 2014 and 2013.
 
Research and Development Expenses
 
Research and development expenses include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our pre-clinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, laboratory and other supplies. All research and development expenses are expensed as incurred. Research and development expenses and percentage changes for the nine months ended January 31, 2014 and 2013, respectively, are as follows:
 
   
Nine months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Clinical and preclinical development
  $ 1,397,583     $ 925,795     $ 471,788       51 %
Personnel costs
    610,793       478,120       132,673       28 %
Consulting
    140,548       93,249       47,299       51 %
Depreciation
    31,643       33,461       (1,818 )     (5 ) %
Other costs
    22,698       27,373       (4,675 )     (17 ) %
Facilities
    7,859       53,295       (45,436 )     (85 ) %
 
 
32

 
 
Clinical and preclinical development:
 
The increase of approximately $472,000 in clinical and preclinical development costs for the nine months ended January 31, 2014 compared to the same period in the prior year was primarily due to increases of $695,000 associated with the Phase II-b trials for Oxycyte partially offset by a decrease of $360,000 in costs incurred for preclinical safety studies for Oxycyte.
 
Personnel costs:
 
Personnel costs increased approximately $133,000 for the nine months ended January 31, 2014 compared to the same period in the prior year primarily due to salaries paid to our prior Chief Medical Officer in the current period.
 
Consulting fees:
 
Consulting fees increased approximately $47,000 for the nine months ended January 31, 2014 compared to the same period in the prior year primarily due to fees incurred to plan and prepare for regulatory submissions, clinical trial expansions and other clinical support activities.
 
Depreciation:
 
Depreciation expense remained relatively consistent for the nine months ended January 31, 2014 and 2013.
 
Other costs:
 
Other costs decreased approximately $5,000 for the nine months ended January 31, 2014 compared to the same period in the prior year primarily due to a decrease in expenses associated with travel and supplies.
 
Facilities:
 
Facilities expense decreased approximately $45,000 for the nine months ended January 31, 2014 compared to the same period in the prior year primarily due to the closure of our California facility.
 
Restructuring expense
 
   
Nine months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Restructuring expense
  $ -     $ 220,715     $ (220,715 )     %
 
During the nine months ended January 31, 2013, the Company recorded one-time charges of approximately $221,000 for severance and benefits related charges that were not incurred in the current period.
 
Interest expense
 
Interest expense includes the interest payments due under our long-term debt, amortization of debt issuance costs and accretion of discounts recorded against our outstanding convertible notes, and noncash interest charges related to our Series A Stock. Interest expense and percentage changes for the nine months ended January 31, 2014 and 2013, respectively, are as follows:
 
   
Nine months ended January 31,
             
   
2014
   
2013
   
Increase/ (Decrease)
   
% Increase/ (Decrease)
 
Interest expense
  $ 2,142,627     $ 3,615,204     $ (1,472,577 )     (41 ) %
 
During the nine months ended January 31, 2014, interest expense decreased approximately $1.5 million compared to the same period in the prior year. The decrease was due primarily to approximately $1.7 million of noncash interest charges recorded in the prior period related to our previously outstanding Series A Stock, partially offset by approximately $229,000 due to the accelerated recognition of discount amortization associated with our convertible notes.
 
 
33

 
 
Other income and expense
 
Other income and expense includes non-operating income and expense items not otherwise recorded in our consolidated statement of operations. These items include, but are not limited to, revenue earned under sublease agreements for our California facility, changes in the fair value of financial assets and liabilities, interest income earned and fixed asset disposals. Other expense for the nine months ended January 31, 2014 and 2013, respectively, is as follows:
 
   
Nine months ended January 31,
       
   
2014
   
2013
   
Increase/ (Decrease)
 
Other income (expense), net
  $ 849,782     $ (8,215 )   $ 857,997  
 
Other (income) expense increased approximately $858,000 for the nine months ended January 31, 2014 compared to the same period in the prior year primarily due to change in fair value of our warrants in the current period.
 
Liquidity, Capital Resources and Plan of Operation
 
We have incurred losses since our inception and as of January 31, 2014 we had an accumulated deficit of $126 million. We will continue to incur losses until we generate sufficient revenue to offset our expenses, and we anticipate that we will continue to incur net losses for at least the next several years. We expect to incur increased expenses related to our development and potential commercialization of Oxycyte and other product candidates and, as a result, we will need to generate significant net product sales, royalty and other revenues to achieve profitability.
 
Liquidity
 
We have financed our operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. We had $7,389,466 and $1,842,251 of total current assets and working capital of $3,775,888 and $(67,326) as of January 31, 2014 and April 30, 2013, respectively. Our policy is to invest excess cash, when available, in short-term money market instruments.
 
We are in the preclinical and clinical trial stages in the development of our product candidates. We are currently initiating a Phase III clinical trial for levosimendan and we are conducting Phase II-b clinical trials for the use of Oxycyte in the treatment of severe traumatic brain injury. Management is actively pursuing private and institutional financing, as well as strategic alliances and/or joint venture agreements to obtain the necessary additional financing and reduce the cost burden related to the development and commercialization of our products though we can give no assurance that any such initiative will be successful. We expect our primary focus will be on funding the continued testing of Oxycyte and initiating the Phase III clinical trials for levosimendan, since these products are the furthest along in the regulatory review process. Our ability to continue to pursue testing and development of our products beyond June 30, 2014 depends on obtaining license income or outside financial resources. There is no assurance that we will obtain any license agreement or outside financing or that we will otherwise succeed in obtaining the necessary resources.
 
On July 23, 2013, we sold 5,369 shares of Series C 8% convertible preferred stock for net proceeds of approximately $4.9 million. Additionally, on August 22, 2013 we issued 4,600 shares of Series D convertible preferred stock in exchange for $4.6 million of convertible notes that were scheduled to mature in June 2014. Based on our working capital at January 31, 2014, we believe we have sufficient capital on hand to continue to fund operations through June 30, 2014.
 
Cash Flows
 
The following table shows a summary of our cash flows for the nine months ended January 31, 2014 and 2013:
 
   
For the nine months ended January 31,
 
   
2014
   
2013
 
Net cash used in operating activities
  $ (6,281,653 )   $ (3,480,825 )
Net cash used in investing activities
    (113,044 )     (105,935 )
Net cash provided by financing activities
    11,950,826       2,535,699  
 
Net cash used in operating activities.  Net cash used in operating activities was $6.28 million for the nine months ended January 31, 2014 compared to net cash used in operating activities of $3.48 million for the nine months ended January 31, 2013. The increase in cash used for operating activities was due primarily to an increase in our costs incurred for the Phase II-b TBI clinical trials and the costs associated with the Phyxius asset acquisition.
 
 
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Net cash used in investing activities . Net cash used in investing activities was $113,044 for the nine months ended January 31, 2014 compared to net cash used in investing activities of $105,935 for the nine months ended January 31, 2013. The cash used for investing activities, primarily capitalized legal fees incurred for filing and maintaining our patent portfolio, remained relatively consistent compared to the same period in the prior year.
 
Net cash provided by financing activities . Net cash provided by financing activities was $11.9 million for the nine months ended January 31, 2014 compared to net cash provided by financing activities of $2.5 million for the nine months ended January 31, 2013. The increase of net cash provided by financing activities was due primarily to net proceeds of $4.9 million received from the issuance of Series C 8% Convertible Preferred Stock on July 23, 2013 and proceeds of $7 million received from the exercise of certain warrants as compared to the $2.5 million received from the issuance Series B Preferred Stock on June 15, 2012.
 
Operating Capital and Capital Expenditure Requirements
 
Our future capital requirements will depend on many factors that include, but are not limited to the following:
 
  
the initiation, progress, timing and completion of clinical trials for our product candidates and potential product candidates;
 
  
the outcome, timing and cost of regulatory approvals and the regulatory approval process;
 
  
delays that may be caused by changing regulatory requirements;
 
  
the number of product candidates that we pursue;
 
  
the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;
 
  
the timing and terms of future in-licensing and out-licensing transactions;
 
  
the cost and timing of establishing sales, marketing, manufacturing and distribution capabilities;
 
  
the cost of procuring clinical and commercial supplies of our product candidates;
 
  
the extent to which we acquire or invest in businesses, products or technologies; and
 
  
the possible costs of litigation.
 
We believe that our existing cash and cash equivalents will be sufficient to fund our projected operating requirements through June 30, 2014. We will need substantial additional capital in the future in order to complete the development and commercialization of Levosimendan and Oxycyte and to fund the development and commercialization of our future product candidates. Until we can generate a sufficient amount of product revenue, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaboration and licensing arrangements. Such funding, if needed, may not be available on favorable terms, if at all. In the event we are unable to obtain additional capital, we may delay or reduce the scope of our current research and development programs and other expenses.
 
To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our product candidates or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital.
 
Recent Accounting Pronouncements
 
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists . ASU No. 2013-11 requires entities to present in the consolidated financial statements an unrecognized tax benefit, or a portion of an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward except to the extent such items are not available or not intended to be used at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position. In such instances, the unrecognized tax benefit is required to be presented in the consolidated financial statements as a liability and not be combined with deferred tax assets. This guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
 
Off-Balance Sheet Arrangements
 
Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.
 
 
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ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Management does not believe that we possess any instruments that are sensitive to market risk. Our debt instruments bear interest at fixed interest rates.
 
We believe that there have been no significant changes in our market risk exposures for the nine months ended January 31, 2014.
 
ITEM 4.     CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
As required by paragraph (b) of Rules 13a-15 and 15d-15 promulgated under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation as of the end of the period covered by this report, of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and 15d-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of January 31, 2014, the end of the period covered by this report in that they provide reasonable assurance that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the SEC and is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
 
Changes in Internal Control over Financial Reporting
 
There were no significant changes in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We routinely review our internal controls over financial reporting and from time to time make changes intended to enhance the effectiveness of our internal control over financial reporting. We will continue to evaluate the effectiveness of our disclosure controls and procedures and internal controls over financial reporting on an ongoing basis and will take action as appropriate.
 
 
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PART II – OTHER INFORMATION
 
ITEM 1.     LEGAL PROCEEDINGS
 
None.
 
ITEM 1A.     RISK FACTORS
 
Described below are various risks and uncertainties that may affect our business. The descriptions below include any material changes to and supersede the description of the risk factors affecting our business previously disclosed in “Part I, Item IA. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2013.
 
RISKS RELATED TO OUR FINANCIAL POSITION AND NEED FOR ADDITIONAL CAPITAL
 
We will need substantial additional funding and if we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our product development programs.
 
Developing biopharmaceutical products, including conducting preclinical studies and clinical trials and establishing manufacturing capabilities, is expensive. We expect our research and development expenses to increase in connection with our ongoing activities, particularly as we focus on and proceed with our Phase II-B and Phase III clinical programs and begin clinical trials for our other products. In addition, our expenses could increase beyond expectations if applicable regulatory authorities, including the FDA, require that we perform additional studies to those that we currently anticipate, in which case the timing of any potential product approval may be delayed. Furthermore, pursuant to the terms of the license acquired in the Phyxius asset acquisition, we must pay to Orion a non-refundable up-front payment in the amount of $1 million no later than April 1, 2014. We believe that as of March 14, 2014, our existing cash and cash equivalents will be sufficient to fund our projected operating requirements through June 30, 2014. We will need substantial additional capital in the future in order to complete the development and commercialization of Oxycyte and levosimendan and to fund the development and commercialization of future product candidates. Until we can generate a sufficient amount of product revenue, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaboration and licensing arrangements. Such funding, if needed, may not be available on favorable terms, if at all. In the event we are unable to obtain additional capital, we may delay or reduce the scope of our current research and development programs and other expenses.
 
If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research or development programs or our commercialization efforts. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our product candidates or to grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time.
 
Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this “Risk Factors” section. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Our future funding requirements will depend on many factors, including, but not limited to:
 
-  
the scope, rate of progress and cost of our clinical trials and other research and development activities;
 
-  
the costs and timing of regulatory approval;
 
-  
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
 
-  
the effect of competing technological and market developments;
 
-  
the terms and timing of any collaboration, licensing or other arrangements that we may establish;
 
-  
the cost and timing of completion of clinical and commercial-scale manufacturing activities; and
 
-  
the costs of establishing sales, marketing and distribution capabilities for our cosmetic products and any product candidates for which we may receive regulatory approval.
 
 
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We are a development stage company and have a history of net losses. Currently, we have two products available for commercial sale, and to date we have not generated any significant product revenue. As a result, we expect to continue to incur substantial net losses for the foreseeable future, which raises doubt about our ability to continue as a going concern.
 
We began research and development activities in 1990 and are a development stage company. We have incurred significant net losses and negative cash flow in each year since our inception, including net losses of approximately $9.4 million and $15.7 million for the years ended April 30, 2013 and 2012, respectively. As of January 31, 2014 our accumulated deficit was approximately $126 million. We have devoted most of our financial resources to research and development, including our preclinical development activities and clinical trials. No revenues have been generated to date from commercial sales of any of our products, except for limited revenues from our topical cosmetic product, Dermacyte. We expect to have substantial expenses as we continue with our Phase II-B clinical program for Oxycyte and as we conduct other clinical trials for levosimendan. In addition, if we are required by applicable regulatory authorities, including the FDA, to perform studies in addition to those we currently anticipate, our expenses will increase beyond expectations and the timing of any potential product approval may be delayed. In addition, we expect to continue to incur costs to support operations as a public company. As a result, we may continue to incur substantial net losses and negative cash flow for the foreseeable future. These losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital.
 
Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of substantial expenses or when, or if, we will be able to achieve or maintain profitability. We have financed our operations primarily through the sale of equity securities and debt financings. The size of our future net losses will depend, in part, on the rate of growth of our expenses and the rate of growth of our revenues. If we are unable to develop and commercialize our other product candidates we will not achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability.
 
As a result of the foregoing circumstances, our independent registered public accounting firm has included, and is likely in the future to include, an explanatory paragraph in their audit opinions based on uncertainty regarding our ability to continue as a going concern. An audit opinion of this type may negatively impact our ability to obtain debt or equity financing in the future.
 
We have a limited operating history, and we expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.
 
Our operations, to date, have been primarily limited to organizing and staffing our company, developing our technology and undertaking preclinical studies and clinical trials of our product candidates. We have not yet obtained regulatory approvals for any of our clinical product candidates. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.
 
Specifically, our financial condition and operating results have varied significantly in the past and will continue to fluctuate from quarter-to-quarter and year-to-year in the future due to a variety of factors, many of which are beyond our control. Factors relating to our business that may contribute to these fluctuations include the following factors, among others:
 
-  
our ability to obtain additional funding to develop our product candidates;
 
-  
the need to obtain regulatory approval of our most advanced product candidates;
 
-  
potential risks related to any collaborations we may enter into for our product candidates;
 
-  
delays in the commencement, enrollment and completion of clinical testing, as well as the analysis and reporting of results from such clinical testing;
 
-  
the success of clinical trials of our Oxycyte and levosimendan product candidates or future product candidates;
 
-  
any delays in regulatory review and approval of product candidates in development;
 
-  
market acceptance of our cosmetic product candidates;
 
-  
our ability to establish an effective sales and marketing infrastructure;
 
-  
competition from existing products or new products that may emerge;
 
-  
the ability to receive regulatory approval or commercialize our products;
 
-  
potential side effects of our product candidates that could delay or prevent commercialization;
 
-  
potential product liability claims and adverse events;
 
-  
potential liabilities associated with hazardous materials;
 
 
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-  
our ability to maintain adequate insurance policies;
 
-  
our dependency on third-party manufacturers to supply or manufacture our products;
 
-  
our ability to establish or maintain collaborations, licensing or other arrangements;
 
-  
our ability, our partners’ abilities, and third parties’ abilities to protect and assert intellectual property rights;
 
-  
costs related to and outcomes of potential litigation;
 
-  
compliance with obligations under intellectual property licenses with third parties;
 
-  
our ability to adequately support future growth; and
 
-  
our ability to attract and retain key personnel to manage our business effectively.
 
Due to the various factors mentioned above, and others, the results of any prior quarterly or annual periods should not be relied upon as indications of our future operating performance.
 
RISKS RELATED TO COMMERCIALIZATION AND PRODUCT DEVELOPMENT
 
We are limited in the number of products we can simultaneously pursue and therefore our survival depends on our success with a small number of product opportunities.
 
We have limited financial resources, so at present we are primarily focusing these resources on developing our Oxycyte oxygen carrier product and levosimendan for the treatment of low cardiac output syndrome. We have delayed development on our Wundecyte topical wound product and Vitavent, our oxygen-carrying liquid, until we find a licensing partner willing to pursue development or obtain additional financing to pursue development ourselves. At present we intend to commit most of our resources to advancing Oxycyte and levosimendan to the point it receives regulatory approval for one or more medical uses, and if this effort is unsuccessful we may not have resources to pursue development of our other products and our business would terminate. Furthermore, by delaying development of Vitavent, this technology may become obsolete by the time we have sufficient capital to resume development and testing, so the funds expended on this product to date would be lost, as well as our opportunity to benefit if the product could be successfully developed.
 
Failure to integrate or realize the expected benefits of the Phyxius asset acquisition could adversely affect our business and results of operations.
 
On November 13, 2013, we completed our acquisition of certain assets of Phyxius.  At the same time, three former employees of Phyxius became employees of our company. We conducted this transaction based on certain assumptions regarding our business, markets, cost structures and synergies. If we do not successfully integrate or realize the anticipated benefits of this transaction, instead of resulting in growth for and enhanced value to our company, our strategy may cause us to experience operational issues and expose us to operational and regulatory risk, each of which could have material adverse effects on our reputation, business, financial condition and results of operations.
 
We currently have no approved drug products for sale and we cannot guarantee that we will ever have marketable drug products.
 
We currently have no approved drug products for sale. The research, testing, manufacturing, labeling, approval, selling, marketing, and distribution of drug products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, with regulations differing from country to country. We are not permitted to market our product in the United States until we receive approval of a new drug application, or an NDA, from the FDA for each product candidate. We have not submitted an NDA or received marketing approval for any of our product candidates. Obtaining approval of an NDA is a lengthy, expensive and uncertain process. Markets outside of the United States also have requirements for approval of drug candidates which we must comply with prior to marketing. Accordingly, we cannot guarantee that we will ever have marketable drug products.
 
The development of Oxycyte and levosimendan is subject to a high level of technological risk.
 
We expect to devote a substantial portion of our financial and managerial resources to pursuing Phase II and Phase III clinical trials for Oxycyte and levosimendan over the next three years. The biomedical field has undergone rapid and significant technological changes. Technological developments may result in our products becoming obsolete or non-competitive before we are able to recover any portion of the research and development and other expenses we have incurred to develop and clinically test Oxycyte or levosimendan. As our opportunity to generate substantial product revenues within the next four to five years is most likely dependent on successful testing and commercialization of Oxycyte and levosimendan for surgical and oxygen delivery applications, any such occurrence would have a material adverse effect on our operations and could result in the cessation of our business.
 
We may be required to conduct additional clinical trials in the future, which are expensive and time consuming, and the outcome of the trials is uncertain.
 
We expect to commit a substantial portion of our financial and business resources over the next three years to clinical testing of Oxycyte and levosimendan and advancing these products to regulatory approval for use in one or more medical applications. All of these clinical trials and testing will be expensive and time consuming and the timing of the regulatory review process is uncertain. The applicable regulatory agencies may suspend clinical trials at any time if they believe that the subjects participating in such trials are being exposed to unacceptable health risks. We cannot ensure that we will be able to complete our clinical trials successfully or obtain FDA or other governmental or regulatory approval of our products, or that such approval, if obtained, will not include limitations on the indicated uses for which our products may be marketed. Our business, financial condition and results of operations are critically dependent on obtaining capital to advance our testing program and receiving FDA and other governmental and regulatory approvals of our products. A significant delay in or failure of our planned clinical trials or a failure to achieve these approvals would have a material adverse effect on us and could result in major setbacks or jeopardize our ability to continue as a going concern.
 
 
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The market may not accept our products.
 
Even if regulatory approval is obtained, there is a risk that the efficacy and pricing of our products, considered in relation to our products’ expected benefits, will not be perceived by health care providers and third-party payers as cost-effective, and that the price of our products will not be competitive with other new technologies or products. Our results of operations may be adversely affected if the price of our products are not considered cost-effective or if our products do not otherwise achieve market acceptance.
 
Any collaboration we enter with third parties to develop and commercialize our product candidates may place the development of our product candidates outside our control, may require us to relinquish important rights or may otherwise be on terms unfavorable to us.
 
We may enter into collaborations with third parties to develop and commercialize our product candidates, including Oxycyte and levosimendan. Our dependence on future partners for development and commercialization of our product candidates would subject us to a number of risks, including:
 
-  
we may not be able to control the amount and timing of resources that our partners may devote to the development or commercialization of our product candidates or to their marketing and distribution;
 
-  
partners may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
 
-  
disputes may arise between us and our partners that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and resources;
 
-  
partners may experience financial difficulties;
 
-  
partners may not properly maintain or defend our intellectual property rights, or may use our proprietary information, in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or proprietary information or expose us to potential litigation;
 
-  
business combinations or significant changes in a partner’s business strategy may adversely affect a partner’s willingness or ability to meet its obligations under any arrangement;
 
-  
a partner could independently move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and
 
-  
the collaborations with our partners may be terminated or allowed to expire, which would delay the development and may increase the cost of developing our product candidates.
 
Delays in the commencement, enrollment and completion of clinical testing could result in increased costs to us and delay or limit our ability to obtain regulatory approval for our product candidates.
 
Delays in the commencement, enrollment and completion of clinical testing could significantly affect our product development costs. We do not know whether planned clinical trials for Oxycyte and levosimendan will begin on time or be completed on schedule, if at all. The commencement and completion of clinical trials requires us to identify and maintain a sufficient number of trial sites, many of which may already be engaged in other clinical trial programs for the same indication as our product candidates or may be required to withdraw from our clinical trial as a result of changing standards of care or may become ineligible to participate in clinical studies. The commencement, enrollment and completion of clinical trials can be delayed for a variety of other reasons, including delays related to:
 
-  
reaching agreements on acceptable terms with prospective CROs and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
 
-  
obtaining regulatory approval to commence a clinical trial;
 
-  
obtaining institutional review board, or IRB, approval to conduct a clinical trial at numerous prospective sites;
 
-  
recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including meeting the enrollment criteria for our study and competition from other clinical trial programs for the same indication as our product candidates;
 
-  
retaining patients who have initiated a clinical trial but may be prone to withdraw due to the treatment protocol, lack of efficacy, personal issues or side effects from the therapy or who are lost to further follow-up;
 
-  
maintaining and supplying clinical trial material on a timely basis; and
 
-  
collecting, analyzing and reporting final data from the clinical trials.
 
 
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In addition, a clinical trial may be suspended or terminated by us, the FDA or other regulatory authorities due to a number of factors, including:
 
-  
failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
 
-  
inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;
 
-  
unforeseen safety issues or any determination that a trial presents unacceptable health risks; and
 
-  
lack of adequate funding to continue the clinical trial, including unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties.
 
Changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes with appropriate regulatory authorities. Amendments may require us to resubmit our clinical trial protocols to IRBs for re-examination, which may impact the costs, timing or successful completion of a clinical trial. If we experience delays in the completion of, or if we terminate, our clinical trials, the commercial prospects for our product candidates will be harmed, and our ability to generate product revenues will be delayed. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. Even if we are able to ultimately commercialize our product candidates, other therapies for the same or similar indications may have been introduced to the market and established a competitive advantage.
 
RISKS RELATING TO REGULATORY MATTERS
 
Our activities are and will continue to be subject to extensive government regulation, which is expensive and time consuming, and we will not be able to sell our products without regulatory approval.
 
Our research, development, testing, manufacturing, marketing and distribution of Oxycyte and levosimendan are, and will continue to be, subject to extensive regulation, monitoring and approval by the FDA and other regulatory agencies. There are significant risks at each stage of the regulatory scheme.
 
Product approval stage
 
During the product approval stage we attempt to prove the safety and efficacy of our product for its indicated uses. There are numerous problems that could arise during this stage, including:
 
-  
The data obtained from laboratory testing and clinical trials are susceptible to varying interpretations, which could delay, limit or prevent FDA and other regulatory approvals;
 
-  
Adverse events could cause the FDA and other regulatory authorities to halt trials;
 
-  
At any time the FDA and other regulatory agencies could change policies and regulations that could result in delay and perhaps rejection of our products; and
 
-  
Even after extensive testing and clinical trials, there is no assurance that regulatory approval will ever be obtained for any of our products.
 
Commercialization approval stage
 
We will be required to file a BLA of an NDA with the FDA in order to obtain regulatory approval for the commercial production and sale of its product candidates in the United States and similar applications with regulatory authorities in countries where we seek to commercialize our product candidates. Under FDA guidelines, the FDA may comment upon the acceptability of the applicable application following its submission. After an application is submitted, there is an initial review to be sure that all of the required elements are included in the submission. There can be no assurance that the submission will be accepted for filing or that the FDA may not issue an RTF. If an RTF is issued, there is opportunity for dialogue between the sponsor and the FDA in an effort to resolve all concerns. There can be no assurance that such a dialogue will be successful in leading to the filing of the BLA or NDA. If the submission is filed, there can be no assurance that the full review will result in product approval.
 
Post-commercialization stage
 
Discovery of previously unknown problems with our products, or unanticipated problems with our manufacturing arrangements, even after FDA and other regulatory approvals of our products for commercial sale may result in the imposition of significant restrictions, including withdrawal of the product from the market.
 
Additional laws and regulations may also be enacted that could prevent or delay regulatory approval of our products, including laws or regulations relating to the price or cost-effectiveness of medical products. Any delay or failure to achieve regulatory approval of commercial sales of our products is likely to have a material adverse effect on our financial condition, results of operations and cash flows.
 
 
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The FDA and other regulatory agencies continue to review products even after they receive agency approval. If and when the FDA or another regulatory agency outside the United States approves one of our products, its manufacture and marketing will be subject to ongoing regulation, which could include compliance with current good manufacturing practices, adverse event reporting requirements and general prohibitions against promoting products for unapproved or “off-label” uses. We are also subject to inspection and market surveillance by the FDA for compliance with these and other requirements. Any enforcement action resulting from failure, even by inadvertence, to comply with these requirements could affect the manufacture and marketing of Oxycyte or our other products. In addition, the FDA or other regulatory agencies could withdraw a previously approved product from the market upon receipt of newly discovered information. The FDA or another regulatory agency could also require us to conduct additional, and potentially expensive, studies in areas outside our approved indicated uses.
 
We must continually monitor the safety of our products once approved and marketed for signs that their use may elicit serious and unexpected side effects and adverse events, which could jeopardize our ability to continue marketing the products. We may also be required to conduct post-approval clinical studies as a condition to licensing a product.
 
As with all pharmaceutical products, the use of our products could sometimes produce undesirable side effects or adverse reactions or events (referred to cumulatively as adverse events). For the most part, we would expect these adverse events to be known and occur at some predicted frequency. When adverse events are reported to us, we will be required to investigate each event and circumstances surrounding it to determine whether it was caused by our product and whether it implies that a previously unrecognized safety issue exists. We will also be required to periodically report summaries of these events to the applicable regulatory authorities.
 
In addition, the use of our products could be associated with serious and unexpected adverse events, or with less serious reactions at a greater than expected frequency. This may be especially true when our products are used in critically ill or otherwise compromised patient populations. When these unexpected events are reported to us, we will be required to make a thorough investigation to determine causality and implications for product safety. These events must also be specifically reported to the applicable regulatory authorities. If our evaluation concludes, or regulatory authorities perceive, that there is an unreasonable risk associated with the product, we would be obligated to withdraw the impacted lot(s) of that product. Furthermore, an unexpected adverse event of a new product could be recognized only after extensive use of the product, which could expose us to product liability risks, enforcement action by regulatory authorities and damage to our reputation and public image.
 
A serious adverse finding concerning the risk of our products by any regulatory authority could adversely affect our reputation, business and financial results.
 
When a new product is approved, the FDA or other regulatory authorities may require post-approval clinical trials, sometimes called Phase IV clinical trials. If the results of such trials are unfavorable, this could result in the loss of the license to market the product, with a resulting loss of sales
 
After our products are commercialized, we expect to spend considerable time and money complying with federal and state laws and regulations governing their sale, and, if we are unable to fully comply with such laws and regulations, we could face substantial penalties.
 
Health care providers, physicians and others will play a primary role in the recommendation and prescription of our clinical products. Our arrangements with third-party payers and customers may expose us to broadly applicable fraud and abuse and other health care laws and regulations that may constrain the business or financial arrangements and relationships through which we will market, sell and distribute our products. Applicable federal and state health care laws and regulations are expected to include, but not be limited to, the following:
 
-  
The federal anti-kickback statute is a criminal statute that makes it a felony for individuals or entities knowingly and willfully to offer or pay, or to solicit or receive, direct or indirect remuneration, in order to induce the purchase, order, lease, or recommending of items or services, or the referral of patients for services, that are reimbursed under a federal health care program, including Medicare and Medicaid;
 
-  
The federal False Claims Act imposes liability on any person who knowingly submits, or causes another person or entity to submit, a false claim for payment of government funds. Penalties include three times the government’s damages plus civil penalties of $5,500 to $11,000 per false claim. In addition, the False Claims Act permits a person with knowledge of fraud, referred to as a qui tam plaintiff, to file a lawsuit on behalf of the government against the person or business that committed the fraud, and, if the action is successful, the qui tam plaintiff is rewarded with a percentage of the recovery;
 
-  
Health Insurance Portability and Accountability Act imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
 
-  
The Social Security Act contains numerous provisions allowing the imposition of a civil money penalty, a monetary assessment, exclusion from the Medicare and Medicaid programs, or some combination of these penalties; and
 
-  
Many states have analogous state laws and regulations, such as state anti-kickback and false claims laws. In some cases, these state laws impose more strict requirements than the federal laws. Some state laws also require pharmaceutical companies to comply with certain price reporting and other compliance requirements.
 
 
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Our failure to comply with any of these federal and state health care laws and regulations, or health care laws in foreign jurisdictions, could have a material adverse effect on our business, financial condition, result of operations and cash flows.
 
Health care reform and controls on health care spending may limit the price we can charge for our products and the amount we can sell.
 
As a result of legislation signed by President Obama on March 22, 2010, substantial changes are expected to occur in the current system for paying for health care in the United States, including changes made in order to extend medical benefits to those who currently lack insurance coverage. Approximately 47 million Americans currently lack health insurance of any kind. Extending coverage to such a large population could substantially change the structure of the health insurance system and the methodology for reimbursing medical services, drugs and devices. Restructuring the coverage of medical care in the United States could impact the reimbursement for prescribed drugs and biopharmaceuticals, including our products. If reimbursement for these products is limited, or rebate obligations associated with them are substantially increased, our financial condition, results of operations and cash flows could be materially impacted.
 
Extending medical benefits to those who currently lack coverage will likely result in substantial cost to the federal government, which may force significant changes to the United States health care system. Much of the funding for expanded health care coverage may be sought through cost savings. While some of these savings may come from realizing greater efficiencies in delivering care, improving the effectiveness of preventive care and enhancing the overall quality of care, much of the cost savings may come from reducing the cost of care. Cost of care could be reduced by reducing the level of reimbursement for medical services or products (including those biopharmaceuticals that we intend to produce and market), or by restricting coverage (and, thereby, utilization) of medical services or products. In either case, a reduction in the utilization of, or reimbursement for, our products could have a materially adverse impact on our financial performance.
 
Uncertainty of third-party reimbursement could affect our future results of operations.
 
Sales of medical products largely depend on the reimbursement of patients’ medical expenses by governmental health care programs and private health insurers. We will be required to report detailed pricing information, net of included discounts, rebates and other concessions, to the Centers for Medicare and Medicaid Services, or CMS, for the purpose of calculating national reimbursement levels, certain federal prices, and certain federal rebate obligations. If we report pricing information that is not accurate to the federal government, we could be subject to fines and other sanctions that could adversely affect our business. In addition, the government could change its calculation of reimbursement, federal prices, or federal rebate obligations which could negatively impact us. There is no guarantee that government health care programs or private health insurers will reimburse for the sales of our products, or permit us to sell our products at high enough prices to generate a profit.
 
Governments outside the United States tend to impose strict price controls and reimbursement approval policies, which may adversely affect our prospects for generating revenue outside the United States.
 
In some countries, particularly European Union countries, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time (6 to 12 months or longer) after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries with respect to any product candidate that achieves regulatory approval, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products upon approval, if at all, is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our prospects for generating revenue, if any, could be adversely affected which would have a material adverse effect on our business and results of operations. Further, if we achieve regulatory approval of any product, we must successfully negotiate product pricing for such product in individual countries. As a result, the pricing of our products, if approved, in different countries may vary widely, thus creating the potential for third-party trade in our products in an attempt to exploit price differences between countries. This third-party trade of our products could undermine our sales in markets with higher prices.
 
RISKS RELATING TO OUR DEPENDENCE ON THIRD PARTIES
 
We depend on third parties to manufacture our products.
 
We do not own or operate any manufacturing facilities for the commercial-scale production of our products. Instead, we rely on third party manufacturers. For example, NextPharma currently manufacturers Oxycyte for us, Fluoromed currently produces FtBu for us and Orion produces levosimendan for us. Accordingly, a delay in achieving scale-up of commercial manufacturing capabilities when needed will have a material adverse effect on sales of our products. Additionally, the manufacture of our products will be subject to extensive government regulation. Among the conditions for marketing approval is that our quality control and manufacturing procedures conform to applicable good manufacturing practice regulations. There is a risk that we will not be able to obtain the necessary regulatory clearances or approvals to manufacture our products on a timely basis or at all.
 
A change in manufacturer likely would require formal approval by the FDA or other regulatory agencies before the new manufacturer could produce commercial supplies of our products. This approval process would likely take at least 12 to 18 months and, during that time, we could face a shortage of supply of our products, which could negatively affect our financial condition, results of operations and cash flows.
 
 
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We depend on the services of a limited number of key personnel.
 
Our success is highly dependent on the continued services of a limited number of scientists and support personnel. The loss of any of these individuals could have a material adverse effect on us. In addition, our success will depend, among other factors, on the recruitment and retention of additional highly skilled and experienced management and technical personnel. There is a risk that we will not be able to retain existing employees or to attract and retain additional skilled personnel on acceptable terms given the competition for such personnel among numerous large and well-funded pharmaceutical and health care companies, universities, and non-profit research institutions, which could negatively affect our financial condition, results of operations and cash flows.
 
We have limited experience in the sale and marketing of medical products.
 
We have limited experience in the sale and marketing of approved medical products and marketing the licensing of such products before FDA or other regulatory approval. We have not decided upon a commercialization strategy in these areas. We do not know of any third party that is prepared to distribute our products should they be approved. If we decide to establish our own commercialization capability, we will need to recruit, train and retain a marketing staff and sales force with sufficient technical expertise. We do not know whether we can establish a commercialization program at a cost that is acceptable in relation to revenue or whether we can be successful in commercializing our product. Factors that may inhibit our efforts to commercialize our products directly and without strategic partners include:
 
-  
Our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
 
-  
The inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our products;
 
-  
The lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
 
-  
Unforeseen costs and expenses associated with creating and sustaining an independent sales and marketing organization.
 
Failure to successfully commercialize our products or to do so on a cost effective basis would likely result in failure of our business.
 
We may enter into distribution arrangements and marketing alliances for certain products and any failure to successfully identify and implement these arrangements on favorable terms, if at all, may impair our ability to commercialize our product candidates.
 
We do not anticipate having the resources in the foreseeable future to develop global sales and marketing capabilities for all of the products we develop, if any. We may pursue arrangements regarding the sales and marketing and distribution of one or more of our product candidates and our future revenues may depend, in part, on our ability to enter into and maintain arrangements with other companies having sales, marketing and distribution capabilities and the ability of such companies to successfully market and sell any such products. Any failure to enter into such arrangements and marketing alliances on favorable terms, if at all, could delay or impair our ability to commercialize our product candidates and could increase our costs of commercialization. Any use of distribution arrangements and marketing alliances to commercialize our product candidates will subject us to a number of risks, including the following:
 
-  
We may be required to relinquish important rights to our products or product candidates;
 
-  
We may not be able to control the amount and timing of resources that our distributors or collaborators may devote to the commercialization of our product candidates;
 
-  
Our distributors or collaborators may experience financial difficulties;
 
-  
Our distributors or collaborators may not devote sufficient time to the marketing and sales of our products; and
 
-  
Business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement.
 
We may need to enter into additional co-promotion arrangements with third parties where our own sales force is neither well situated nor large enough to achieve maximum penetration in the market. We may not be successful in entering into any co-promotion arrangements, and the terms of any co-promotion arrangements we enter into may not be favorable to us.
 
RISKS RELATING TO INTELLECTUAL PROPERTY
 
It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection.
 
Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our product candidates and the methods used to manufacture them, as well as successfully defending these patents against third-party challenges. Our ability to stop third parties from making, using, selling, offering to sell or importing our products is dependent upon the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.
 
 
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We license certain intellectual property from third parties that covers our product candidates. We rely on certain of these third parties to file, prosecute and maintain patent applications and otherwise protect the intellectual property to which we have a license, and we have not had and do not have primary control over these activities for certain of these patents or patent applications and other intellectual property rights. We cannot be certain that such activities by third parties have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights. Our enforcement of certain of these licensed patents or defense of any claims asserting the invalidity of these patents would also be subject to the cooperation of the third parties.
 
The patent positions of pharmaceutical and biopharmaceutical companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in biopharmaceutical patents has emerged to date in the United States. The biopharmaceutical patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in the patents we own or to which we have a license from a third-party. Further, if any of our patents are deemed invalid and unenforceable, it could impact our ability to commercialize or license our technology.
 
The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
 
-  
others may be able to make compositions or formulations that are similar to our product candidates but that are not covered by the claims of our patents;
 
-  
we might not have been the first to make the inventions covered by our issued patents or pending patent applications;
 
-  
we might not have been the first to file patent applications for these inventions;
 
-  
others may independently develop similar or alternative technologies or duplicate any of our technologies;
 
-  
it is possible that our pending patent applications will not result in issued patents;
 
-  
our issued patents may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges by third parties;
 
-  
we may not develop additional proprietary technologies that are patentable; or
 
-  
the patents of others may have an adverse effect on our business.
 
We also may rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.
 
We rely on confidentiality agreements that, if breached, may be difficult to enforce and could have a material adverse effect on our business and competitive position.
 
Our policy is to enter agreements relating to the non-disclosure and non-use of confidential information with third parties, including our contractors, consultants, advisors and research collaborators, as well as agreements that purport to require the disclosure and assignment to us of the rights to the ideas, developments, discoveries and inventions of our employees and consultants while we employ them. However, these agreements can be difficult and costly to enforce. Moreover, to the extent that our contractors, consultants, advisors and research collaborators apply or independently develop intellectual property in connection with any of our projects, disputes may arise as to the proprietary rights to the intellectual property. If a dispute arises, a court may determine that the right belongs to a third party, and enforcement of our rights can be costly and unpredictable. In addition, we rely on trade secrets and proprietary know-how that we seek to protect in part by confidentiality agreements with our employees, contractors, consultants, advisors or others. Despite the protective measures we employ, we still face the risk that:
 
-  
These agreements may be breached;
 
-  
These agreements may not provide adequate remedies for the applicable type of breach; or
 
-  
Our trade secrets or proprietary know-how will otherwise become known.
 
 
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Any breach of our confidentiality agreements or our failure to effectively enforce such agreements would have a material adverse effect on our business and competitive position.
 
We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights and we may be unable to protect our rights to, or use, our technology.
 
If we or our partners choose to go to court to stop someone else from using the inventions claimed in our patents, that individual or company has the right to ask the court to rule that these patents are invalid and/or should not be enforced against that third party. These lawsuits are expensive and would consume time and other resources even if we were successful in stopping the infringement of these patents. In addition, there is a risk that the court will decide that these patents are not valid and that we do not have the right to stop the other party from using the inventions. There is also the risk that, even if the validity of these patents is upheld, the court will refuse to stop the other party on the ground that such other party’s activities do not infringe our rights to these patents.
 
Furthermore, a third party may claim that we or our manufacturing or commercialization partners are using inventions covered by the third party’s patent rights and may go to court to stop us from engaging in our normal operations and activities, including making or selling our product candidates. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and technical personnel. There is a risk that a court would decide that we or our commercialization partners are infringing the third party’s patents and would order us or our partners to stop the activities covered by the patents. In addition, there is a risk that a court will order us or our partners to pay the other party damages for having violated the other party’s patents. We have agreed to indemnify certain of our commercial partners against certain patent infringement claims brought by third parties. The biotechnology industry has produced a proliferation of patents, and it is not always 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 products or methods of use either does not infringe the patent claims of the relevant patent and/or that the patent claims are invalid, and we may not be able to do this. Proving invalidity, in particular, is difficult since it requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.
 
Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our issued patents or our pending applications, or that we were the first to invent the technology. Our competitors may have filed, and may in the future file, patent applications covering technology similar to ours. Any such patent application may have priority over our patent applications or patents, which could further require us to obtain rights to issued patents by others covering such technologies. If another party has filed a U.S. patent application on inventions similar to ours, we may have to participate in an interference proceeding declared by the U.S. Patent and Trademark Office to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that such efforts would be unsuccessful if, unbeknownst to us, the other party had independently arrived at the same or similar invention prior to our own invention, resulting in a loss of our U.S. patent position with respect to such inventions.
 
Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.
 
Our collaborations with outside scientists and consultants may be subject to restriction and change.
 
We work with chemists, biologists and other scientists at academic and other institutions, and consultants who assist us in our research, development, regulatory and commercial efforts, including the members of our scientific advisory board. These scientists and consultants have provided, and we expect that they will continue to provide, valuable advice on our programs. These scientists and consultants are not our employees, may have other commitments that would limit their future availability to us and typically will not enter into non-compete agreements with us. If a conflict of interest arises between their work for us and their work for another entity, we may lose their services. In addition, we will be unable to prevent them from establishing competing businesses or developing competing products. For example, if a key scientist acting as a principal investigator in any of our clinical trials identifies a potential product or compound that is more scientifically interesting to his or her professional interests, his or her availability to remain involved in our clinical trials could be restricted or eliminated.
 
Under current law, we may not be able to enforce all employees’ covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees.
 
We have entered into non-competition agreements with certain of our employees. These agreements prohibit our employees, if they cease working for us, from competing directly with us or working for our competitors for a limited period. Under current law, we may be unable to enforce these agreements against certain of our employees and it may be difficult for us to restrict our competitors from gaining the expertise our former employees gained while working for us. If we cannot enforce our employees’ non-compete agreements, we may be unable to prevent our competitors from benefiting from the expertise of our former employees.
 
We may infringe or be alleged to infringe intellectual property rights of third parties.
 
Our products or product candidates may infringe on, or be accused of infringing on, one or more claims of an issued patent or may fall within the scope of one or more claims in a published patent application that may be subsequently issued and to which we do not hold a license or other rights. Third parties may own or control these patents or patent applications in the United States and abroad. These third parties could bring claims against us or our collaborators that would cause us to incur substantial expenses and, if successful against us, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit.
 
 
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If we are found to infringe the patent rights of a third party, or in order to avoid potential claims, we or our collaborators may choose or be required to seek a license from a third party and be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our collaborators were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms.
 
There have been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biotechnology industries. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference proceedings declared by the United States Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our products. Our products, after commercial launch, may become subject to Paragraph IV certification under the Hatch-Waxman Act, thus forcing us to initiate infringement proceedings against such third-party filers. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.
 
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We try to ensure that our employees do not use the proprietary information or know-how of others in their work for us. We may, however, be subject to claims that we or these employees have inadvertently or otherwise used or disclosed intellectual property, trade secrets or other proprietary information of any such employee’s former employer. Litigation may be necessary to defend against these claims and, even if we are successful in defending ourselves, could result in substantial costs to us or be distracting to our management. If we fail to defend any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
 
Product liability lawsuits against us could cause us to incur substantial liabilities, limit sales of our existing products and limit commercialization of any products that we may develop.
 
Our business exposes us to the risk of product liability claims that are inherent in the manufacturing, distribution, and sale of biotechnology products. We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and an even greater risk when we commercially sell any products. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
 
-  
Decreased demand for our products and any product candidates that we may develop;
 
-  
Injury to our reputation;
 
-  
Withdrawal of clinical trial participants;
 
-  
Costs to defend the related litigation;
 
-  
Substantial monetary awards to trial participants or patients;
 
-  
Loss of revenue; and
 
-  
The inability to commercialize any products that we may develop.
 
We currently maintain limited product liability insurance coverage for our clinical trials in the total amount of $3 million. However, our profitability will be adversely affected by a successful product liability claim in excess of our insurance coverage. There can be no assurance that product liability insurance will be available in the future or be available on reasonable terms.
 
RISKS RELATED TO OWNING OUR COMMON STOCK
 
If we cannot meet the NASDAQ Capital Market continued listing requirements, our common stock may be delisted which could have an adverse impact on the liquidity and market price of our common stock.
 
While our common stock is currently listed on the NASDAQ Capital Market, or NASDAQ, there can be no assurance it will continue to be listed in the future. Continued listing of a security on NASDAQ is conditioned upon compliance with various continued listing standards, which require, among other things, that for 30 consecutive trading days (i) the closing minimum bid price for our listed securities not be lower than $1.00 per share and (ii) our market capitalization not be lower than $35 million. The closing bid price for our shares fell below $1.00 per share on August 21, 2012 and our market capitalization fell below $35 million on August 8, 2012.
 
On September 20, 2012 we received a deficiency notice from NASDAQ due to our market capitalization falling below $35 million for 30 consecutive days. We were required to regain compliance with this continued listing standard before March 19, 2013. On October 3, 2012 we received a deficiency notice from NASDAQ due to the closing bid price for our shares falling below $1.00 per share for 30 consecutive days. We were required to regain compliance with this continued listing standard before April 1, 2013.
 
 
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However, we were not able to regain compliance with the market capitalization requirement by March 19, 2013.  As a result NASDAQ notified us by letter dated March 20, 2013 of the Staff’s decision to delist our securities from NASDAQ.  We appealed the Staff’s determination by requesting a hearing, or the Hearing, before a NASDAQ Hearings Panel, or the Panel, to seek continued listing pending our return to compliance with the minimum market value requirement under Rule 5550(b)(2).  In addition, we were not able to regain compliance with the minimum bid price listing standard by April 1, 2013.  As a result NASDAQ notified us by letter dated April 4, 2013 that our failure to comply with Rule 5550(a)(2) serves as an additional basis to delist our securities from The NASDAQ Capital Market, and that the Panel, in connection with the Hearing, would consider this matter in rendering a determination regarding our continued listing on The NASDAQ Capital Market.
 
On May 15, 2013, we received notice from the Panel that the Panel has determined to grant our request for continued listing on The NASDAQ Capital Market pursuant to an extension through June 3, 2013 to evidence compliance with the minimum $1.00 bid price requirement, as set forth in NASDAQ Listing Rule 5550(a), and through July 31, 2013 to evidence compliance with the alternate minimum $2.5 million stockholders’ equity requirement, as set forth in NASDAQ Listing Rule 5550(b), for continued listing on The NASDAQ Capital Market.  As of June 3, 2013, we have regained compliance with the minimum $1.00 bid price requirement, due in part to our 20-to-1 reverse stock split effected on May 10, 2013, and as of the date hereof, our stockholders’ equity exceeds $2.5 million.  While we believe we are currently in compliance with NASDAQ listing requirements, we have not yet received confirmation of our compliance status from NASDAQ.  There can be no assurance that NASDAQ will agree with our assessment of our compliance status, and, accordingly, no assurance that we will remain listed on NASDAQ. Delisting from NASDAQ would negatively impact us and our stockholders by, among other things, reducing the liquidity and market price of our common stock and adversely affecting our ability to raise additional capital.
 
Our share price has been volatile and may continue to be volatile which may subject us to securities class action litigation in the future.
 
The market price of shares of our common stock has been, and may be in the future, subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including:
 
-  
actual or anticipated fluctuations in our financial condition and operating results;
 
-  
status and/or results of our clinical trials;
 
-  
status of ongoing litigation;
 
-  
results of clinical trials of our competitors’ products;
 
-  
regulatory actions with respect to our products or our competitors’ products;
 
-  
actions and decisions by our collaborators or partners;
 
-  
actual or anticipated changes in our growth rate relative to our competitors;
 
-  
actual or anticipated fluctuations in our competitors’ operating results or changes in their growth rate;
 
-  
competition from existing products or new products that may emerge;
 
-  
issuance of new or updated research or reports by securities analysts;
 
-  
fluctuations in the valuation of companies perceived by investors to be comparable to us;
 
-  
share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;
 
-  
market conditions for biopharmaceutical stocks in general;
 
-  
status of our search and selection of future management and leadership; and
 
-  
general economic and market conditions.
 
On January 31, 2014 the closing price of our common stock was $6.18 as compared with $13.68 as of January 31, 2013. During the twelve months ended January 31, 2014, the lowest closing price of our common stock was $1.23 and the highest closing price was $20.60, all as adjusted for the 1-for-20 reverse stock split effective on May 10, 2013.
 
Some companies that have had volatile market prices for their securities have had securities class action lawsuits filed against them. Such lawsuits, should they be filed against us in the future, could result in substantial costs and a diversion of management’s attention and resources. This could have a material adverse effect on our business, results of operations and financial condition.
 
We are likely to attempt to raise additional capital through issuances of debt or equity securities, which may cause our stock price to decline, dilute the ownership interests of our existing stockholders, and/or limit our financial flexibility.
 
Historically we have financed our operations through the issuance of equity securities and debt financings, and we expect to continue to do so for the foreseeable future.  As of March 14, 2014, we believe we have sufficient capital on hand to continue to fund operations through June 30, 2014. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution of their ownership interests.  Debt financing, if available, may involve restrictive covenants that limit our financial flexibility or otherwise restrict our ability to pursue our business strategies. Additionally, if we issue shares of common stock, or securities convertible or exchangeable for common stock, the market price of our existing common stock may decline. There can be no assurance that we will be successful in obtaining any additional capital resources in a timely manner, on favorable terms, or at all.
 
 
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We have issued in the past, and may issue in the future, substantial amounts of instruments that are convertible into or exercisable for common stock, and our existing stockholders may face substantial dilution if such instruments are converted or exercised.
 
As of March 14, 2014, we had outstanding convertible notes, warrants, options, securities purchase agreements, and other instruments that are convertible or exercisable into an aggregate of 6,187,215 shares of our common stock, which, if converted or exercised, would represent approximately 31% of our current outstanding common stock.  In addition our employment agreements with four of our employees require us, upon obtaining stockholder approval, to issue options exercisable for up to 3,572,880 shares of common stock.  These instruments carry a wide variety of different terms and prices, and there can be no assurance as to when or whether conversions or exercises of these instruments may occur.  If all or any substantial portion of these instruments are converted or exercised, our existing stockholders may face substantial dilution of their ownership interests. 
 
Certain investors may be able to exercise significant influence over us.
 
As of March 14, 2014, SPC 1 Vatea Segregated Portfolio, or Vatea Fund, held 189,082 shares of our common stock, representing 1% of our outstanding common stock. As of March 14, 2014, JP SPC 3 obo OXBT FUND, SP, or OXBT Fund, held warrants that are exercisable into an aggregate of up to 2,460,972 shares of our common stock, which, if converted or exercised, would represent 18% of our current outstanding common stock. Mr. Gregory Pepin, one of our directors, is the investment manager of both Vatea Fund and OXBT Fund. Accordingly, these parties, either individually or as part of a group, may have a strong ability to influence our business, policies and affairs.  We cannot be certain that their interests will be consistent with the interests of other holders of our common stock.
 
RISKS RELATING TO EMPLOYEE MATTERS AND MANAGING GROWTH
 
We may need to increase the size of our company, and we may experience difficulties in managing growth.
 
As of March 14, 2014, we had 14 full-time employees. We may need to expand our managerial, operational, administrative, financial and other resources in order to manage and fund our operations and clinical trials, continue our development activities and commercialize our product candidates. To support this growth, we may hire additional employees within the next 12 months. Our management, personnel, systems and facilities currently in place may not be adequate to support this future growth. Our need to effectively manage our operations, growth and various projects requires that we continue to improve our operational, financial and management controls, reporting systems and procedures.
 
We may not be able to attract or retain qualified management and scientific personnel in the future. If we are unable to attract and retain necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede our achievement of our development objectives, our ability to raise additional capital and our ability to implement our business strategy.
 
In addition, we have scientific and clinical advisors who assist us in 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. Because our business depends on certain key personnel and advisors, the loss of such personnel and advisors could weaken our management team and we may experience difficulty in attracting and retaining qualified personnel and advisors. 
 
ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
Repurchases of Common Stock
 
The following table lists all repurchases during the third quarter of fiscal 2014 of any of our securities registered under Section 12 of the Exchange Act by or on behalf of us or any affiliated purchaser.
 
Issuer Purchases of Equity Securities
 
Period
 
Total Number of Shares Purchased (1)
   
Average Price Paid per Share (2)
   
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
   
Approximate Dollar Value of Shares that August Yet Be Purchased Under the Plans or Programs
 
                         
November 1, 2013 - November 30, 2013
    22     $ 3.04       -     $ -  
December 1, 2013 - December 31, 2013
    22       6.27       -       -  
January 1, 2014 - January 31, 2014
    20       4.50       -       -  
                                 
Total
    64     $ 4.61       -     $ -  
 
(1)  
Represents shares repurchased in connection with tax withholding obligations under the 1999 Amended Stock Plan.
 
(2)  
Represents the average price paid per share for the shares repurchased in connection with tax withholding obligations under the 1999 Amended Stock Plan.
 
 
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Unregistered Sales of Equity Securities
 
During the fiscal quarter ended January 31, 2014, we issued 253 shares of unregistered common stock as payment of $11,375 of interest due on our outstanding convertible notes.
 
All of the securities described above were issued in reliance on the exemption from registration set forth in Section 4(a)(2) of the Securities Act.
 
ITEM 3.     DEFAULTS UPON SENIOR SECURITIES
 
None.
 
ITEM 4.     MINE SAFETY DISCLOSURES
 
Not applicable.
 
ITEM 5.     OTHER INFORMATION
 
On November 13, 2013, our Board of Directors approved, subject to stockholder approval, an amendment to our 1999 Amended Stock Plan, or the Plan, to increase the number of shares of common stock authorized for issuance to a total of 4,000,000 shares, representing an increase of 3,600,000 shares. As further described below, on March 13, 2014, our stockholders approved the amendment to the Plan at a Special Meeting of Stockholders, or the Special Meeting.
 
The Plan provides for the award of up to 4,000,000 shares of common stock to be granted through stock options, stock purchase rights, stock appreciation rights, and long-term performance awards, collectively, Awards.  If any Award expires or is terminated, surrendered, canceled or forfeited, the unused shares of common stock covered by such Award will again be available for grant under the Plan.
 
Our employees, consultants, directors and officers are eligible to be granted Awards under the Plan.  The Plan is administered by the Board of Directors, which may delegate its authority to administer the Plan to a Committee of the Board.
 
At the Special Meeting, the stockholders considered the two proposals described below, each of which is described in more detail in our definitive proxy statement dated February 4, 2014.  As of February 3, 2014, the record date for the Special Meeting, there were 13,671,105 shares of common stock issued, outstanding and entitled to vote. At the Special Meeting, 7,730,237 shares of common stock were represented in person or by proxy, constituting a quorum.  The final number of votes cast for and against, as well as the number of abstention with respect to each proposal are set forth below.
 
Proposal 1 :  To approve the conversion of our Series E Preferred Stock into shares of common stock.  The votes were cast as follows:
 
For (1)
 
Against
 
Abstain (1)
7,563,128
 
150,788
 
16,321
 
(1)  
Represents votes cast on Proposal 1 as received by the Company.  For the purpose of determining that Proposal 1 was approved pursuant to NASDAQ rules, 1,366,844 shares (representing the aggregate number of shares of common stock issued in connection with the acquisition of Phyxius) that voted in favor of Proposal 1 were deemed to have abstained.

Proposal 1 was approved.
 
Proposal 2 :  To approve Amendment No. 2 to our 1999 Amended Stock Plan to increase the number of shares authorized for issuance thereunder.  The votes were cast as follows:
 
For
 
Against
 
Abstain
7,510,360
 
197,981
 
21,896

Proposal 2 was approved.
 
 
ITEM 6.     EXHIBITS
 
No.
Description
   
4.1
Certificate of Designation of Series E Convertible Preferred Stock (1)
10.1
Employment Agreement with John Kelley dated November 13, 2013 (1)
10.2
Second Amended and Restated Employment Agreement with Michael Jebsen dated November 13, 2013 (1)
License Agreement dated September 20, 2013 by and between Phyxius Pharma, Inc. and Orion Corporation
10.4  Amendment to Common Stock Purchase Agreement 
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
(1)
This document was filed as an exhibit to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on November 19, 2013, and is incorporated herein by reference.
*
Portions of this exhibit have been omitted pursuant to a request for confidential treatment, which portions have been separately filed with the SEC.
 
 
50

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
OXYGEN BIOTHERAPEUTICS, INC.
 
       
Date: March 17, 2014
By:
/s/ Michael B. Jebsen   
   
Michael B. Jebsen
 
   
Chief Financial Officer
 
   
(On behalf of the Registrant and as Principal Financial Officer)
 

 
 
51

Exhibit 10.3
 
 
Execution Copy
 
LICENSE AGREEMENT
 
 
This License Agreement (the “ Agreement ”) is entered into this 20 th day of September 2013 (the “ Effective Date ”) by and between Phyxius Pharma Inc., a company incorporated under the laws of State of Delaware (“ Licensee ”) and Orion Corporation, a company incorporated under the laws of Finland (“ Orion ”). Licensee and Orion may each be referred to in this Agreement individually as a “ Party ” and collectively as the “ Parties ”.
 
BACKGROUND
 
A.         Orion owns and controls certain patent rights and proprietary information with respect to Levosimendan and the Product.
 
B.         Orion desires to license certain rights to Licensee for the Development and Commercialization of the Product for use in the Field in the Territory as more particularly described in, and subject to, the terms and conditions set forth in this Agreement.
 
C.         Licensee desires to obtain such license under Orion’s patent rights and proprietary information with respect to the Product.
 
NOW THEREFORE, in consideration of the mutual promises and covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
 
1.  
DEFINITIONS
 
1.1.   Affiliate(s) ” means, with respect to either Party, any Person that directly or indirectly through one or more Affiliates controls, is controlled by or is under common control with such Party. For the purposes of this definition, “control” means the ownership of greater than fifty percent (50%) of the shares or such other arrangement as constitutes the direct or indirect ability to direct the management, affairs or actions of such Person.
 
1.2.   Annual Net Sales ” means the total and aggregate Net Sales achieved during any given Calendar Year.
 
1.3.   Breaching Party ” has the meaning ascribed to such term in Section 16.3.
 
1.4.   Calendar Year ” means each successive period of twelve (12) consecutive calendar months commencing on January 1 and ending on December 31, except that the first Calendar Year of the Term shall commence on the Effective Date and end on December 31, 2013, and the last Calendar Year of the Term shall commence on January 1 of the Calendar Year in which the Term ends and end on the last day of the Term.
 
1.5.   Change of Control ” means the occurrence of any of the following events: (i) any Person, or Persons acting in concert, becoming the beneficial owner of more than fifty percent (50%) of the stock (or other ownership interest) or voting rights thereunder of Licensee; or (ii) any Person, or Persons acting in concert, acquiring the capability of electing the majority of the Board of Directors (or other governing body) of Licensee. For the purposes of this definition, “acting in concert” means a group of Persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control of Licensee.
_____________________
 
[***]  Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.
 
 
 

 
 
1.6.   Commercialization ” means any and all activities directed to the commercialization of the Product for use in the Field in the Territory, including pre-launch and post-launch marketing, promoting, distributing, offering for sale and selling the Product in the Field in the Territory. When used as a verb, “ Commercialize ” means to engage in Commercialization.
 
1.7.   Competing Product ” means any pharmaceutical product intended for the same indication or indications for which the Product is approved, containing Levosimendan as an active pharmaceutical ingredient, other than the Product.
 
1.8.   Confidential Information ” means any and all proprietary or otherwise confidential business, commercial, financial, technical or other information, know-how and data, regardless of whether any of the foregoing are marked “confidential” or “proprietary” or communicated in oral, written, graphic, electronic, or any other form.
 
1.9.   Development ” means any and all pre-clinical and clinical development activities reasonably related to the submission of information to a Regulatory Authority and other activities related to obtaining Regulatory Approval for the Product in the Field in the Territory, but excluding Commercialization activities. When used as a verb, “ Develop ” means to engage in Development.
 
1.10.    “ Disclosing Party ” has the meaning ascribed to such term in Section 14.1.
 
1.11.   FDA ” means the United States Food and Drug Administration or any successor agency thereof.
 
1.12.   Field ” means the use of the Product for any and all therapeutic, diagnostic, preventative, disease management and other uses in humans.
 
1.13.   First Commercial Sale ” means the first arm’s length transaction, transfer, or disposition for value to a Third Party of the Product by or on behalf of Licensee or its Sub licensee in the Territory after Regulatory Approval has been granted.
 
1.14.   Force Majeure Event ” has the meaning ascribed to such term in Section 17.2.
 
1.15.   GAAP ” means generally accepted accounting principles in the United States, as consistently applied by Licensee.
 
1.16.   Generic Competition ” means, on a country-by-country basis, that one or more Third Parties sell one or more Generic Products in a given country of the Territory and that the unit sales of Generic Product(s) exceed fifty percent (50%) of the total unit sales of the Product and all Generic Products in such country.
 
1.17.   Generic Product ” means any pharmaceutical product, other than the Product, that (i) contains Levosimendan as an active pharmaceutical ingredient; (ii) is intended for the same indication or indications for which the Product is approved; (iii) is pharmaceutical equivalent with respect to the Product; and (iv) could not have been sold or with respect to which a license would have been required to be obtained from Orion, if patent or other exclusivity rights covering the Product would have been in full force and effect.
 
 
 

 
 
1.18.   IND ” means an Investigational New Drug application filed with the FDA seeking approval to conduct human clinical investigations. References herein to an IND shall include, to the extent applicable, any comparable filing(s) in the Territory outside the United States.
 
1.19.   Indemnified Party ” has the meaning ascribed to such term in Section 15.3.
 
1.20.   Indemnifying Party ” has the meaning ascribed to such term in Section 15.3.
 
1.21.   Levosimendan ” means (-)(R)-[[4-(1,4,5,6-tetrahydro-4-methyl-6-oxo-3-pyridazinyl)phenyl]-hydrazono]propanedinitrile.
 
1.22.   Licensee Clinical Data ” has the meaning ascribed to such term in Section 7.6
 
1.23.   Licensee Grant-Back Patents ” has the meaning ascribed to such term in Section 7.6
 
1.24.   Licensee Indemnities ” has the meaning ascribed to such term in Section 15.3.
 
1.25.   Licensee Loss ” has the meaning ascribed to such term in Section 15.3.
 
1.26.   Line Extension Products ” means new developments of the Product, for instance, as to the formulation, presentation, means of delivery, route of administration, dosage or indication (whether or not patented or patentable).
 
1.27.   NDA ” means a New Drug Application filed with the FDA seeking approval to market, sell, and use the Product in the Field in the United States. References herein to an NDA shall include, to the extent applicable, any comparable filing(s) in the Territory outside the United Sates.
 
1.28.   Net Sales ” means the gross amounts invoiced for sales of the Product in the Territory by Licensee and its Sublicensees to Third Parties, less the following deductions (specifically excluding any royalty payments made by Licensee to Orion hereunder and all payments made by Licensee to Orion under the Supply Agreement - Commercial), in each case in accordance with the GAAP, related specifically to the Product, actually allowed and taken by such Third Party, and not otherwise recovered by or reimbursed to Licensee or its Sublicensees:
 
(a)  
normal and customary trade, quantity or cash discounts actually allowed (other than discounts granted at the time of invoicing and already included in the gross amount invoiced);
 
(b)  
refunds, rebates, wholesaler charge backs and retroactive price adjustments actually allowed or paid;
 
 
 
 

 
 
 
(c)  
amounts repaid or credited by reason of rejections, returns or recalls of the Product;
 
(d)  
taxes on sales (such as value added, sales or use taxes), but not including taxes assessed against the income derived from such sales;
 
(e)  
custom duties and import fees levied against and payable by Licensee directly on account of the importation of the Product into the Territory;
 
(f)  
freight, insurance and other transportation charges to the extent added to the sale price and set forth separately as such in the gross amount invoiced; and
 
(g)  
similar deductions as Licensee can reasonably demonstrate are or have become customary in the pharmaceutical industry.
 
1.29.   Non-Breaching Party ” has the meaning ascribed to such term in Section 15.3.
 
1.30.   Orion Indemnitees ” has the meaning ascribed to such term in Section 15.3.
 
1.31.   Orion Loss ” has the meaning ascribed to such term in Section 15.3.
 
1.32.   Orion Proprietary Information ” means any and all Confidential Information related to the human use of Levosimendan and/or the Product which (i) Orion owns or controls on the Effective Date or at any time during the Term; (ii) Orion has the right to disclose and license (it being understood that the limitation in this clause (ii) shall only apply to such Confidential Information that is not material to the Product); and (iii) is necessary or useful for Licensee to practice the licenses granted to it hereunder.
 
1.33.   Orion Patent Rights ” means any and all patents and patent applications in the Territory directed or related to Levosimendan or the Product that Orion own or control on the Effective Date or at any time during the Term. The Orion Patent Rights in existence on the Effective Date are set forth on Exhibit A .
 
1.34.   Patent Term Extension ” has the meaning ascribed to such term in Section 10.3
 
1.35.   Payments ” has the meaning ascribed to such term in Section 5.1.
 
1.36.   Person ” means (as the context requires) an individual, corporation, partnership, association, trust, limited liability company, or other entity or organization.
 
 
 

 
 
1.37.   Pricing Approval ” means any and all pricing approvals, licenses, registrations or authorizations of any Regulatory Authority necessary to Commercialize the Product in the Field in the Territory.
 
1.38.   Product ” means the pharmaceutical product containing Levosimendan as an active pharmaceutical ingredient and intended for human use or administration in a hospital or critical care setting (i.e., 2.5 mg/ml concentrate for solution for infusion / 5ml vial).
 
1.39.   Product Trademark ” means Simdax® or any other trademark selected by the Parties, registered or registerable and owned by Orion to be used for the Product in the Territory.
 
1.40.   Receiving Party ” has the meaning ascribed to such term in Section 15.3.
 
1.41.   Sales Level Estimate ” means Licensee’s good faith forecast of its projected Net Sales of the Product in the Territory for the relevant Sales Year.
 
1.42.   Sales Year ” means the twelve (12) months’ period commencing on the first day of the first calendar month following the First Commercial Sale and each subsequent twelve (12) months’ period thereafter.
 
1.43.   sNDA ” means a supplemental New Drug Application based on a NDA filed and approved by the FDA . References herein to a sNDA shall include, to the extent applicable, any comparable filing(s) in the Territory outside the United Sates.
 
1.44.   Study ” means the human clinical trial using the Product and studying reduction in morbidity and mortality of cardiac surgery patients at risk of low cardiac output syndrome (LCOS) as described in the Study Protocol, to be conducted by or on behalf of Licensee.
 
1.45.   Study Protocol ” means the written clinical study protocol created by Licensee, and discussed and agreed with the FDA, as set forth on Exhibit B .
 
 
 

 
 
1.46.   Sublicensee ” has the meaning ascribed to such term in Section 2.2.
 
1.47.   Supply Agreement – Commercial ” means the agreement to be entered into between Orion and Licensee, under which the Parties shall address issues related to the supply of commercial quantities of the Product to Licensee by Orion (or its nominee).
 
1.48.   Supply Agreement – Development ” means the agreement to be entered into between Orion and Licensee, under which the Parties shall address issues related to the supply of developmental quantities of the Product to Licensee by Orion (or its nominee).
 
1.46.   Term ” has the meaning ascribed to such term in Section 16.1.
 
1.47.   Territory ” means the United States of America and Canada, and their respective territories, commonwealths and possessions.
 
1.48.   Third Party Claim ” has the meaning ascribed to such term in Section 15.3.
 
1.49.   Regulatory Approval ” means any and all registrations, licenses, authorizations and approvals of any Regulatory Authority necessary to Develop and/or Commercialize the Product for use in the Field in the Territory (including, without limitation, all Pricing Approvals).
 
1.50.   Regulatory Authority ” means, with respect to any particular country in the Territory, any governmental authority, body, commission, agency or other instrumentality of such country regulating or otherwise exercising authority over the Development and/or Commercialization of the Product in such country of the Territory.
 
1.51.   “Third Party ” means any Person other than Licensee and Orion and their respective Affiliates.
 
1.52.   Regulatory Approval ” means any and all registrations, licenses, authorizations and approvals of any Regulatory Authority necessary to Develop and/or Commercialize the Product for use in the Field in the Territory (including, without limitation, all Pricing Approvals).
 
1.53.   Regulatory Authority ” means, with respect to any particular country in the Territory, any governmental authority, body, commission, agency or other instrumentality of such country regulating or otherwise exercising authority over the Development and/or Commercialization of the Product in such country of the Territory.
 
1.54.   “Third Party ” means any Person other than Licensee and Orion and their respective Affiliates.
 
 
 
 

 
 
2.  
LICENSE GRANTS
 
2.1   Development and Commercialization Licenses . Subject to the terms and conditions of this Agreement, Orion hereby grants to Licensee under the Orion Patent Rights and Orion Proprietary Information during the Term (and thereafter, subject to the terms and conditions of this Agreement):
 
(a)  
an exclusive right and license, with the right to grant sublicenses subject to Section 2.2, to conduct Development in support of obtaining Regulatory Approval for the Product in the Field in the Territory; and
 
(b)  
an exclusive right and license, with the right to grant sublicenses subject to Section 2.2, to Commercialize the Product in the Field in the Territory.
 
2.2   Right to Sublicense . Subject to the terms and conditions of this Agreement, Licensee shall have the right to grant sublicenses in the Territory under the licenses and rights granted by Orion under Section 2.1 to any Affiliate or Third Party (each a “ Sublicensee ”); provided that (i) Licensee enters into a written sublicense agreement with each such Sublicensee that is consistent with the terms and conditions of this Agreement; (ii) Licensee shall not be relieved of its obligations pursuant to this Agreement as a result of such sublicense; and (iii) in the case where the Sublicensee is a Third Party, Orion has granted its prior written consent to such sublicense, which consent shall not be unreasonably withheld, conditioned or delayed. If this Agreement terminates for any reason, any Sublicensee shall, from the effective date of such terminate, become a direct licensee of Orion; provided, however, that Orion’s obligation(s) to such Sublicensee are not greater than Orion’s obligations to Licensee under this Agreement, and provided further that such Sublicensee is not in breach of its sublicense agreement and such Sublicensee agrees in writing to comply with all of the terms of this Agreement and assumes the responsibilities of Licensee hereunder.
 
2.3   License to the Product Trademark . The Product shall be Commercialized in the Territory under the Product Trademark. Subject to and in accordance with the terms and conditions of this Agreement, during the Term, Orion hereby grants to Licensee an exclusive license, with the right to sublicense subject to Section 2.2, to use and display the Product Trademark in the Territory solely in connection with the performance by Licensee of its Development and Commercialization obligations with respect to the Product in the Territory. Licensee acknowledges that nothing in this Agreement shall give it any right, title or interest in or to the Product Trademark other than the limited license granted herein for the duration of the Term.
 
2.4   Retention of Rights . All rights not specifically granted to Licensee under this Agreement are expressly reserved and retained by Orion. Without limiting the generality of any of the foregoing, it is expressly understood and agreed that (i) Orion retains all rights under the Orion Patent Rights and Orion Proprietary Information outside the Territory; and (ii) the grant of rights to Licensee under this Agreement excludes any rights whatsoever for Licensee to manufacture or have manufactured the Product.
 
2.5   Line Extension Products . If Orion develops any Line Extension Product during the Term, Licensee shall have a right of first refusal to Commercialize each such Line Extension Product in the Territory in accordance with and subject to the terms of this Section 2.5. Orion shall notify Licensee in writing of any Line Extension Product and commercial terms thereof, and provide Licensee with information reasonably required to evaluate the proposal. Licensee shall have sixty (60) days from the date of such notice to consider the proposal, by the end of which period Licensee must notify Orion in writing if it is interested in pursuing such proposal for the Line Extension Product described in such proposal. In such event, the Parties shall negotiate in good faith with a view of reaching a mutually acceptable agreement (if any) for such Line Extension Product. If the Parties, despite conducting good faith negotiations, do not finalize and execute a mutually acceptable agreement for such Line Extension Product within one-hundred twenty (120) days after the date of Licensee’s notification of interest (or should Licensee fail to notify Orion of its interest within the above mentioned sixty (60) days’ period), Orion shall be free to commercialize such Line Extension Product in the Territory either itself or through any Third Party on terms materially no less favorable to Orion in the aggregate than those terms last offered by Orion to Licensee. For the avoidance of doubt it is expressly stated that nothing herein shall be deemed as an obligation for Orion to develop any Line Extension Product.
 
 
 
 

 
 
 
3.  
UP-FRONT AND MILESTONE PAYMENTS
 
3.1   Up-Front Payment . In consideration of Orion entering into this Agreement and the rights granted to Licensee hereunder, Licensee shall pay to Orion a non-refundable up-front payment in the amount of one million US Dollars (USD 1,000,000) within thirty (30) days of Licensee receiving the funding for the Study into its bank account, but in any event at the latest on April 1, 2014.
 
3.2   Development Milestone Payments . Licensee shall pay to Orion the following non-refundable development milestone payments no later than twenty-eight (28) days after the occurrence of the applicable milestone event:
 
(a)  
two million US Dollars (USD 2,000,000) upon the grant of Regulatory Approval for the Product in the United States of America by the FDA; and
 
(b)  
one million US Dollars (USD 1,000,000) upon the grant of Regulatory Approval for the Product in Canada by the relevant Regulatory Authority.
 
If Licensee Develops the Product for several indications subsequent to which two (or more) Regulatory Approvals are applied for, each of the above development milestone payments is payable also for each such additional indication; provided, however, that no additional development milestone payments will be due in case Licensee submits a sNDA for an extension of the indication for the Product.
 
3.3   Commercialization Milestone Payment . Licensee shall pay to Orion the following non-refundable commercialization milestone payments, contingent upon occurrence of the specified event and payable the first time such milestone event is achieved:
 
(a)  
[***] upon the Net Sales in the Territory [***];
 
(b)  
[***] upon the Net Sales in the Territory [***]; and
 
(c)  
[***] upon the Net Sales in the Territory [***].
 
3.4   Notification . Licensee shall notify Orion in writing of the achievement of the milestones set forth in Section 3.2 within fourteen (14) days after the achievement thereof and of the achievement of the milestone set forth in Section 3.3 within fourteen (14) days after Licensee’s determination of the achievement thereof, but in any event no later than thirty (30) days after the end of the calendar quarter in which such Net Sales milestone is achieved. No later than within fourteen (14) days from the date of such notice, Licensee shall make the applicable milestone payment to Orion.
 
4.  
ROYALTIES
 
4.1   Royalty Payments on Net Sales in the Territory . Licensee shall pay or cause to be paid to Orion a royalty on Net Sales of the Product in the Territory made by Licensee and its Sublicensees at the following rate:
 
4.1.1   During the Term:
 
(a)  
[***] of Annual Net Sales of the Product in the Territory during the relevant Calendar Year [***]; and
 
____________________________
[***]  Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.
 
 
 
 

 
 
(b)  
[***] of Annual Net Sales of the Product in the Territory during the relevant Calendar Year [***].
 
4.1.2   After the Term, [***] of Net Sales for as long as the Product is sold in the Territory.
 
4.2   Royalty Reduction . Notwithstanding Section 4.1.1, to the extent there is Generic Competition in any given country of the Territory with respect to the Product during the Term, then the applicable royalty rate according to Section 4.1.1 with respect to such country shall be reduced to [***] of Net Sales. Such reduced royalty rate shall become effective on the first day of the first calendar month following the onset of Generic Competition and shall continue to apply for the remainder of the Term as long as Generic Competition exists (and to the extent Generic Competition ceases to exist, Licensee resumes to pay royalty according to Section 4.1.1 as of the first day of the first calendar month following the cessation of Generic Competition).  In the event Generic Competition occurs in any country of the Territory during the Term, then Orion may elect to convert the license under Section 2.1 to non-exclusive, in which case the applicable royalty rate according to Section 4.1.1 with respect to such country for the remainder of the Term shall be reduced to [***].
 
4.3   Accrual of Royalties . No royalty shall be due or owing from the use or distribution of the Product in transactions where no consideration is received by Licensee, such as when the Product is used for Development purposes. No royalties shall be payable on sales between Licensee and its Sublicensees, but royalties shall be payable on subsequent sales by any such Sublicensee.
 
5.  
MILESTONE AND ROYALTY REPORTS AND ACCOUNTING
 
5.1   Reports and Payments .
 
5.1.1   Royalty Payments and Statements . Commencing on the calendar quarter in which the First Commercial Sale occurs, Licensee shall, within thirty (30) days after the end of each calendar quarter, pay to Orion the total royalties due from Licensee to Orion for such calendar quarter, along with a written report setting forth for such calendar quarter the following information:
 
(a)  
the gross sales and Net Sales of the Product on a country-by-country basis in the Territory in each country’s local currency and in US Dollars (including a detailing of all deductions taken in the calculation of Net Sales);
 
(b)  
the applicable exchange rate to convert from each country’s local currency to US Dollars;
 
_________________________________
[***]  Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.
 
 
 
 

 
 
(c)  
the sales volumes of the Product on a country-by-country basis in the Territory; and
 
(d)  
the calculation of the royalty due from Licensee to Orion under Section 4.1 or 4.2.
 
5.1.2   Milestone Payments and Statements . Licensee shall notify Orion of the occurrence of each milestone event and shall make milestone payments to Orion as described in Section 3 above.
 
5.1.3   Taxes . All amounts payable by Licensee to Orion pursuant to this Agreement (the “ Payments ”) are inclusive of, and shall be made subject to any deduction or withholding for or on account of, any tax required by applicable laws. Licensee shall not be required to gross up any Payments or to pay any additional amounts to account for such deduction or withholding. Orion shall be responsible for paying any and all taxes levied on account of, or measured in whole or in part by reference to, any Payments it receives. If Licensee does deduct or withhold as set forth above, Licensee shall (i) promptly notify Orion of such deduction or withholding; (ii) pay to the relevant authorities the full amount deducted or withheld; and (iii) promptly forward to Orion an official receipt (or certified copy) or other documentation evidencing such payment to such authorities. Orion retains the right to respond to and challenge any such tax.
 
5.1.4   Currency . All payments required under this Agreement shall be made in US Dollars. For the purpose of computing the Net Sales of the Product in a currency other than US Dollars, such currency shall be converted from local currency to US Dollars at the conversion rate reported in The Wall Street Journal on the last business day of the calendar quarter immediately preceding the applicable calendar quarter. If The Wall Street Journal ceases to be published, then the rate of exchange to be used shall be that reported in such other business publication of national circulation in the United States as the Parties reasonably agree.
 
5.2   Maintenance of Records; Audits .
 
5.2.1   Record Keeping . Licensee shall keep and shall cause its Sublicensees to keep complete and accurate books and accounts of record in connection with the sale of the Product in sufficient detail to permit accurate determination of all figures necessary for verification of milestone payments and royalties to be paid hereunder. Licensee shall maintain and shall cause its Sublicensees to maintain such books and accounts of record for a period of at least three (3) years after the end of the period for which they were generated, or longer if required by any law or regulation.
 
5.2.2   Audits . Upon the written request by Orion, Licensee shall permit an independent accounting firm selected by Orion and reasonably acceptable to Licensee to have access during normal business hours and upon reasonable notice to Licensee to such of the books and accounts of record as may be reasonably necessary to verify the accuracy of the reports provided under Section 5.1. The foregoing audit right shall be limited to one (1) audit per Calendar Year, and the scope of any such audit shall be limited to the current and the preceding two (2) Calendar Years. The accounting firm shall disclose to Orion only whether the reports are correct or incorrect, the specific details concerning any discrepancies and such other information that should properly be contained in any report required under Section 5.1.
 
5.2.3   Underpayments/Overpayments . If any audit concludes that additional milestone payments or royalties were due by Licensee to Orion, Licensee shall pay to Orion the additional payments within thirty (30) days of the date Licensee receives notice from Orion of such conclusion. If such audit concludes that Licensee overpaid milestone payments or royalties to Orion, Orion shall refund such overpayments to Licensee within thirty (30) days of the date of the conclusion of such audit.
 
5.2.4   Audit Fees . The fees charged by the independent accounting firm shall be paid by Orion; provided, however, that if an error of five percent (5%) or more in favor of Orion in the payment of the milestone payments or royalties is discovered, then the reasonable fees and expenses of the accounting firm shall be paid by Licensee.
 
 
 
 

 
 
6.  
REGULATORY MATTERS
 
6.1   Regulatory Responsibility . Licensee shall have all regulatory responsibilities under applicable laws, rules and regulations, reporting and otherwise, in connection with the Product in the Territory. Licensee shall be responsible for all cost and expenses associated therewith (including, without limitation, all fees payable to the FDA and other Regulatory Authorities in the Territory). Licensee shall keep Orion reasonably informed of its efforts and activities in seeking, obtaining and maintaining Regulatory Approval for the Product in the Territory.
 
6.2   Licensee’s Diligence Obligations . Licensee shall be responsible for diligently compiling all NDAs for the Product for the Territory and for having each NDA filed with the relevant Regulatory Authority as promptly as practical after Licensee’s receipt of all data, information and documents necessary to prepare such filing.
 
6.3   Communications with Regulatory Authorities . Licensee shall be responsible for interfacing, corresponding, communicating and meeting with the FDA and other Regulatory Authorities in the Territory with respect to all matters relating to the Product. However, Orion shall have the right to participate and cooperate in such meetings (and planning therefor), as may be appropriate and reasonable. Licensee shall, and shall cause its Sublicensees to, promptly (and in any event no later than three (3) business days of receipt of such communication) make available to Orion copies of all material correspondence with any Regulatory Authority regarding regulatory warning letters, withdrawal of the Product in the Territory, and correspondence bearing on the safety and efficacy of the Product. Further, Licensee undertakes, upon reasonable request by Orion, to provide Orion with copies of any other correspondence with the Regulatory Authorities in the Territory regarding the Product.
 
6.4   Additional Information . From and after the Effective Date, Orion shall, at no cost to Licensee, provide Licensee with all information readily available to Orion which Licensee reasonably requests regarding the Development and/or Commercialization of the Product which are required by the FDA and other Regulatory Authorities. To the extent any such information requested by Licensee is not readily available to Orion, the Parties shall discuss in good faith and attempt to agree on how to meet such requirement set forth by the relevant Regulatory Authority.
 
7.  
DEVELOPMENT
 
7.1   Progress Updates . So long as Development activities are being performed by or on behalf of Licensee, Licensee shall on a calendar quarterly basis inform Orion on the progress thereof. This information shall contain, but is not limited to, any updates regarding the Study.
 
7.2   Development Activities . Licensee shall exercise commercially reasonable efforts to Develop the Product for use in the Field in the Territory, including, without limitation, the activities set forth in the Study Protocol. Without limiting the generality of any of the foregoing, Licensee shall be solely responsible for funding and completing all clinical studies required in order to obtain and maintain Regulatory Approval for the Product in the Territory. Licensee shall perform its obligations under the Study Protocol and all other Development activities in good scientific manner and in compliance with all applicable laws, rules and regulations.
 
 
 

 
 
7.3   Abandonment . In the event Licensee ceases or discontinues Development of the Product in a particular country of the Territory for any reason, provided that such cessation or discontinuation lasts for at least three (3) consecutive months or for a period of at least six (6) months in aggregate and is not due to a Force Majeure Event, then, at Orion’s notice, all rights and licenses granted hereunder by Orion to Licensee with respect to that particular country shall terminate and will be returned to Orion.
 
7.4   Non-Commencement of the Study . Without limiting the generality of Section 7.3, in the event the Study has not been commenced at the latest by July 31, 2014, then Orion may terminate this Agreement with immediate effect. Such termination by Orion shall be deemed, for purposes of Section 16, to be a termination due to an uncured breach under Section 16.3. For the purpose of this Section, the Study is considered to have been commenced when the first randomized patient enters the Study.
 
7.5   Licensee’s Development Data . Licensee shall promptly provide Orion with copies of all data, information and documentation made, procured, collected or otherwise generated by or on behalf of Licensee in connection with Development activities (including, without limitation, all clinical study reports and NDAs). Licensee hereby grants to Orion an irrevocable, perpetual, transferable, sublicensable, fully-paid-up, non-exclusive, royalty-free right and license to use or reference such data, information and documentation for any and all purposes not in conflict with the rights granted to Licensee under this Agreement.
 
7.6   Grant Back of Licensee’s IPR . The Parties acknowledge that as a result of this Agreement, Licensee may (i) generate or have generated clinical trial data relating to the Product (“ Licensee Clinical Data ”) and (ii) be issued patents covering inventions conceived and reduced to practice by Licensee related to the Product during the course of this Agreement (“ Licensee Grant-Back Patents ”). Licensee hereby grants to Orion an irrevocable, perpetual, transferable, sublicensable, fully-paid-up, non-exclusive, royalty-free right and license under the Licensee Clinical Data and Licensee Grant-Back Patents for any and all purposes not in conflict with the rights granted to Licensee under this Agreement. Licensee agrees to promptly notify Orion of any Licensee Clinical Data generated and Licensee Grant-Back Patents issued, and shall make available to Orion all Licensee Clinical Data.
 
7.7   Orion’s Development Data . Orion shall promptly provide Licensee with copies of all data, information and documentation existing on the Effective Date regarding the Product and/or Levosimendan necessary for Licensee to obtain and maintain Regulatory Approval for the Product in the Territory. For the avoidance of doubt it is expressly agreed that Orion shall have no obligation whatsoever (i) to carry out or have carried out any trial or study relating to Levosimendan or the Product whether requested by Licensee or any Regulatory Approval; or (ii) to prepare any data, information or documentation that is not readily available to Orion.
 
7.8   Supply of Development Quantities of the Product . Orion shall supply to Licensee at no charge reasonable amounts of the Product required by Licensee to conduct, or have conducted, the Study as set forth in more detail in the Supply Agreement – Development. The Supply Agreement – Development shall contain the terms set forth in Exhibit D hereto.
 
8.  
COMMERCIALIZATION
 
8.1   Diligence Obligations . Without prejudice to the Minimum Net Sales requirement stipulated in Section 8.5, Licensee shall exercise commercially reasonable efforts to Commercialize the Product for use in the Field in the Territory. Licensee shall be responsible for all aspects of Commercializing the Product in the Field in the Territory.
 
8.2   Launch Obligation . Licensee agrees to launch the Product as promptly as practical following the grant of Regulatory Approval, with the goal of effectuating such launch within six (6) months following the grant of Regulatory Approval, subject to adequate supply of Product and intellectual property matters.
 
 
 

 
 
8.3   Stock . Licensee shall, subject to the receipt of adequate supply of Product from Orion under the Supply Agreement – Commercial, continuously maintain an adequate stock of the Product in order to meet normal market demand for the Product in the Territory.
 
8.4   Abandonment . In the event Licensee ceases or discontinues Commercialization of the Product in a particular country of the Territory for any reason, provided that such cessation or discontinuation lasts for at least three (3) consecutive months or for a period of at least six (6) months in aggregate and is not due to a Force Majeure Event, then, unless Licensee has during such period of time been using commercially reasonable efforts as evidenced by Licensee, at Orion’s notice all rights and licenses granted hereunder by Orion to Licensee with respect to that particular country shall terminate and will be returned to Orion.
 
8.5   Projected Sales Levels . The Sales Level Estimates for the first five (5) Sales Years shall be discussed, negotiated and agreed upon between the Parties no later than three (3) months after the filing of the NDA for the Product. Such Sales Level Estimates, once agreed, shall be recorded on Exhibit C . The Sales Level Estimate for each following Sales Year thereafter shall be discussed and agreed between the Parties no later than three (3) months prior to the expiry of the fifth (5 th ) Sales Year or any subsequent Sales Year thereafter.
 
8.6   Minimum Sales Obligation . Without prejudice to Licensee’s undertaking in Section 8.1 with respect to Commercializing the Product for use in the Field in the Territory, Licensee agrees that, during each Sales Year, a minimum sales level shall be at least sixty percent (60%) of the Sales Level Estimate set for such Sales Year (the “ Minimum Net Sales ”).
 
8.7   Failure to Achieve Minimum Net Sales . In the event that the actual Net Sales of the Product in the Territory for any given Sales Year are less than the applicable Minimum Net Sales for that Sales Year other than due to Force Majeure or other reasons beyond the control of Licensee (the “ Net Sales Shortfall ”), then Licensee shall pay to Orion, sixty (60) days after the end of the applicable Sales Year, a shortfall royalty equal to the applicable royalty percentage (as defined in Section 4.1.1 or 4.2) multiplied by the Net Sales Shortfall. Such payment shall be Orion’s sole remedy for Licensee’s failure to achieve the Minimum Net Sales for a Sales Year.
 
8.8   Competing Products . Should Licensee commence Dealing with a Competing Product at any time during the Term, Orion shall have the right to terminate this Agreement upon thirty (30) days’ written notice. Such termination by Orion shall be deemed, for purposes of Section 16, to be a termination due to an uncured breach under Section 16.3. In addition, subject to Section 4.2, Orion shall not Deal with a Competing Product in the Territory at any time during the Term.  For purposes of this Section 8.8, “Dealing with a Competing Product” or “Deal with a Competing Product” shall mean, directly or indirectly, selling, promoting, marketing or distributing in the Territory any Competing Product.
 
8.9   Supply of Commercial Quantities of the Product . Orion shall supply to Licensee its entire requirements for the Product in connection with the Commercialization of the Product in the Territory as stipulated in more detail in the Supply Agreement – Commercial. The Parties shall enter into the Supply Agreement – Commercial on commercially reasonable terms satisfactory to the Parties as promptly as practical after the Effective Date but in any event no later than the filing of the NDA for the Product in any country in the Territory. The transfer price for the Product shall be [***]. The Supply Agreement – Commercial shall contain the terms set forth in Exhibit E hereto.
 
8.10   Adverse Event Reporting . The Parties shall negotiate in good faith a pharmacovigilance agreement with the intent to enter into such agreement as promptly as practical after the Effective Date.
_____________________________
[***]  Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.
 

 
 

 
 
9.  
PROMOTION AND MARKETING
 
9.1   Responsibility for Marketing Activities . Licensee shall bear all responsibility with regard to the advertising, promotion and marketing of the Product by or on behalf of Licensee, and with regard to the nature, content and use of all advertising, promotion and marketing materials and the like for the Product which Licensee and/or its Sublicensees use in connection with the marketing, promotion and sale of the Product in the Territory. It shall be Licensee’s responsibility to ensure that all of said materials conform to the legal requirements in the Territory. Upon reasonable request, Licensee shall without undue delay provide Orion with current copies of all advertising, promotion and marketing materials related to the Product. It is expressly understood and agreed that Orion’s review of such materials shall not be deemed a qualification of or otherwise release Licensee of its sole and exclusive responsibility relating to any use of same.
 
9.2   Inclusion of Orion’s Name on Marketing Materials . Licensee agrees that, to the extent consistent with and subject to regulatory requirements in the Territory, appropriate language shall be included in the advertising, promotion and marketing materials for the Product identifying the Product as being licensed from and manufactured by Orion.
 
9.3   Annual Sales and Marketing Plan . By the end of September of each Calendar Year, Licensee shall prepare and provide Orion with an annual sales and marketing plan for the following Calendar Year. Such annual sales and marketing plan shall include, at a minimum, the projected sales volumes, and the advertising and promotion budget. Orion shall have the right to review the annual sales and marketing plan and comment on the same.
 
9.4   Long-term Sales Plan . By the end of March of each Calendar Year, Licensee shall prepare and provide Orion with a five (5) years’ sales plan indicating the forecasted sales for such period. Orion shall have the right to review the long-term sales plan and comment on the same.  Licensee may provide the initial Sales Level Estimate to be recorded on Exhibit C pursuant to Section 8.5 as the first such sales plan.
 
9.5   Annual Business Review Meeting . By the end of March of each Calendar Year, the Parties shall hold an annual business review meeting where Licensee shall provide information about, inter alia , promotion and marketing activities undertaken by Licensee in the Territory during the preceding Calendar Year, and Orion shall update Licensee generally with respect to Orion’s activities with respect to the Product during the preceding Calendar Year.
 
 
 

 
 
10.  
Patent Rights
 
10.1   Orion Patent Rights .
 
10.1.1   Ownership, Prosecution and Maintenance of the Orion Patent Rights . Orion shall have the right, but not the obligation, at its sole expense, to prosecute any and all patent applications within the Orion Patent Rights, to obtain patents thereon, and to maintain all patents included therein. Such prosecution and maintenance may be performed by outside counsel of Orion’s choosing.
 
10.1.2   Discontinuation; Abandonment of the Orion Patent Rights . Orion shall have the right to discontinue the prosecution of any patent application, or to abandon any patent, on a country-by-country basis, encompassed within the Orion Patent Rights. If Orion decides to discontinue the prosecution of any patent application or to abandon any patent within the Orion Patent Rights in any country of the Territory, Orion shall inform Licensee at least sixty (60) days prior to such discontinuance and Licensee shall be given the opportunity to prosecute such patent application and/or maintain such patent at its sole risk and expense. Licensee shall advise Orion in writing of its decision regarding the opportunity to prosecute such patent application and/or maintain such patent within thirty (30) days of the date of Orion’s notice and, in the absence of a written decision from Licensee, Orion shall have the right to discontinue or abandon such patent application or patent. In the event Licensee timely elects to prosecute and maintain such patent or patent application, Orion shall, at Licensee’s cost and expense, execute an assignment transferring ownership of such patent or patent application to Licensee in each such country of the Territory.
 
10.2   Licensee Patent Rights .
 
10.2.1   Ownership, Prosecution and Maintenance of the Licensee Grant-Back Patents . Subject to Section 10.2.2, Licensee shall have the right, but not the obligation, at its sole expense, to prosecute and maintain any and all Licensee Grant-Back Patents. Such prosecution and maintenance may be performed by outside counsel of Licensee’s choosing. Licensee shall keep Orion informed of the progress regarding the prosecution of each patent application included within the Licensee Grant-Back Patents. Orion shall have the right to review all pending patent applications and to make recommendation to Licensee regarding the prosecution of such patent applications. Licensee shall, if so requested by Orion and at Orion’s expense, file for any Licensee Grant-Back Patents outside the Territory in the name of Orion.
 
10.2.2   Discontinuation; Abandonment of the Licensee Patent Rights . Licensee shall have the right to discontinue the prosecution of any patent application, or to abandon any patent, on a country-by-country basis, encompassed within the Licensee Grant-Back Patents. If Licensee decides to discontinue the prosecution of any patent application or to abandon any patent within the Licensee Grant-Back Patents in any country of the world, Licensee shall inform Orion at least sixty (60) days prior to such discontinuance and Orion shall be given the opportunity to prosecute such patent application and/or maintain such patent at its sole risk and expense. Orion shall advise Licensee in writing of its decision regarding the opportunity to prosecute such patent application and/or maintain such patent within thirty (30) days of the date of Licensee’s notice and, in the absence of a written decision from Orion, Licensee shall have the right to discontinue or abandon such patent application or patent. In the event Orion timely elects to prosecute and maintain such patent or patent application, Licensee shall, at Orion’s cost and expense, execute an assignment transferring ownership of such patent or patent application to Orion in each such country.
 
10.3   Patent Term Extensions . Licensee shall provide written notice to Orion of any applicable Regulatory Approval that can provide a basis for a Patent Term Extension of the Orion Patent Rights within five (5) days of receiving such Regulatory Approval. Licensee shall cooperate with Orion in providing Orion, at Orion’s request, all facts and documents which may assist Orion in its procurement of Patent Term Extensions for the Orion Patent Rights. Orion shall be responsible for, and shall bear the expense, of obtaining such Patent Term Extensions. For the purpose hereof, the term “Patent Term Extension” shall mean any extension of the Orion Patent Rights that may be granted by any patent office or regulatory agency.
 
10.4   Data Exclusivity and Orange Book Listings . With respect to data exclusivity periods (such as those periods listed in the FDA’s Orange Book and all foreign equivalents), Licensee shall, at its own expense and consistent with its obligations under applicable law, seek and enforce all such data exclusivity periods available for the Product. Licensee shall, at its own expense, be responsible for listing in the FDA’s Orange Book the relevant issued patents as well as corresponding patent term extensions under the Orion Patent Rights for the Product. Upon request by Licensee (and at Licensee’ expense), Orion shall provide reasonable cooperation to Licensee in filing such Orange Book listings.
 
 
 

 
 
11.  
TRADEMARK MATTERS
 
11.1   Ownership . Licensee acknowledges that Orion is the sole and exclusive owner of the Product Trademark within the Territory. All goodwill resulting from use of the Product Trademark by or on behalf of Licensee shall at all times inure solely to the benefit of Orion. Licensee may not register or cause to be registered the Product Trademark or any mark confusingly similar thereto with any national, state or provincial or other governmental authority. Licensee agrees that it will not at any time dispute or contest (i) the validity of the Product Trademark and/or any registrations thereof, whether now existing or hereafter obtained; (ii) the exclusive ownership by Orion of the Product Trademark and/or of any registrations thereof, whether now existing or hereafter obtained; (iii) the exclusive ownership by Orion of the present and future goodwill pertaining to the Product Trademark; or (iv) Orion’s right to grant to Licensee the rights conferred by this Agreement as to the Product Trademark.
 
11.2   Product Trademark on Materials . It shall be clearly indicated on the Product’s labels, packaging and inserts, and all sales, marketing and promotional materials that the Product Trademark is a registered trademark using the symbol ® or any other appropriate symbol indicating the registration status of the Product Trademark. Orion retains the right to review and approve all intended uses of the Product Trademark prior to the first use thereof, such approval not to be unreasonably withheld, conditioned or delayed. It is expressly understood and agreed that Orion’s review of such materials shall not be deemed a qualification of or otherwise release Licensee of its sole and exclusive responsibility relating to any use of the Product Trademark.
 
11.3   Domain Names . Licensee shall have the right to apply for, acquire and/or register domain names specific to the countries comprised in the Territory that incorporate the Product Trademark in Orion’s name and at Licensee’s own cost. Any such domain names shall be owned by Orion.
 
11.4   Notice . Each Party shall promptly notify the other Party of any actual, alleged or threatened infringement by a Third Party of the Product Trademark which comes to the attention of such Party.
 
12.  
INFRINGEMENT
 
12.1   Notice . If, during the Term, either Party learns of any (i) actual, alleged or threatened infringement by a Third Party of any Orion Patent Rights in the Territory; or (ii) claim by a Third Party alleging that the Development and/or Commercialization of the Product infringes or otherwise violates the intellectual property rights of such Third Party, then such Party shall promptly notify the other Party of the same and shall provide such other Party with available details as to and evidence of such infringement, suit or claim.
 
12.2   Third Party Infringement .
 
12.2.1   Orion Enforcement . Orion shall have the first right, but not the obligation, to initiate a suit or take other appropriate action required to protect or otherwise enforce the Orion Patent Rights at its own expense and with legal counsel of its own choice. For this purpose, Licensee shall execute such legal papers and cooperate in the prosecution of such suit or action as may be reasonably requested by Orion; provided that Orion shall promptly reimburse all out-of-pocket expenses (including reasonable counsel fees and expenses) actually incurred by Licensee in connection with such cooperation.
 
 
 

 
 
12.2.2   Licensee Enforcement . If Orion does not initiate a suit or take other appropriate action that it has the initial right to initiate or take pursuant to Section 12.2.1 above, then Licensee may provide Orion with notice of Licensee’s intent to initiate a suit or take other appropriate action against any actual, alleged or threatened infringement of the Orion Patent Rights by a Third Party in the Territory. If Licensee provides such notice and Orion does not initiate a suit or take such other appropriate action within thirty (30) days after receipt of such notice from Licensee, then Licensee shall have the right to initiate a suit or take other appropriate action required to protect the Orion Patent Rights in the Territory. For this purpose, Orion shall execute such legal papers and cooperate in the prosecution of such suit or action as may be reasonably requested by Licensee; provided that Licensee shall promptly reimburse all out-of-pocket expenses (including reasonable counsel fees and expenses) actually incurred by Orion in connection with such cooperation.
 
12.2.3   Conduct of Certain Actions; Costs . The Party initiating suit or action shall have the sole and exclusive right to select counsel for any suit or action initiated by it pursuant to this Section 12.2.3. The initiating Party shall assume and pay all of its own out-of-pocket costs incurred in connection with any litigation or proceedings initiated by it pursuant to this Section 12.2.3, including the fees and expenses of the counsel selected by it. The other Party shall have the right to participate and be represented in any such suit or action by its own counsel at its own expense. The Party initiating and assuming control over such suit or action shall be entitled to receive the entire amount of any damages, settlements, accounts of profits, or other financial compensation recovered from a Third Party based upon any such suit or action.
 
12.3   Patent Invalidity Claim . Each of the Parties shall promptly notify the other in the event of any legal or administrative action by any Third Party against any Orion Patent Right of which it becomes aware, including any nullity, revocation or reexamination proceeding. Orion shall have the first right, but not the obligation, to defend against any such action involving any Orion Patent Right in its own name, and the costs of any such defense shall be at Orion’s expense. Licensee, upon request of Orion, agrees to join in any such action and to cooperate reasonably with Orion; provided that Orion shall promptly reimburse all out-of-pocket expenses (including reasonable counsel fees and expenses) actually incurred by Licensee in connection with such cooperation. If Orion does not defend against any such action involving such Orion Patent Right, then Licensee shall have the right, but not the obligation, to defend such action and any such defense shall be at Licensee’s expense. Orion, upon request of Licensee, agrees to join in any such action and to cooperate reasonably with Licensee; provided that Licensee shall promptly reimburse all out-of-pocket expenses (including reasonable counsel fees and expenses) actually incurred by Orion in connection with such cooperation.
 
13.  
REPRESENTATIONS AND WARRANTIES
 
13.1   Representations and Warranties of Orion . Orion hereby represents and warrants to Licensee at the Effective Date:
 
13.1.1   Corporate Power and Due Authorization . Orion is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization, with the corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Orion. This Agreement has been duly executed and delivered by Orion and constitutes the valid, binding and enforceable obligation of Orion, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity.
 
13.1.2   Conflicts . Orion is not subject to, or bound by, any provision of:
 
(a)  
any articles or certificates of incorporation or by-laws;
 
(b)  
any mortgage, deed of trust, lease, note, shareholders’ agreement, bond, indenture, license, permit, trust, custodianship, or other instrument, agreement or restriction, or
 
(c)  
any judgment, order, writ, injunction or decree or any court, governmental body, administrative agency or arbitrator,
 
that would prevent, or be violated by, or under which there would be a default as a result of, nor is the consent of any Third Party required for, the execution, delivery and performance by Orion of this Agreement and the obligations contained herein.
 
13.1.3   Intellectual Property .
 
(a)  
Orion owns all right, title and interest in and to the Orion Patent Rights free of any liens or restrictions, and Orion has the right to grant to Licensee all of the licenses and other rights with respect to the Orion Patent Rights granted to Licensee under this Agreement. Orion has not and will not enter into any agreement nor grant any Third Party any rights with respect to the Orion Patent Rights that are inconsistent with the rights granted to Licensee under this Agreement. Orion is not a party to, nor otherwise bound by, any contract that will result in any Third Party obtaining any interest in, or which would give any Third Party any right to assert any claim in or with respect to Licensee’s rights under this Agreement.
 
(b)  
(i) To the actual knowledge of Orion, none of the Orion Patent Rights infringe any patent rights or other intellectual property rights of any Third Party; (ii) the Orion Proprietary Information do not misappropriate any Confidential Information of any Third Party; (iii) there are no existing actions, suits or proceedings, and Orion has not received any written claim or demand from a Third Party, that challenges Orion’s rights with respect to the Orion Patent Rights or the Orion Proprietary Information; (iv) to the actual knowledge of Orion, there is no unauthorized use, infringement, misappropriation or violation of any of the Orion Patent Rights or the Orion Proprietary Information by any Third Party;; and (v) Orion has obtained from each of its Affiliates, employees, agents and contractors who perform or have performed activities with respect to the manufacture, development or commercialization of the Product full rights to the inventions of such activities.
 
 
 
 

 
 
13.1.4   Litigation and Claims . There is no action pending or, to the actual knowledge of Orion, threatened against Orion involving the Orion Patent Rights or the Orion Proprietary Information.
 
13.1.5   Regulatory . The development, manufacture and commercialization of the Product by Orion and its Affiliates have been conducted in material compliance with all applicable regulatory requirements and applicable laws, rules and regulations. Neither Orion nor any of its Affiliates or employees has been debarred and is not subject to debarment pursuant to applicable laws, rules or regulations, nor is it the subject of a conviction of such nature.
 
13.1.6   No Implied Warranties . EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 13.1, ORION EXCLUDES ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED.
 
13.2   Representations and Warranties of Licensee . Licensee hereby represents and warrants to Orion at the Effective Date:
 
13.2.1   Corporate Power and Due Authorization . Licensee is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization, with the corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Licensee. This Agreement has been duly executed and delivered by Licensee and constitutes the valid, binding and enforceable obligation of Licensee, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity.
 
13.2.2   Conflicts . Licensee is not subject to, or bound by, any provision of:
 
(a)  
any articles or certificates of incorporation or by-laws;
 
(b)  
any mortgage, deed of trust, lease, note, shareholders’ agreement, bond, indenture, license, permit, trust, custodianship, or other instrument, agreement or restriction, or
 
(c)  
any judgment, order, writ, injunction or decree or any court, governmental body, administrative agency or arbitrator,
 
that would prevent, or be violated by, or under which there would be a default as a result of, nor is the consent of any Third Party required for, the execution, delivery and performance by Licensee of this Agreement and the obligations contained herein.
 
 
 
 

 
 
14.  
CONFIDENTIALITY
 
14.1   Treatment of Confidential Information . Except as otherwise provided in this Section 14, each Party (the “ Receiving Party ”) agrees to keep confidential all of the other Party’s (the “ Disclosing Party ”) Confidential Information. Each Party agrees to preserve and protect the Confidential Information to the same extent it protects its own confidential information. Each Party will use the Confidential Information only as permitted under this Agreement, and will not disclose Confidential Information to any Third Party.
 
14.2   Right to Disclose . The Receiving Party may disclose Confidential Information belonging to the Disclosing Party to the extent (and only to the extent) such disclosure is necessary in the following instances:
 
(a)  
obtaining Regulatory Approval for the Product in the Territory;
 
(b)  
complying with applicable laws (including, without limitation, securities laws and the rules and regulations of any securities exchange) and with judicial process, if in the reasonable opinion of the Receiving Party’s counsel, such disclosure is necessary for such compliance; and/or
 
(c)  
disclosure, solely on a “need to know basis”, to directors, officers, employees, investors, potential funding sources or potential collaborators or acquirors of the Receiving Party and its Sublicensees, each of whom shall be bound by obligations of confidentiality and non-use no less restrictive than the obligations set forth in this Section 14;
 
provided, however, that, in each of the above situations, the Receiving Party shall remain responsible for any failure by any Person who receives Confidential Information pursuant to this Section 14.2 to treat such Confidential Information as required under this Section 14 .
 
If and whenever any Confidential Information is disclosed in accordance with this Section 14.2, such disclosure shall not cause any such information to cease to be Confidential Information. Where reasonably possible and other than pursuant to Section 14.2 (c), the Receiving Party shall notify the Disclosing Party of its intent to make such disclosure pursuant to this Section 14.2 sufficiently prior to making such disclosure so as to allow the Disclosing Party adequate time to take whatever action it may deem appropriate to protect the confidentiality of the information.
 
14.3   Release from Restrictions . The foregoing obligations in respect of disclosure and use of the Confidential Information shall not apply to any part of such Confidential Information that the Receiving Party can demonstrate by contemporaneously prepared competent evidence:
 
(a)  
is or becomes part of the public domain other than by acts of the Receiving Party in contravention of this Agreement;
 
(b)  
is disclosed to the Receiving Party by a Third Party who had the right to disclose such Confidential Information to the Receiving Party; or
 
(c)  
prior to disclosure under this Agreement, was already in the possession of the Receiving Party, provided such Confidential Information was not subject to any obligation to keep it confidential.
 
14.4   Confidentiality of this Agreement . The Parties acknowledge that this Agreement and all of the respective terms of this Agreement shall be treated as Confidential Information of both Parties.
 
14.5   Duration of Confidentiality Obligations . The obligations in respect of disclosure and use of the Confidential Information contained herein shall survive the termination or expiration of this Agreement for any reason and shall remain in effect for seven (7) years after the termination or expiration of this Agreement.
 
 
 
 

 
 
15.  
INDEMNIFICATION
 
15.1   Indemnification by Orion . Orion shall defend, indemnify and hold harmless Licensee and its directors, officers and employees (collectively the “ Licensee Indemnitees ”) from and against any and all liabilities, damages, costs or expenses (including reasonable attorneys’ fees and expenses) arising out of any claim, demand, suit or action brought by any Third Party against Licensee to the extent such arise, result from, or relate to:
 
(a)  
any breach by Orion of any of its representations or warranties contained in this Agreement;
 
(b)  
any breach of Orion of any of its covenants or obligations under this Agreement; or
 
(c)  
the negligence, recklessness or willful misconduct of Orion; or
 
(d)  
any activities or actions taken by or on behalf of Orion or its Affiliates with respect to the Product, Licensee Grant-Back Patents or Licensee Clinical Data.
 
The items above are hereinafter collectively referred to as a “ Licensee Loss ”. Orion shall have no obligation to indemnify any Licensee Indemnitee to the extent that any Licensee Loss arises out of the negligence, recklessness or willful misconduct of any Licensee Indemnitee or Licensee’s breach of this Agreement.
 
15.2   Indemnification by Licensee . Licensee shall defend, indemnify and hold harmless Orion and its directors, officers and employees (collectively the “ Orion Indemnitees ”) from and against any liabilities, damages, costs or expenses (including reasonable attorneys’ fees and expenses) arising out of any claim, demand, suit or action brought by any Third Party against Orion to the extent such arise, result from, or relate to:
 
(a)  
any breach by Licensee of any of its representations or warranties contained in this Agreement;
 
(b)  
any breach of Licensee of any of its covenants or obligations under this Agreement;
 
(c)  
the negligence, recklessness or willful misconduct of Licensee; or
 
(d)  
any activities or actions taken by or on behalf of Licensee or its Affiliates with respect to the Product, Orion Patent Rights or Orion Proprietary Information.
 
The items above are hereinafter collectively referred to as an “ Orion Loss ”. Licensee shall have no obligation to indemnify any Orion Indemnitee to the extent that any Orion Loss arises out of the negligence, recklessness or willful misconduct of any Orion Indemnitee or Orion’s breach of this Agreement.
 
15.3   Indemnification Procedures . With respect to any indemnification obligation of either Party under this Agreement, the conditions to be met for such indemnification obligation to become applicable are as follows:
 
(a)  
If any Third Party shall notify a Party (the “ Indemnified Party ”) with respect to any matter (a “ Third Party Claim ”) which may give rise to a claim for indemnification against the other Party (the “ Indemnifying Party ”) under this Agreement, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing;
 
(b)  
The Indemnifying Party shall have sole control of the defense of the Third Party Claim and all negotiations for its settlement or compromise (provided that any such settlement or compromise shall be subject to the consent of the Indemnified Party, such consent not to be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, the Indemnifying Party may compromise or settle the Third Party Claim without the consent of the Indemnified Party provided that (i) there is no admission of any violation of law or any violation of the rights of any Third Party; and (ii) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party); and
 
(c)  
The Indemnified Party shall render reasonable assistance, information, cooperation and authority to permit the Indemnifying Party to defend the Third Party Claim; provided, that the Indemnifying Party shall promptly reimburse all out-of-pocket expenses (including reasonable attorneys’ fees and expenses) actually incurred by the Indemnified Party in connection therewith.
 
 
 
 

 
 
16.  
TERM AND TERMINATION
 
16.1   Term . This Agreement shall become binding upon the Effective Date and shall continue thereafter in full force and effect, unless terminated sooner pursuant to this Section 16, for fifteen (15) years from the Effective Date; provided, however, that, to the extent any of the Orion Patent Rights continue in existence in any country in the Territory at the end of such fifteen-year period, this Agreement shall continue in full force and effect on a country-by-country basis until the expiration of such Orion Patent Rights (the “ Term ”).
 
16.2   Insolvency . Either Party may terminate this Agreement effective immediately upon written notice to the other Party upon (i) the bankruptcy, liquidation or dissolution of the other Party; or (ii) the filing of any voluntary petition for bankruptcy, dissolution, liquidation or winding-up of the affairs of the other Party which is not dismissed within one hundred twenty (120) days after the date on which it is filed or commenced; provided, however, that this Agreement shall be subject to the provisions of Section 365(n) of the U. S. Bankruptcy Code.
 
16.3   Breach of the Agreement . Either Party (the “ Non-Breaching Party ”) may terminate this Agreement with immediate effect at any time, if the other Party (the “ Breaching Party ”) materially breaches this Agreement and such material breach is not cured by the Breaching Party within sixty (60) days after the Non-Breaching Party provides the Breaching Party with written notice of such breach.
 
16.4   Contesting Patent Rights . Orion may terminate this Agreement with immediate effect in the event that Licensee or any of its Affiliates or Sublicensees directly or indirectly challenge or contest the validity or enforceability of any Orion Patent Rights. Licensee may terminate this Agreement with immediate effect in the event that Orion or any of its Affiliates directly or indirectly challenge or contest the validity or enforceability of any Licensee Grant-Back Patents.
 
16.5   Change of Control . If there is a Change of Control of Licensee, Orion may, in its sole discretion, terminate this Agreement in its entirety with immediate effect.
 
16.6   Rights upon Expiration and Termination .
 
16.6.1   Upon expiration of this Agreement pursuant to Section 16.1 or upon termination of this Agreement by Licensee under Section 16.2 (Orion’s insolvency) or 16.3 (Orion’s uncured material breach) or 16.4 (Orion contesting Licensee Grant-Back Patents), Licensee shall have an irrevocable, perpetual license under the Orion Patent Rights and the Orion Proprietary Information to Develop, and Commercialize the Product for use in the Field in the Territory. Such license shall be non-exclusive in the event of expiration of the Term pursuant to Section 16.1, but shall be exclusive in the event of termination by Licensee under Section 16.2 or 16.3 or 16.4 until the expiration of the Term (where after such license shall become non-exclusive). Licensee shall pay royalties in accordance with Section 4.1.2 in the event of expiration of the Term, but shall have no obligation for payment of any royalty under Section 4.1 or 4.2 in the event of termination by Licensee under Section 16.2 or 16.3 or 16.4.
 
16.6.2   Upon termination of this Agreement other than pursuant to Section 16.1 or by Licensee under Section 16.2 (Orion’s insolvency) or 16.3 (Orion’s uncured material breach) or 16.4 (Orion contesting Licensee Grant-Back Patents): (i) as of the effective date of such termination all rights and licenses granted by Orion to Licensee hereunder shall automatically terminate; (ii) Licensee shall promptly and without charge to Orion assign and transfer to Orion all data, information and documentation arising out of or in connection with Development and/or Commercialization activities conducted by or on behalf of Licensee, and all Regulatory Approvals for the Product (including, without limitation, the NDA) and any applications therefor; and (iii) Licensee shall, at no cost to Orion, provide all cooperation and assistance reasonably requested by Orion to achieve a smooth transition of the Development and/or Commercialization of the Product to Orion (or its nominee).
 
16.6.3   Upon expiration or termination of this Agreement, the following Sections shall survive such expiration or termination, subject to any later termination dates provided for therein: Sections 1 (Definitions, to the extent applicable), 2 (License Grants, to the extent applicable), 4 (Royalties, to the extent applicable), 5 (Milestone and Royalty Reports and Accounting, to the extent applicable), 6 (Regulatory Matters, to the extent applicable), 10 (Patent Rights), 11 (Trademark Matters), 12 (Infringement),  14 (Confidentiality), 15 (Indemnification, to the extent applicable), 16 (Term and Termination) and 17 (Miscellaneous).
 
16.6.4   Expiration or termination of the Agreement shall not relieve the Parties of any obligation accruing before such expiration or termination. Any expiration or termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement before termination or expiration.
 
 
 
 

 
 
17.  
MISCELLANEOUS
 
17.1   Assignment . This Agreement may not be assigned or otherwise transferred by either Party without the written consent of the other Party; provided, however, that either Party may, without such consent, assign this Agreement (i) to an Affiliate; provided, however, that the assigning Party shall remain liable for the performance of its Affiliate under the terms and conditions of this Agreement; or (ii) in connection with a merger, consolidation, or transfer or sale of all or substantially all of such Party’s business or assets that are the subject of this Agreement; provided, however, that the assignee shall be of good financial standing, the other Party consents to such assignment and the assigning Party agrees that the assignment shall not release the assigning Party from its obligations under this Agreement. Any Change of Control of Licensee shall be deemed an assignment requiring the prior written consent of Orion. Any purported assignment in violation of the preceding sentence shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement.
 
17.2     Force Majeure . Neither Party shall be liable to the other for delay or failure in the performance of the obligations on its part contained in this Agreement if and to the extent that such failure or delay is due to circumstances beyond its control that it could not have avoided by the exercise of reasonable diligence (a “ Force Majeure Event ”). Such Party shall notify the other promptly in the event such circumstances arise, giving an indication of the likely extent and duration thereof, and shall use all commercially reasonable efforts to resume performance of its obligations as soon as practicable; provided, however, that neither Party shall be required to settle any labor dispute or disturbance.
 
17.3   Representation by Legal Counsel . Each Party hereto has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting of this Agreement. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption shall exist or be implied against the Party which drafted such terms and provisions.
 
17.4   Correspondence and Notices .
 
17.4.1   Ordinary Notices . Correspondence, reports, documentation and any other communication in writing between the Parties in the course of ordinary implementation of this Agreement shall be delivered in person, sent by facsimile transmission (receipt verified), or by overnight courier to the employee or representative of the other Party who is designated by such other Party to receive such written communication.
 
17.4.2   Extraordinary Notices . Extraordinary notices and communications (including, without limitation, notices of termination, force majeure, material breach, change of address) shall be in writing and delivered in person, or sent by facsimile transmission (receipt verified), overnight courier or by prepaid certified air mail, to the address of the addressee specified herein below.
 

All correspondence to Licensee shall be addressed as follows:

John Kelley, President and CEO
Phyxius Pharma, Inc.
14 Green Hill Road, Chester,
New Jersey 07930
USA

All correspondence to Orion shall be addressed as follows:

Orion Corporation
Visiting address: Orionintie 1, FI-02200 Espoo, Finland
Mailing address: P.O. Box 65, FI-02101 Espoo, Finland
Attn: President and CEO
Fax: +358 10 426-3815

 
 

 
 
                 Any Party may change its contact information herein by giving notice hereunder.
 
17.5   Amendment . No amendment, modification or supplement of any provision of this Agreement shall be valid or effective unless made in writing and signed by duly authorized officers of each Party.
 
17.6   Waiver of Compliance . The failure by any Party to comply with any obligation, covenant or condition under this Agreement may be waived by the Party entitled to the benefit thereof only by a written instrument signed by the Party on granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. The failure of any Party to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision, nor in any way to affect the right of such Party thereafter to enforce each and every such provision. No waiver of any breach of such provisions shall be held to be waiver of any other or subsequent breach.
 
17.7   Exhibits and Schedules . The exhibits and schedules attached to this Agreement are incorporated by reference into and made a part of this Agreement.
 
17.8   Severability . The illegality or partial illegality of any or all of this Agreement, or any provision thereof, shall not affect the validity of the remainder of the Agreement, or any provision thereof; the illegality or partial illegality of the Agreement shall not affect the validity of the Agreement; and the Parties shall replace any such illegal or partially illegal part or provision of this Agreement with a legal and enforceable substitute part or provision therefor that, as closely as possible, effectuates the original intent of the Parties in connection with such illegal or partially illegal part or provision of this Agreement.
 
17.9   Descriptive Headings . The descriptive headings of this Agreement are for convenience only and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.
 
17.10   Limitation of Liability . EXCEPT WITH RESPECT TO THIRD PARTY CLAIMS COVERED BY SECTION 15, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND ARISING FROM OR RELATING TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE LOSS OF PROFITS, REVENUE, BUSINESS OPPORTUNITY OR GOODWILL, OR INTERRUPTION OF BUSINESS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGES. Nothing in this Section 17.10 is intended to limit either Party’s obligations under Section 15 in relation to Third Party Claims. Notwithstanding the foregoing, the limitation of liability stipulated in this Section 17.10 shall not be applied with regard to any breach of the obligations of confidentiality set forth in this Agreement.
 
17.11   Governing Law . This Agreement shall be governed by and construed in accordance with the laws of Sweden, without giving effect to any choice or conflict of law provision.
 
 
 

 
 
17.12   Dispute Resolution.  Any dispute, controversy or claim arising out of or in connection with this Agreement, including the breach, termination or invalidity thereof, shall be finally settled by arbitration in accordance with the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce. The arbitral tribunal shall be composed of three (3) arbitrators appointed in accordance with the said rules. The seat of arbitration shall be London, England, and the language to be used in the arbitral proceedings shall be English.
 
17.13   Entire Agreement . This Agreement constitutes the entire agreement between the Parties with respect to the subject matter thereof and shall supersede all previous negotiations, commitments and discussions with respect to such subject matter.
 
17.14   Specific Performance . Each of the Parties acknowledges and agrees that the other Party may be damaged irreparably in the event any of the provisions of the Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court having jurisdiction over the Party and the matter in addition to any other remedy to which it may be entitled.
 
17.15   Independent Contractors . Both Parties are independent contractors under this Agreement. Nothing contained in this Agreement shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties. Neither Party shall have any express or implied power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever.
 
17.16   No Third Party Beneficiaries . All rights, benefits and remedies under this Agreement are solely intended for the benefit of Orion and Licensee, and no Third Party shall have any rights whatsoever to (i) enforce any obligation contained in this Agreement; (ii) seek a benefit or remedy for any breach of this Agreement; or (iii) take any other action relating to this Agreement under any legal theory, including but not limited to, actions in contract, tort (including but not limited to negligence, gross negligence and strict liability), or as a defense, set-off or counterclaim to any action or claim brought or made by the Parties.
 
17.17   Press Release . Neither Party shall make or procure or permit the making of any press release or other announcement or statement to the public with respect to this Agreement, except as required by law or applicable stock exchange rules, in which event such Party shall give the other Party a reasonable opportunity to review the form and content of such announcement prior to its scheduled release.
 
17.18   Counterparts . This Agreement may be executed in any number of counterparts, each of which need not contain the signature of more than one Party but all such counterparts taken together shall constitute one and the same agreement.
 
 
IN WITNESS WHEREOF, duly authorized representatives of the Parties have duly executed this Agreement to be effective as of the date first set forth above.
 
PHYXIUS PHARMA LLC
   
ORION CORPORATION
 
         
         
         
/s/
   
/s/ Liisa Hurme
 
Name:  John Kelley
   
Name:  Liisa Hurme
 
Title:   President, CEO
   
Title:    Senior Vice President
 
         
 
   
/s/ Mikko Kemppainen
 
 
   
Name: Mikko Kemppainen
 
 
   
Title:   Head of Legal Affairs
 
 
 
 
 

 

 
EXHIBIT A

PATENT RIGHTS


Levosimendan basic patent:

US 5,569,657, expiry Oct 29, 2013


Levosimendan i.v. formulation patents:

US 6,730,673, expiry Sept 08, 2020
US 6,943,164, expiry Sept 08, 2020
 
 
 
 
 
 

 
 
EXHIBIT B

STUDY PROTOCOL

Attached as a separate attachment.

 
Phyxius Pharma, INC.*
 
 
Clinical Protocol
 
A Double-Blind, Randomized, Placebo-Controlled Study of Levosimendan
in Patients with Left Ventricular Systolic Dysfunction Undergoing Cardiac
Surgery Requiring Cardiopulmonary Bypass
 
Protocol for Phase 3
 
 
Levosimendan

* Phyxius Pharma, Inc. The term “sponsor” is used throughout the protocol to represent these various legal entities, including Phyxius; the sponsor is identified on the Contact Information page that accompanies the protocol.


This study will be conducted under Food & Drug Administration IND regulations (21 CFR Part 312).
 
 

 

Issue/Report Date:             02 July 2012
Prepared by:
Douglas Hay, PhD, Phyxius Pharma, Inc.
Version No.:                       PYX-LVO-01, fully revised protocol, version 2.0
Amendment 1 Date:          05 July 2012
Amendment 2 Date:         24 April 2013


Confidentiality Statement
The information in this document contains trade secrets and commercial information that are privileged or confidential and may not be disclosed unless such disclosure is required by applicable law or regulations. In any event, persons to whom the information is disclosed must be informed that the information is privileged or confidential and may not be further disclosed by them. These restrictions on disclosure will apply equally to all future information supplied to you that is indicated as privileged or confidential .
 
 
 
 

 
 
INVESTIGATOR AGREEMENT
 
I have read this protocol and agree that it contains all necessary details for carrying out this study. I will conduct the study as outlined herein and will complete the study within the time designated.

I will provide copies of the protocol and all pertinent information to all individuals responsible to me who assist in the conduct of this study. I will discuss this material with them to ensure that they are fully informed regarding the study drug and the conduct of the study.

Coordinating Investigator:
 
Name (typed or printed):
 
Institution and Address:
 
   
   
   
Signature:
 
Date:
 
     
(Day Month Year)


Principal (Site) Investigator:
 
Name (typed or printed):
 
Institution and Address:
 
   
   
   
Telephone Number:
 
Signature:
 
Date:
 
     
(Day Month Year)


Sponsor’s Responsible Medical Officer:
 
Name (typed or printed):
 
Institution:
Phyxius Pharma, Inc
Signature:
 
Date:
 
     
(Day Month Year)


Note:
If the address or telephone number of the investigator changes during the course of the study, written notification will be provided by the investigator to the sponsor, and a protocol amendment will not be required.
 
 
 
1

 
 
TABLE OF CONTENTS
 
   
INVESTIGATOR AGREEMENT
    1  
             
   
SYNOPSIS
    6  
             
   
TIME AND EVENTS SCHEDULE
    9  
             
   
ABBREVIATIONS
    11  
             
  1  
INTRODUCTION
    12  
  1.1  
Background
    13  
     
1 .1.1      Levosimendan
    15  
     
1.1.2      Overall Rationale for the Study
    24  
  2  
OBJECTIVES
    25  
               
  3  
OVERVIEW OF STUDY DESIGN
    26  
               
  3.1  
Study Design
    26  
  3.2  
Study Design Rationale
    29  
     
3.2.1     Rationale for Enrolling Patients with Left Ventricular Systolic Dysfunction
    29  
     
3.2.2     Rationale for Study Drug Infusion Regimen
    33  
     
3.2.3     Rationale for Co-primary Endpoints
    35  
     
3.2.4      Rationale for Health Care Utilization Data Collection
    35  
     
3.2.5     Rationale for Measuring Biomarkers
    35  
  3.3  
Study Committees
    35  
     
3.3.1     Steering Committee (SC)
    35  
     
3.3.2     Data and Safety Monitoring Committee (DSMC)
    35  
               
  4  
STUDY POPULATION
    36  
  4.1  
General Considerations
    36  
  4.2  
Inclusion Criteria
    36  
  4.3  
Exclusion Criteria
    36  
  4.4  
Prohibitions and Restrictions
    38  
 
 
 
 
2

 
 
               
  5  
RANDOMIZATION AND BLINDING
    38  
  5.1  
Overview
    38  
  5.2  
Procedures
    39  
               
  6  
DOSAGE AND ADMINISTRATION
    40  
  6.1  
D ose Adjustment
    41  
     
6.1.1     Dose-limiting Events
    41  
     
6.1.2     Criteria for the Permanent Discontinuation of Study Drug Infusion
    42  
     
6.1.3     Re-initiating Study Drug
    42  
               
  7  
COMPLIANCE
    42  
               
  8  
CONCOMITANT THERAPY
    43  
               
  9  
STUDY EVALUATIONS
    44  
  9.1  
Study Procedures
    44  
     
9.1.1      Overview
    44  
     
9.1.2      Screening Phase
    45  
     
9.1.3     Presurgery Screening Period
    46  
     
9.1.4     Intraoperative Screening Period
    46  
     
9.1.5     Double-Blind Treatment Phase
    46  
     
9.1.6     Pre- and Intraoperative Period
    46  
     
9.1.7     Postoperative Period through Hospital Discharge
    46  
     
9.1.8     Double-Blind Follow-up Phase
    47  
  9.2  
Efficacy Evaluations
    47  
     
9.2.1     All-cause Mortality
    48  
     
9.2.2     Perioperative Myocardial Infarction (defined through postoperative Day 5)
    48  
     
9.2.3     Need for Dialysis (through Day 30)
    48  
     
9.2.4     Use of Mechanical Assist: Intra-Aortic Balloon Pump or Ventricular Assist Devices (through Day 5)
    49  
  9.3  
Efficacy Criteria
    49  
     
9.3.1      Composite Co-primary Efficacy Endpoints
    49  
     
9.3.2     Secondary Efficacy Endpoints
    49  
  9.4  
Pharmacokinetic Evaluation
    50  
  9.5  
Health Economic Evaluations
    50  
  9.6  
Safety Evaluations
    50  
  9.7  
Safety Criteria
    53  
  9.8  
Other Exploratory Evaluations
    54  
 
 
 
3

 
 
 
               
  10  
SUBJECT COMPLETION/WITHDRAWAL
    54  
  10.1  
Completion
    54  
  10.2  
Withdrawal from the Study
    54  
  11  
STATISTICAL METHODS
    55  
  11.1  
  Sample Size Determination and Statistical Analyses
    55  
     
11.1.1     General Analytic Considerations
    55  
     
11.1.2     Sample Size Determination
    56  
     
11.1.3     Randomization
    56  
  11.2  
Interim Analyses
    57  
  11.3  
Primary and Secondary Analyses
    58  
  11.4  
Other Efficacy Endpoint Analyses
    58  
  11.5  
Subgroup Analyses
    58  
  11.6  
Health Economics Analyses
    58  
  11.7  
Safety Analyses
    58  
  11.8  
Interim Analyses
    60  
               
  12  
ADVERSE  EVENT REPORTING
    60  
  12.1  
Definitions
    61  
     
12.1.1     Adverse Event Definitions and Classifications
    63  
     
12.1.2     Attribution Definitions
    63  
     
12.1.3     Events That Do Not Qualify as an Adverse Event
    64  
  12.2  
Procedures
    64  
     
12.2.1     All Adverse Events
    66  
     
1 2.2.2     Study-specific Adverse Events
    67  
     
12.2.3     Clinical Laboratory Abnormalities
    67  
     
1 2.2.4     Serious Adverse Events
    67  
     
12.2.5     Processing Primary Clinical Endpoint Safety Events
    69  
     
12.2.6     Pregnancies
    69  
     
12.2.7     Contacting Sponsor Regarding Safety
    70  
               
  13  
STUDY DRUG INFORMATION
    70  
  13.1  
Physical Description of Study Drugs
    70  
     
1 3.1.1     Levosimendan
    70  
     
13.1.2     Matching Placebo
    70  
  13.2  
Packaging
    70  
  13.3  
Labeling
    70  
  13.4  
Preparation and Handling
    71  
  13.5  
Drug Accountability
    72  
 
 
 
4

 
 
               
  14  
STUDY-SPECIFIC MATERIALS
    73  
               
  15  
ETHICAL ASPECTS
    73  
  15.1  
Study-Specific Design Considerations
    73  
  15.2  
Regulatory Ethics Compliance
    75  
     
15.2.1     Investigator Responsibilities
    75  
     
15.2.2     Independent Ethics Committee or Institutional Review Board (IEC/IRB)
    75  
     
15.2.3     Informed Consent
    77  
     
15.2.4     Privacy of Personal Data
    78  
               
  16  
ADMINISTRATIVE REQUIREMENTS
    79  
               
  16.1  
Protocol Modifications
    79  
  16.2  
Regulatory Documentation
    79  
     
16.2.1     Regulatory Approval/Notification
    79  
     
16.2.2     Required Prestudy Documentation
    79  
  16.3  
Subject Identification Register and Subject Screening Log
    81  
  16.4  
Case Report Form Completion
    81  
  16.5  
Data Quality Assurance
    81  
  16.6  
Record Retention
    82  
  16.7  
Monitoring
    82  
  16.8  
Study Completion/Termination
    83  
     
16.8.1     Study Completion
    83  
     
1 6.8.2      Study Termination
    83  
  16.9  
On-Site Audits
    83  
  16.10  
Use of Information and Publication
    84  
               
  17.  
REFERENCES
    85  
               
ATTACHMENTS
    89  
 
 
 
 
5

 
SYNOPSIS
 
Sponsor/Company
Phyxius Pharma
Individual Study Table referring to a specific Part of the dossier
 
Volume:
 
Page
      (for National Regulatory Authority use only)
Finished product:
Simdax (levosimendan) injection
Active ingredient:
(-)-(R)-[[4-(1,4,5,6-tetrahydro-4-methyl-6-oxo-3-pyridazinyl)phenyl]hydrazono]
propanedinitrile
Study code: PYX-LVO-01
Date: Version 2.0, 2 July 2012; Amendment 1, 5 July 2012, Amendment 2, Date: 24 April 2013
Study title: Multicenter, Randomized, Double-blind, Placebo-controlled Parallel Study to Evaluate the Safety and Efficacy of Levosimendan in Cardiac Surgery Patients at High Risk of Low Cardiac Output Syndrome (LCOS)
Investigators and study centers: Multicenter study
Development phase: 3
Objectives: To evaluate the efficacy of levosimendan compared with placebo in reducing the 30-day composite event rate of all-cause death, perioperative MI, need for dialysis, or use of mechanical assist (IABP or LVAD) in subjects with reduced ejection fraction undergoing cardiac surgery on CPB.
Methodology: Randomized, double-blind, placebo-controlled, multicenter study in patients with pre-existing left ventricular systolic dysfunction undergoing CABG with or without mitral valve surgery or isolated mitral valve surgery.
Sample size: 760
Diagnosis and main criteria for inclusion and exclusion:
Male and female patients who meet the following criteria will be enrolled:
Main Inclusion Criteria:
 
  Written, signed and dated informed consent
 
  ³ 18 years of age
 
  Scheduled CABG with or without mitral valve surgery or isolated mitral valve surgery
 
  Surgery will employ CPB pump
 
  LVEF £ 25% measured by nuclear scan, echocardiogram (ECHO), or ventriculogram, within 60 days before surgery
 
Main Exclusion Criteria:
 
  Restrictive or obstructive cardiomyopathy, constrictive pericarditis, restrictive pericarditis, pericardial tamponade, or other conditions in which cardiac output is dependent on venous return.
 
  Pulmonary disease (chronic obstructive pulmonary disease [COPD], asthma, or other condition) that, in the opinion of the investigator, represents an independent clinical risk to the cardiac surgery and recovery of the patient.
 
  Evidence of systemic bacterial, systemic fungal, or viral infection within 72 hours before surgery.
 
  Chronic dialysis at baseline (either continuous venovenous hemo(dia)filtration, hemodialysis, ultrafiltration, or peritoneal dialysis with 30 days of CABG/mitral valve surgery).
 
  Estimated glomerular filtration rate (eGRF) < 30 mL/kg/min or evidence of worsening renal function before CABG/mitral valve surgery.
 
  Weight ³ 170 kg.
 
 
 
6

 
 
 
 
 
 
  Patients whose systolic blood pressure (SBP) cannot be managed to ensure SBP > 90 mmHg at initiation of study drug.
 
  Heart rate ³ 120 bpm, persistent for at least 10 minutes at screening.
 
  Hemoglobin < 80 g/L within 4 hours before baseline.
 
  Serum potassium < 3.5 mmol/L at baseline.
 
  Mechanical assist device (IABP, LVAD) placed before randomization or pre-planned to be used during or after CABG/mitral valve surgery.
 
  Patients with aortal femoral inclusive disease that would prohibit use of IABP.
 
  Planned aortic valve repair or replacement.
 
  Liver dysfunction with Child Pugh Class B or C..
 
  Patients having severely compromised immune function.
 
  Pregnant, suspected to be pregnant, or breast-feeding.
 
  Known allergic reaction or sensitivity to levosimendan or excipients.
 
  A history of Torsades de Pointes.
 
  Received commercial levosimendan within 30 days before the planned start of study drug.
 
  Received an experimental drug or used an experimental medical device within 30 days before the planned start of study drug.
 
  Employees of the investigator or study center, with direct involvement in the proposed study or other studies under the direction of that investigator or study center, as well as family members of the employees or the investigator.
Investigational product, dose and mode of administration: Levosimendan, supplied as a concentrated solution (2.5 mg/mL), or matching placebo will be administered intravenously at 0.2 µg/kg/min for the first hour with adjustment of the dose to 0.1 µg/kg/min for an additional 23 hours.
Duration of treatment: From infusion initiated prior to surgery (no later than the initiation of surgical infusion) and continuing for a total infusion duration of 24 hours.
Reference product, dose and mode of administration: Matching placebo.
 
 
 
7

 
 
Criteria for Evaluation:
Co-primary Endpoints:
 
  The all-cause death at 30 days or use of mechanical assist device (IABP, LVAD) (through Day 5)
 
  The composite endpoint of all-cause mortality (at 30 days), or perioperative nonfatal MI (through Day 5) (CK-MB >10xULN or >100 ng/mL, CK-MB >5xULN or 50 ng/mL with new Q wave (>0.04 seconds wide   in two contiguous leads) or left bundle branch block), need for renal dialysis (through Day 30), or use of mechanical assist device (IABP or LVAD following the start of surgery for poor cardiac function despite inotropic support and adequate fluid replacement) (through Day 5)
 
Secondary Endpoints:
 
  Duration of intensive care unit/critical or coronary care unit (ICU/CCU) LOS during the index hospitalization
 
  Incidence of LCOS defined as cardiac index £ 2.0 L/min/m 2 for ³ 30 minutes despite optimal fluid balance and maximal inotropic support (dobutamine, milrinone, epinephrine, norepinephrine), with the fluid balance and maximal inotropic dose at the investigator’s discretion
 
  Postoperative use of secondary inotrope (dobutamine, milrinone, epinephrine, and norepinephrine) associated with index surgical procedure
 
Safety Endpoints:
 
  Occurrence of all-cause mortality from randomization through Day 90
 
  Postoperative incidence of atrial fibrillation
 
Other Endpoints:
 
  Rehospitalization for any cause through Day 30
Evaluation and statistical methods: Sample size is based on assumed composite primary endpoint event rate (all-cause mortality, MI, dialysis, mechanical assist) of 32% for placebo, 35% effect size for levosimendan, significance level of 0.01 and at least 80% power. A total sample size of 760 should provide 201 events.  This same sample size will provide 113 events for 61% power to detect a statistically significant difference in the dual endpoint (mortality, mechanical assist) assuming an 18% event rate in placebo-treated patients, a 35% effect size and a significance level of 0.04. The assumed event rates and effect size for co-primary endpoints are conservative compared with prior trials and registries in similar patient populations. A simulation with 10,000 iterations using the above assumptions indicated a combined ~86% power to demonstrate that levosimendan treatment is significantly better than placebo in one or both of the co-primary endpoints.
Expected number of events is derived using event rates and estimated sample sizes per group.   Incidence rates and treatment effects for composite primary endpoint will be estimated at 30 days from randomization. Odds ratios and confidence intervals (96% CI for the dual co-primary endpoint and 99% CI for the quad co-primary endpoint) estimated from a logistic regression model will be used to compare treatments with regard to the composite primary endpoint. The study will use a group sequential design.
Interim evaluations for safety will be provided for a data and safety monitoring committee (DSMC).  The first DSMC review will be conducted after the first 200 enrolled patients have completed 30 days of follow-up.  In addition to reviewing patient safety, the DSMC will review event rates.  Should the event rate in the control arm be below the planned 32%, the DSMC may recommend an increase in the percentage of patients with LVEF ≤20% to bring the event rate to the planned 32%.     Interim analyses, including a test for efficacy and futility, will be conducted after 50% and 70% of the 113 study events for the co-primary endpoint of all-cause mortality or mechanical assist (57 and 80 events, respectively).
Secondary binary endpoints will be tested using odds ratios and 95% CIs. Time-to-event endpoints are evaluated using hazard ratios and 95% CIs. All tests will be two tailed and treatments compared based on the intent-to-treat populations.

 
 
8

 
TIME AND EVENTS SCHEDULE
 
Phase
Screening
Treatment
Post-treatment
Assessments
Before Surgery
Intra-operative
Intra-operative
Postoperative (In Hospital)
Day 30
(+5 d)
Phone
Contact
Day 90
(+5 d)
Phone
Contact
Within
Post-induction
Anesthesia
Post-induction
Anesthesia
(Day 1)
Day
Within
12 h Before Discharge
30 Days
24 h
1
Post-surgery
2
3
5
Informed consent
X
                   
Inclusion/exclusion
X
X
                 
LVEF
X a
                   
Medical history
X
                   
Record preplanned surgeries
X
                   
Physical examination
X
                   
Serum b -hCG
pregnancy test b
X
                   
Urine pregnancy test b
 
X
                 
CK-MB, CK, troponins-Local lab c
 
X
   
X   (12-24 hrs)
X
X
X
     
Serum chemistry-Local lab d
X
X
                 
Child Pugh Class
X
                   
PK sample e
       
X
X
         
Vital signs
 
X
     
X
X
 
X
   
Body weight
 
X
                 
12-lead ECG f
 
X
 
Post-op day 1 and as needed for new-onset atrial fibrillation/ventricular arrhythmia f
X f
     
Hematology and coagulation local lab d
 
X
           
X
   
Baseline BNP or NT pro-BNP as available at local lab d
 
X
     
X
         
Right heart catheter and blood pressure measurements g
   
X
 
X
           
Randomization h
     
X
             
Study drug administration i
     
X    ¬ ¾ ¾ ®   X
     
Urine output
     
  X ¬¾¾¾¾¾¾¾® X
         
Adverse events
Collected continuously from the time an informed consent is signed through Day 14 (or through discharge, if earlier) for adverse events and through Day 30 for serious adverse events.
 
Concomitant procedures j
     
 X ¬ ¾ ¾ ¾ ¾ ®   X
           
Secondary Inotropes k
     
 X ¬ ¾ ¾ ¾ ¾ ®   X
           
Concomitant medications
   
Continuous
 
Health care resource utilization l
     
X
       
X
X
 
Follow-up contact
                 
X m
X n
 
 
 
9

 
 
TIME AND EVENTS SCHEDULE ( CONTINUED )
 
a Within 60 Days before surgery and as close to surgery day as possible, the subject must have a documented left ventricular ejection fraction (LVEF) £ 25% (either by LV angiogram, or by echocardiogram or by radionuclide ventriculography-in that order). If more than one documented LVEF is available, the one closest to the surgery date should be used for screening purposes.
b Pregnancy tests for women of childbearing potential only. Additional serum or urine pregnancy testing may be performed as required by local regulations (if performed, pregnancy tests must be negative for subjects to continue in the study). Pregnancy test results must be available before study drug administration.
c Blood samples for creatine kinase (CK), CK-MB fractions and troponins will be sent to the local laboratory within 12-24 hours post-surgery (post-op day 1) and on post-op days 2, 3 and 5.
d Samples for serum chemistry (sodium, bicarbonate, potassium, blood urea nitrogen, creatinine, aspartate aminotransferase [AST], alanine aminotransferase [ALT], gamma-glutamyltransferase [GGT], CK, lactic acid dehydrogenase [LDH], uric acid), hematology (hematocrit, hemoglobin, WBC count with differential, platelet count) and coagulation (prothrombin time and partial thromboplastin time) studies by local laboratory. Baseline B-type natriuretic peptide (BNP ) or N-terminal pro-BNP (NTpro-BNP) will be analyzed as available at local labs. At the screening visit and within 24 hours before surgery, a separate blood sample for serum chemistry (see footnote c for tests) will be collected and sent to the local laboratory. The serum chemistry results from the local laboratory collected within 24 hours before surgery will be used as the baseline for subsequent local laboratory tests. From Day 1 to discharge and through to Day 30, if additional blood samples for serum chemistry analysis are taken as part of standard of care, they will be sent to and analyzed by the local laboratory.
e In patients participating in the pharmacokinetic substudy: Blood samples will be taken at the end of study drug infusion and at 48 hours following initiation of study drug, and on Day 2 and Day 4 or at hospital release for pharmacokinetic analysis
f     Investigators will evaluate/record new Q waves (>30ms) and left bundle branch block.
g Right heart catheter and blood pressure measurements will be noted if available and will include: systolic, diastolic, and mean pulmonary artery pressures, central venous pressure, systemic systolic blood pressure, cardiac output and index before and 12-24 hour after starting the drug and prior to Swan-Ganz catheter removal.
h On the day of surgery, following acquisition of vital signs including blood pressure measurements, subjects will be randomly assigned to a treatment group using an interactive voice response system (IVRS) system after they have met all of the inclusion criteria and none of the exclusion criteria.
i Start study drug (levosimendan or placebo) as soon as possible after randomization, after arterial line insertion, and before skin incision. If not already in place, a Swan-Ganz catheter should be inserted as soon as possible after study drug initiation. Administer as a fixed-rate infusion of 0.2 µg/kg/min for first hour with adjustment of the dose to 0.1 µg/kg/min for an additional 23 hours.
j Document other concomitant procedures performed during surgery including Maze (for the treatment of atrial fibrillation), Dor (for LV remodeling), intra-aortic balloon pump (IABP) placement and ventricular assist device (VAD) use, and/or type and amount of fluid challenges.
k Document the need for a secondary inotrope (dobutamine, milrinone, epinephrine, norepinephrine) during surgery and through weaning from the CBP.  Record time of dose (initiation and conclusion) and peak dose.
l Health care resource utilization including time in operating room, length of stay (LOS) in intensive care unit/critical or coronary care unit (ICU/CCU) LOS during index hospitalization, rehospitalizations for any medical cause that occur from randomization through Day 30. Dates and reasons for hospitalizations will be recorded through Day 30. Dates and times for the index operation (time in the operating room and ICU/CCU admission and release following the index hospitalization/surgery will be recorded.
m Subjects will be contacted or have their medical records reviewed at Days 30 to collect information on need for postoperative dialysis (start and stop dates, and type) and survival status. Subjects who withdraw from the study will be contacted or will have their medical records reviewed unless they specifically withdraw their consent for further contact or for medical record review.
n Subjects will be contacted or have their medical records reviewed at Days 90 to collect information on survival status after hospital discharge. Subjects who withdraw from the study will be contacted or will have their medical records reviewed unless they specifically withdraw their consent for further contact or for medical record review.
 
 
 
10

 
 
ABBREVIATIONS
 
BNP
B-type natriuretic peptide
CABG
coronary artery bypass graft
CCU
critical or coronary care unit
CI
confidence interval
CK
creatine kinase
CPB
cardiopulmonary bypass
DCRI
Duke Clinical Research Institute
DSMC
Data and Safety Monitoring Committee
ECHO
echocardiogram
eCRF
electronic case report form
EDC
electronic data capture
FDA
Food and Drug Administration
GCP
Good Clinical Practices
IABP
intra-aortic balloon pump
ICH
International Conference on Harmonization
ICU
intensive care unit
IEC
Independent Ethics Committee
IRB
Institutional Review Board
i.v.
intravenous
MI
myocardial infarction
MITT
modified intent-to-treat
ITT
intent-to-treat
IVRS
interactive voice response system
LBBB
left bundle branch block
LCOS
low cardiac output syndrome
LOS
length of stay
LVAD
left ventricular assist device
LVEF
left ventricular ejection fraction
NYHA
New York Heart Association
OBF
O’Brien-Fleming type of a spending function
PK
pharmacokinetics
RIFLE
risk, injury, failure, loss, and end-stage renal disease
SBP
systolic blood pressure
SC
Steering Committee
   

 
 
11

 
 
1.  
INTRODUCTION
 
Levosimendan (Simdax Ò ) is a calcium sensitizer with vasodilatory and cardioprotective properties. Levosimendan exerts its positive inotropic effect by increasing calcium sensitivity of myocytes by binding to cardiac troponin C in a calcium-dependent manner. It also has a vasodilatory effect, by opening adenosine triphosphate (ATP)-sensitive potassium channels in vascular smooth muscle, to cause smooth muscle relaxation. The combined inotropic and vasodilatory actions result in an increased force of contraction, decreased preload and decreased afterload. Moreover, by opening also the mitochondrial ATP-sensitive potassium channels in cardiomyocytes, the drug exerts a cardioprotective effect.
 
Levosimendan has been marketed in Sweden since 2000 for acute decompensated heart failure. Currently, levosimendan has marketing authorisation in over 50 countries worldwide; more than 500,000 patients have been treated with levosimendan. The drug is not approved in the United States.
 
Most of the regulatory studies with levosimendan have been performed in patients with acute decompensated chronic heart failure and, to a lesser extent, in patients with left ventricular failure due to an acute myocardial infarction (MI), cardiac surgery and pulmonary hypertension. Overall, the clinical research program has included nearly 3500 patients.
 
Levosimendan has been assessed in numerous clinical studies by independent investigators throughout the world. The focus of these investigator-initiated studies has lately been on the use of levosimendan in an operative setting.
 
A number of modest sized randomized controlled studies of levosimendan in cardiac surgery patients have demonstrated that low dose infusions provide rapid and sustained hemodynamic improvements compared to standard inotrope regimens. These improvements have consistently been associated with reductions in morbidity and mortality.
 
For more detailed information, refer to the Investigator's Brochure for Levosimendan. 1
 
The term sponsor used throughout this document refers to the entities listed in the Contact Information page(s), which will be provided as a separate document.
 
1.1  
Background
 
Preserving heart function during and immediately following cardiac surgery, is a major goal of current perioperative therapies. Intensive hemodynamic monitoring is employed to detect and assess the mechanisms underlying perioperative cardiovascular dysfunction early. A variety of vasoactive drugs and device therapies are employed to maintain hemodynamic performance and ameliorate dramatic departures from that required to preserve myocardium function and prevent end organ damage. Despite the available therapies, low cardiac output syndrome (LCOS) remains a substantial risk in cardiac surgery. LCOS has been described in 3-14% of coronary artery bypass graft (CABG) cases, and is associated with a 10-17 fold increase in mortality. 2
 
Over the past several decades, the risk profile of patients undergoing cardiac surgery has increased 3 in part due to mounting evidence suggesting that patients with coronary artery disease and reduced left ventricular function benefit from surgical revascularization over medical therapy. 4, 5 Patients with impaired left ventricular function undergoing cardiac surgery have relatively high rates of mortality and other adverse events, including need for dialysis or mechanical support. Shahian et al. 6 used the Society of Thoracic Surgeons National Adult Cardiac Surgery Database (STS NCD) to derive a risk model for cardiac surgery using the 700,000 isolated CABG procedures performed between 2006 and 2008. They found that each 10-unit decrease in left ventricular ejection fraction ( LVEF) was associated with a 19% increase in the odds of death, and an 8% increase in the odds of developing renal failure or new dialysis. Absolute rates of these events according to LVEF are summarized in Table 1. Rates of postoperative need for intra-aortic balloon pump (IABP) or left ventricular assist device (LVAD) were not reported in this study.
 
 
Table 1.Incidence of 30-day mortality and renal failure in STS database, NCD – CABG-only.
 
LVEF
N (% of cohort)
Mortality
Renal Failure
<25%
25,323 (3.3)
7.2%
8.0%
25-34%
57,460 (7.4)
4.6%
6.1%
35-44%
108,623 (14.0)
3.0%
4.7%
45-54%
189,478 (24.5)
1.9%
3.4%
³ 55%
351,455 (45.4)
1.5%
2.7%

 
 
12

 
 
Two retrospective observational studies have been published in the last ten years which specifically report on outcomes in patients with a low LVEF undergoing CABG in the US (Table 2). Topkara et al. 7 analyzed 55,515 CABG procedures recorded in the New York State database between 1997 and 1999. Filsoufi et al. 8 reported on the outcomes of 2,725 patients undergoing CABG at a single center between 1998 and 2005. Eighteen percent (n=495) had a LVEF £ 30%. Outcomes from these two studies are summarized in Table 2. The consistency of the findings suggests that patients with low LVEFs are at a 2-4 fold higher risk of adverse events, including death.
 
 
Table 2.Outcomes in low-LVEF patients undergoing CABG, observational studies.
 
Study
N (%)
In-hospital Mortality
Renal Failure
IABP or LVAD
Topkara et al. 7
       
LVEF £ 20%
2,442 (4.4)
6.5%
2.5%
9.1%
LVEF 21-30%
5,772 (10.4)
4.1%
1.5%
5.5%
LVEF 31-40%
11,365 (20.5)
2.7%
1.2%
2.7%
LVEF ³ 40%
35,936 (64.7)
1.4%
0.6%
1.7%
Filsoufi et al. 8
       
LVEF ≤ 30%
495 (18)
3.6%
1.4%
NR
LVEF > 30%
2,230 (82)
1.4%
0.7%
NR
 
NR = not reported
 
Similar rates of adverse outcomes are evident in several contemporary clinical trials which have studied moderate to high risk patients undergoing CABG. The PRIMO trial enrolled 3,099 patients undergoing CABG or combined CABG+valve surgery; 473 patients had pre-existing congestive heart failure. The 30-day mortality rate in the overall trial was 4.6%, and 5.3% in the cohort with preoperative congestive heart failure. 9 An unpublished review of the data from PRIMO performed by the Duke Clinical Research Institute (DCRI) shows the composite outcome of death, myocardial infarction (MI), new dialysis, or need for LVAD or IABP occurred in 32% of subject with an LVEF < 30%. The NAPA trial enrolled 279 patients with low LVEF (<35%) undergoing CABG. 10 The 30-day mortality rate in NAPA was 5.7%. The composite of death or need for IABP or LVAD occurred in 10-12% of patients. Finally, the STITCH trial compared medical therapy and CABG in patients with coronary artery disease and LVEF ≤ 35%. 5 Thirty day mortality in the 610 patients randomized to CABG was 3.8%. Unpublished analyses of STITCH data performed by the DCRI shows the rate of death in patients with LVEF < 35% was 6.8%, with the composite of death and LVAD or IABP use occurring in 23.5% of subjects. Recent reviews of outcomes in mitral valve surgery patients have demonstrated LVEF dysfunction substantially increases morbidity and mortality. 11, 12
 
 
13

 
 
The mechanism by which reduced ejection fraction is associated with higher rates of death, dialysis, and use of mechanical support is likely related to the development of post-cardiotomy myocardial dysfunction. This phenomenon has been described by some as the LCOS. LCOS has typically been defined as the need for either inotropic or mechanical support in order to be weaned from cardiopulmonary bypass (CPB) or in the intensive care unit (ICU) because of hemodynamic compromise. Reduced ejection fraction has been shown to be a strong predictor of LCOS with an odds ratio of 3.5 for an LVEF < 20%, and an odds ratio of 2.0 for an LVEF of 20-39%. 11
 
Current standards in the management of high risk patients undergoing cardiac surgery fall into two categories: pre- and intraoperative prophylaxis against myocardial dysfunction and hemodynamic compromise, and postoperative inotropic and mechanical support in the setting of manifest hemodynamic deterioration.
 
Standard management of post-cardiac surgery patients includes the use of volume expanders or diuretics to manage volume status, vasoactive agents to support blood pressure, inotropic agents to increase cardiac output, and mechanical devices such as IABP or LVAD to improve cardiac output. Available pharmacologic agents include phosphodiesterase inhibitors (milrinone), antidiuretic hormone analogues (vasopressin), alpha-adrenergic agonists (phenylephrine), and catecholamines (epinephrine, norepinephrine, dopamine, dobutamine, and dopexamine). There is a paucity of evidence to guide physicians in the choice of specific pharmacologic therapies. This lack of evidence has led to a high degree of geographic variability in the use of specific vasoactive or inotropic therapies. 13 Furthermore, both catecholamines and phosphodiesterase inhibitors are associated with increased postoperative myocardial oxygen consumption and arrhythmogenesis, and analyses of patients requiring their use have shown higher rates of mortality and other cardiac morbidities including arrhythmias. 14, 15
 
 
14

 
 
Although there is a general recommendation to employ the use of mechanical assistance, particularly with an IABP, early after recognition of LCOS, there is no evidence to suggest that outcomes are improved. 16 A meta-analysis of IABP use in high risk surgical patients suggests that IABP is associated with reduced in-hospital mortality with an odds ratio of 0.18. 17 Retrospective analyses which have adjusted for preoperative risk have shown mixed results as to the benefit of prophylactic IABP use. 18, 19 IABP use is also associated with complications including prolonged ICU stay, bleeding, sepsis, and development of an ischemic limb. 20 IABP are employed in approximately 5% of cardiac surgery cases, 13 and outcomes in patients who require IABP use are poor with an estimated mortality rate of 35%. 20
 
1.1.1  
Levosimendan
 
Levosimendan is a promising new agent for the perioperative treatment of cardiac surgery patients to maintain hemodynamic performance and preserve myocardium function and prevent end organ damage. The positive inotropic, vasodilatory and eventual cardioprotective effects combined with neutral effects on myocardial oxygen consumption and intracellular calcium concentrations, make it an ideal candidate for further investigation. The current comparative data on levosimendan with the traditional inotropic agents, suggest that the drug has potential to become a drug of choice among the agents with inotropic properties.
 
1.1.1.1  
Metabolism and Pharmacokinetics
 
Levosimendan is extensively metabolized before excretion into urine and feces. The main pathway is conjugation with glutathione to form inactive metabolites. The minor pathway (approximately 6% of the total levosimendan dose) is reduction in the intestine to an intermediate metabolite OR-1855, which is further acetylated to an active metabolite, OR-1896. 21 The terminal elimination half-life of levosimendan is about 1 hour both in healthy volunteers and in patients with heart failure and it rapidly disappears from the circulation after the infusion is stopped. The elimination half-life of the metabolite OR-1896 is 70-80 hours in heart failure patients and the maximum concentrations are only seen 2-4 days after starting a 24-hour infusion. Thereafter the metabolite is slowly eliminated within two weeks.
 
The metabolite OR-1896 has been shown to have hemodynamic and pharmacologic properties similar to those of the parent drug in preclinical models, whereas the metabolite OR-1855 had only minor pharmacodynamic effects. 22-26 Although patients with a rapid acetylator phenotype produce more OR-1896 than slow acetylators, the hemodynamic responses are similar in the two acetylator types, and no dose adjustments are needed in clinical practice. 27
 
 
15

 
 
In patients undergoing cardiac surgery, the formation of the metabolites OR-1855 and OR-1896 has been shown to be delayed. Compared to the 2-4 days after initiation of a 24-hour levosimendan infusion in chronic heart failure patients, 28 the maximum OR-1896 concentrations were only seen 6 days after starting the infusion in patients undergoing cardiac surgery. 29 The reason is not fully known, but may be related to initiation of therapy following a fasting state and the use of broad-spectrum antibiotics. These conditions reduce populations of intestinal bacteria involved in the acetylation of levosimendan, leading to reduced/delayed formation of metabolites OR-1855 and OR-1896. The steady state plasma concentrations of the parent drug were also somewhat lower in cardiac surgery patients than in chronic heart failure with the AUC 14% lower with similar dosing (approximately 1200 vs. 1400 h × ng/mL, respectively). 29
 
1.1.1.2  
Pharmacodynamics
 
Levosimendan produces significant, dose-dependent increases in cardiac output, stroke volume and heart rate, and decreases in pulmonary capillary wedge pressure, mean blood pressure, mean pulmonary artery pressure, mean right atrial pressure and total peripheral resistance. 30
 
The effect of levosimendan on hemodynamic variables was clearly evident already at the end of a 5-min bolus infusion. 31 There is no sign of development of tolerance even with a prolonged infusion up to 48 hours. 32 Due to the formation of the active metabolite, the hemodynamic effects are maintained several days after stopping levosimendan infusion. 33
 
Compared with dobutamine, levosimendan produces a slightly greater increase in cardiac output and a profoundly greater decrease in pulmonary capillary wedge pressure. 34, 35 In contrast to dobutamine, the hemodynamic effects are not attenuated with concomitant beta-blocker use. 35 It has also been shown that at 48 hours after the start of infusion, a 24-hour infusion achieves superior hemodynamic effects over a 48-hour dobutamine infusion in patients with severe acute decompensated heart failure on beta-blockers. 34
 
 
16

 
 
Several studies indicate that levosimendan produces a rapid and sustained decrease in natriuretic peptides. Lilleberg et al. 33 found that a 24-hour levosimendan infusion induced a 40% decrease in plasma N-terminal atrial natriuretic peptide (NT-proANP) and N-terminal pro-BNP (NT-proBNP) levels and the treatment effect was estimated to last up to 16 and 12 days, respectively.
 
The beneficial effects of levosimendan on hemodynamics and neurohormones are not associated with any significant increase in myocardial energy consumption, as evidenced using dynamic positron emission tomography (PET) in hospitalized patients with NYHA III-IV heart failure. 36 Similarly, bolus doses of 8 µg/kg or 24 µg/kg did not increase myocardial oxygen consumption in postoperative patients, although cardiac function markedly improved. 37
 
Levosimendan also possesses anti-stunning effects. This was shown in 24 patients with an acute myocardial infarction (AMI) who had undergone percutaneous transluminal coronary angioplasty (PTCA). 38 A bolus dose of levosimendan improved the function of stunned myocardium, as evidenced by a substantial reduction in the number of hypokinetic segments in the left ventricular wall compared to placebo.
 
1.1.1.3  
Symptoms in Heart Failure Patients
 
In the LIDO study in 203 NYHA III-IV heart failure patients, symptoms improved equally well in the levosimendan and dobutamine treated patients at 24 hours after start of infusion (68% and 59%, p = 0.865) groups, respectively, while fatigue improved in 63% and 47% (p = 0.155), respectively. 35
 
In the REVIVE II study in 600 patients hospitalized for worsening heart failure, symptoms over the 5-day assessment period improved significantly more with levosimendan than with placebo. 39 The primary endpoint was a composite consisting of patients’ subjective symptom assessments (at 6 hours, 24 hours, and 5 days) and signs of worsening symptoms (including death) during the 5 days after starting a 24-hour trial drug infusion. Improvement was observed more frequently (19 vs. 15%) and worsening less frequently (19 vs. 27%) in levosimendan treated patients compared with placebo (p = 0.015). 40 The improvement in the composite endpoint was accompanied by a lower need for rescue medication in the levosimendan group. 40, 41
 
 
17

 
 
1.1.1.4  
Mortality in Heart Failure Patients
 
In the LIDO study in 203 heart failure patients comparing levosimendan to dobutamine and in the placebo-controlled RUSSLAN study with 504 patients with a recent AMI and left ventricular dysfunction, a significant mortality benefit with levosimendan was observed. These favorable results were not, however, confirmed in two large-scale studies where levosimendan was compared with placebo (REVIVE II, N = 600) and dobutamine (SURVIVE, N = 1327). In the former, a numerical disadvantage and in the latter a numerical advantage with levosimendan was seen. Recent independent meta-analysis with data from 45 randomized studies and 5480 patients found a statistically significant survival benefit of levosimendan both compared to placebo and dobutamine. 42
 
1.1.1.5  
Clinical Safety in Heart Failure Patients
 
Levosimendan infusion has generally been rather well tolerated in this very ill patient population. A full summary of the safety of levosimendan in heart failure patients is included in the Levosimendan (Simdax) Investigator Brochure. 1
 
In REVIVE II and SURVIVE studies, hypotension was more frequently seen with levosimendan compared with placebo, but not when compared with dobutamine. Levosimendan was also associated with a higher incidence of atrial fibrillation both compared with placebo and with dobutamine. However, conflicting results have been presented with regard to ventricular arrhythmias. In REVIVE II a higher incidence of ventricular tachycardia was observed with levosimendan compared with placebo. In SURVIVE, ventricular tachycardia was observed with similar frequency in the levosimendan and dobutamine groups. 43 In both studies, cardiac failure as an adverse event was less frequent in levosimendan arm, although the result was statistically significant only in SURVIVE.
 
The changes in safety laboratory variables have been modest in levosimendan studies. Clinically insignificant decreases in hemoglobin, erythrocyte and red blood cell counts have been observed. Also decrease in potassium levels have been seen with levosimendan more often than with comparators.
 
1.1.1.6  
Clinical Efficacy in Cardiac Surgery Patients
 
Orion has conducted four studies with levosimendan in cardiac surgery. In addition, numerous investigator-initiated studies have been conducted. These studies suggest that levosimendan protects the myocardium and improves tissue perfusion, while minimizing the tissue damage during the cardiac surgery and reperfusion periods.
 
 
 
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1.1.1.7  
Orion-sponsored studies
 
The first three Orion-sponsored studies utilized bolus doses only or were performed in stable patients and are not described in detail. These mechanistic studies confirmed that that levosimendan increases cardiac output and stroke volume and reduces peripheral vascular resistance also in cardiac surgery patients. No increase in myocardial oxygen consumption or impairment of diastolic function was observed. 36, 37
 
In the fourth study, levosimendan was compared with placebo in a randomized double-blind study of 60 patients with 3-vessel coronary disease and LVEF < 50%. 29   Levosimendan with a bolus of 12 μg/kg was started immediately after induction of anesthesia , followed by an infusion of 0.2 μg/kg/min for 24 hours. Primary weaning, the primary endpoint, was successful in 22 patients (73%) in the levosimendan group and 10 patients (33%) in the placebo group (p = 0.002). The odds ratio for failure in primary weaning was 0.18 (95% confidence interval [CI], 0.06 to 0.55). Four patients in the placebo group failed the second weaning and underwent IABP compared with none in the levosimendan group (p = 0.112).
 
Levosimendan treatment was associated with lower levels of lactate, indicating a better tissue perfusion, and associated with lower levels of troponin T, indicating less myocardial damage. Fewer inotropic agents, but more vasopressors, were needed in the levosimendan-treated patients.
 
1.1.1.8  
Investigator-initiated Studies
 
Levosimendan was compared to milrinone in a randomized, blinded study in patients undergoing elective cardiac surgery with CPB. In this study, 30 patients with preoperative LVEF < 30% were randomized to milrinone (mean 0.5  m g/kg/min for 83 hours, n = 15) or to levosimendan (mean 0.1  m g/kg/min for 19 hours, n = 15). 44 Study drugs were started immediately after the release of the aortic crossclamp and all patients received additional dobutamine 5 m g/kg/min. Levosimendan showed similar hemodynamic effects to milrinone on stroke volume during the first hours after starting the surgery, immediately after the end of CPB, and significantly more pronounced effect at 12, 24 and 48 hours after arrival at the ICU.
 
 
19

 
 
Significantly higher dobutamine and norepinephrine use and significantly longer time on IABP and tracheal intubation time in the milrinone group were reported. Mortality was numerically higher in milrinone treated patients.
 
Levin et al. 45 performed an open-label, randomized study in cardiac surgery patients developing postoperative LCOS. Levosimendan, 10 μg/kg for 1 hour (i.e. 17 μg/kg/min), followed by 0.1  μg/kg/min for 24 hours or dobutamine (5-12.5 μg/kg/min) were started to treat LCOS. Diagnosis of LCOS was made within 6 hours after operation with the following criteria: pulmonary capillary wedge pr essure ³ 16 mmHg, cardiac index < 2.2 L/min/m 2 , and mixed venous saturation < 60%. In total, 1004 consecutive heart surgeries were evaluated. LCOS was detected in 137 patients (13.6%) and 69 patients were randomized to levosimendan and 68 to dobutamine. Levosimendan showed superior effect on cardiac index and mixed venous saturation, less need for an additional inotropic drug (8.7 vs. 36.8%; p < 0.05), need for a vasopressor (11.6 vs. 30.9%; p < 0.05), or need for balloon counterpulsation (2.9 vs. 14.7%; p < 0.05). More importantly, the outcome effects were in favor of levosimendan; statistically significantly fewer perioperative MIs, acute renal failures, ventricular arrhythmias, prolonged ventilator assistance and sepsis were observed in the levosimendan group. Also mortality (8.7 vs. 25%) and length of ICU stay (66 vs. 158 h) were significantly (p < 0.05) lower in levosimendan treated patients.
 
Tritapepe et al. 46 performed a randomized, double-blind, placebo-controlled study in 106 patients undergoing elective multivessel CABG. Levosimendan, administered as a bolus only (24  m g/kg over 10 minutes), or placebo was given before the initiation of CPB. Significantly higher postoperative values of mean arterial pressure, cardiac index and cardiac power index and lower systemic vascular resistance index were observed in the levosimendan group. Troponin I increases were significantly lower with levosimendan. The need for inotropic agents was greater; the time on ventilator and length of ICU stay were longer in the placebo group.
 
Lahtinen et al. 47 reported a randomized, double-blind, placebo-controlled study in 200 patients assigned to undergo heart valve or combined heart valve and CABG surgery. These patients had a relatively high normal LVEF (mean 55%). Levosimendan was given as a 24-hour infusion started at the induction of anesthesia with a 24 µg/kg bolus over 30 min and thereafter at a dose of 0.2 µg/kg/min. The primary outcome measure was heart failure, defined as cardiac index < 2.0 L/min/m 2 or failure to wean from CPB necessitating inotrope administration for at least 2 hours postoperatively after CPB. Heart failure was less frequent in the levosimendan compared to the placebo group: 15% in the levosimendan and 58% in the placebo group, p < 0.001. In line, a rescue inotrope, epinephrine, was needed less frequently in the levosimendan group (risk ratio 0.11; 95% CI 0.01-0.89), and IABP was utilized in one patient (1%) in the levosimendan and in nine patients (9%) in the placebo group (risk ratio 0.11; 95% CI 0.01-0.87). The cardiac enzymes (CK-MB isoenzyme mass) indicating myocardial damage were lower in the levosimendan group on the first postoperative day, p = 0.011. The levosimendan group had more hypotension and needed norepinephrine more often; 83 vs. 52 patients, p < 0.001. No difference in in-hospital and 6-month mortality was seen (12% of the patients died in both groups).
 
 
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An additional summary of the pharmacodynamic response to levosimendan in cardiac surgery patients is included in Section 3.2.2 Rationale for Study Drug Infusion Regimen.
 
Levin et al. 48 investigated the safety and effectiveness of levosimendan when administered to patients in advance of CABG surgery. The study was a prospective, randomized placebo controlled study of CABG patients with LVEF < 25% using CPB. This study screened 1798 consecutive CABG patients at two teaching hospitals, randomizing 221. Exclusion criteria included patients receiving valves alone or in combination with CABG, patients with serum creatinine (S-Cr)   >2.5 mg/dL or dialysis, patients with congenital abnormalities or receiving emergency procedures, and patients that had received treatment with inotropic drugs or IABP in the previous 14 days.
 
Study drug was initiated ~24 hours prior to surgery at 10 µg/kg over the first hour (i.e. 0.17 µg/kg/min), followed by adjustment of the dose to 0.1 µg/kg/min for an additional 23 hours along with standard of care. The primary endpoints were all-cause mortality at 30 days and development of LCOS defined as cardiac index < 2.2 L/min/m 2 , mixed venous oxygen saturation (SVO 2 ) < 60% and pulmonary capillary wedge pressure >18 mmHg. Secondary endpoints included morbidity (renal failure, dialysis, respiratory failure, stroke, acute respiratory distress syndrome [ARDS]), requirements for inotropic and vasopressor drugs, and need for IABP.
 
The patients’ operative therapy was balanced across treatments. The cardiac index of patients receiving levosimendan was significantly greater than the placebo arm with means of 3 L/min/m 2 one hour after initiating therapy and was sustained through the 48-hour postoperative period.
 
 
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Levosimendan patients had significantly lower incidences of 30-day mortality and LCOS, representing the primary endpoints of the study (Table 3). 48

  Table 3. Postoperative Primary Outcomes in High Risk CABG Patients after Preoperative Infusion   of Levosimendan or Placebo.
 
 / Drug
Levosimendan
n (%)
Placebo
n (%)
P value   N
111
110
 
  Mortality
3 (2.7)
12 (10.9)
0.001
LCOS
7 (6.3)
20 (18.2)
0.001

 
Patients receiving levosimendan had a lower incidence of postoperative nonfatal MI, renal failure, dialysis and respiratory failure. The difference in nonfatal MI was significant. The incidence of stroke and ARDS was low and comparable across treatment arms (Table 4). 48
 
  Table 4.  Postoperative Secondary Outcomes of Morbidity in High Risk CABG Patients after Preoperative Infusion   of Levosimendan or Placebo.
 
  Drug
Levosimendan
n (%)
Placebo
n (%)
P value
  N
111
110
 
  Dialysis
1 (0.9)
7 (6.4)
0.02
  Respiratory failure
12 (10.8)
19 (17.3)
NS (0.1)
  Stroke
3 (2.7)
2 (1.8)
NS
  ARDS
1 (0.9)
2 (1.8)
NS
  Nonfatal MI
1 (0.9)
6 (5.4)
<0.05

 
Levin et al. 48 identified a decreased incidence of difficulty in weaning patients in the levosimendan-treated group. Fewer patients in the levosimendan arm required inotrope, vasopressor and IABP therapy to maintain patient hemodynamics (Table 5).
 
 
 
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  Table 5.  Postoperative Weaning Difficulty and Therapy Requirements in High Risk Patients after Preoperative Infusion of Levosimendan or Placebo.
 
Drug
Levosimendan
n (%)
Placebo
n (%)
P value
N
111
110
 
Difficulty in weaning
2 (1.8)
13 (11.8)
<0.05
Inotropes
6 (5.4)
52 (47.3)
<0.05
Vasopressors
5 (4.5)
28 (25.4)
<0.05
IABP
3 (2.7)
22 (20)
<0.05

 
Levosimendan was well-tolerated relative to placebo in addition to standard care. The incidence of supraventricular and ventricular arrhythmias were lower in levosimendan patients (Table 6). 48 Hypotension was observed in 8 levosimendan patients and resolved with fluid infusions.
 
  Table 6.  Postoperative Complications in Cardiac Surgery Patients.
 
   
Levosimendan
(N = 127)
Placebo
(N = 125)
 
P value
 
 Complication
    n    
(%)
      n    
(%)
   
  Mortality
    5       ( 3.9 )     16       (12.8 )
<0.05
  Complicated weaning
    3       ( 2.4 )     12       ( 9.6 )
<0.05
  LCOS
    9       ( 7.1 )     26       (20.8 )
<0.05
 New renal failure
    7       ( 5.5 )     18       (14.4 )
<0.05
 Dialysis
    3       ( 2.4 )     8       ( 6.4 )
NS
 Prolonged stay on ventilator
    7       ( 5.5 )     21       (16.8 )
<0.05
Postoperative myocardial infarct
    1       ( 0.8 )     8       ( 6.4 )
<0.05
 Vasoplegic syndrome
    3       ( 2.4 )     12       ( 9.6 )
<0.05
 Atrial fibrillation
    18       (14.2 )     40       (32.0 )
<0.05
 Ventricular arrhythmia
    8       ( 6.3 )     19       (15.2 )
<0.05
 Systemic inflammatory response syndrome
    4       ( 3.1 )     15       (12.0 )
<0.05
 Sepsis
    2       ( 1.6 )     10       ( 8.0 )
<0.05
 Transitory ischemic attack
    2       ( 1.6 )     2       ( 1.6 )
NS
 Cerebrovascular accident
    2       ( 1.6 )     2       ( 1.6 )
NS
NS: not significant
 

 
 
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1.1.1.9  
Mortality in cardiac surgery
 
Maharaj et al. 49 have published a meta-analysis of 17 controlled clinical studies of levosimendan in cardiac surgery patients, including 729 patients. They identified an odds ratio of 0.41 in favor of levosimendan with 95% CI of 0.23, 0.74, a significant reduction (p = 0.003) in mortality of patients treated with levosimendan.
 
The most recent and comprehensive meta-analysis by Landoni et al. 42 of mortality with intravenous levosimendan identified 17 studies in cardiac surgery patients. These studies included 1233 patients (of which 635 received levosimendan). Levosimendan reduced mortality compared with the control arm significantly (5.8% in the levosimendan group versus 12.9% in the control arm; risk ratio 0.52 with 95% CI 0.35-0.76).
 
1.1.2  
  Overall Rationale for the Study
 
Medical practice associated with cardiac surgery has evolved in the last decade to aggressively manage patients in order to minimize the manifestations of LCOS in the peri- and post-surgical periods. Despite advances, 5-10% of these patients develop LCOS.
 
Post-cardiotomy LCOS may be defined as the need for postoperative pharmacologic stimulation of ventricular contraction and/or mechanical circulatory support to maintain systolic blood pressure (SBP) > 90 mmHg or a cardiac index > 2.2 L/min/m 2 . Mortality in patients who develop LCOS is 10-15 fold higher than for the general cardiac surgery population. In addition, LCOS is also associated with significant morbidity and low tissue/organ perfusion injury, including MI and renal failure
 
Transient myocardial depression typically associated with CPB surgery places patients at risk of LCOS. The risk for LCOS is increased in patients with pre-existing low LVEF, diabetes, prior CABG surgery, emergency surgery, as well as for those patients who are female or older than 70 years of age. These higher risk patient groups represent a fast growing subset of the cardiac surgery patient population. New therapies are needed to minimize their risk of morbidity and mortality. This has led many investigators to use levosimendan in cardiac patients where the drug is approved and marketed for treatment of acute decompensated heart failure.
 
Prophylactic treatment of cardiac surgery patients at high risk of LCOS is a unique setting for levosimendan’s clinical development. The condition represents an acute decline in cardiac function presumably as a result of ischemia/reperfusion injury with cardioplegic arrest and the use of CPB leading to a cardiac index < 2.2 L/min/m 2 .
 
 
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Currently, there are no pharmacologic therapies approved to reduce the incidence of LCOS or the associated mortality and morbidity. When cardiac function declines, pharmacologic and mechanical assist therapies are employed to optimize hemodynamic performance to ensure CPB weaning success and minimize peripheral tissue/organ damage. This management is particularly important in those cardiac surgery patients whose hearts have little margin for further diminished capacity, the cardiac surgery population at high risk for LCOS characterized by low LVEF.
 
A unique pharmacodynamic profile has differentiated levosimendan from other agents typically used in acute decompensated cardiac patients. The drug increases cardiac contractility through calcium sensitization of troponin C. Unlike other positive inotropes, levosimendan is not associated with substantial increases in oxygen demand. Levosimendan has been demonstrated a vasodilator of the arterial and venous circulation through its activity on K ATP channels. Unlike milrinone, however, levosimendan is also a vasodilator of the coronary circulation. Levosimendan also uniquely opens K ATP of mitochondria within cardiomyocytes, an activity associated with reduced apoptosis in nonclinical models and reduced circulating troponin levels in acute decompensated heart failure and cardiac surgery patients.
 
2.  
OBJECTIVES
 
Main Study Hypothesis:
 
The hypothesis is that levosimendan is superior to placebo in reducing clinical events including all-cause death, perioperative MI, need for dialysis, or use of mechanical assist (IABP of LVAD) in subjects with reduced ejection fraction undergoing cardiac surgery on CPB.
 
Primary Objectives:
 
Primary objective is to evaluate the efficacy of levosimendan compared with placebo in reducing the co-primary endpoints of 30-day composite of all-cause death or use of mechanical assist (IABP or LVAD) or the composite endpoint of all-cause death, perioperative MI, need for dialysis, or use of mechanical assist (IABP or LVAD) in subjects with reduced LVEF undergoing cardiac surgery on CPB.
 
 
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Secondary Objectives:
 
Secondary efficacy objectives will evaluate the effect of levosimendan compared with placebo when administered in addition to standard therapies on the:
 
  
Duration of ICU/CCU LOS during the index hospitalization.
 
  
Incidence of LCOS defined as cardiac index £ 2.0 L/min/m 2 for ³  30 minutes despite optimal fluid balance and maximal inotropic support (dobutamine, milrinone, epinephrine, norepinephrine), with the fluid balance and maximal inotropic dose at the investigator’s discretion.
 
  
Postoperative use of secondary inotrope dobutamine, milrinone, and epinephrine, associated with the index surgical procedure.
 
Safety Objectives:
 
Safety objectives will evaluate the effect of levosimendan compared with placebo, when administered in addition to standard of care therapies on the:
 
  Occurrence of all-cause mortality from randomization through Day 90.
 
  Postoperative atrial fibrillation.
 
Other Exploratory Objectives:
 
Other exploratory objectives will be:
 
  
The effect of levosimendan compared with placebo when administered in addition to standard therapies on extended health resource utilization surmised from hospitalization for any cause and duration of rehospitalization up to 30 days.
 
 
3.  
OVERVIEW OF STUDY DESIGN
 
3.1  
Study Design
 
This is a randomized, double-blind, placebo-controlled, multicenter study of levosimendan in subjects with pre-existing left ventricular systolic dysfunction (documented LVEF £ 25%) with or without heart failure (NYHA functional Class I-IV) undergoing 1) CABG surgery, with or without mitral valve replacement or repair, or 2) isolated mitral valve surgery patients; all patients randomized with planned CPB. Approximately 760 subjects will be enrolled in the study. Subjects will be randomly assigned to receive either levosimendan or a matching placebo in a 1:1 ratio. The study will be divided into a screening phase, a double-blind treatment phase that consists of the pre-, intra- and postoperative periods through hospital discharge, a double-blind post-treatment and follow-up phase from hospital discharge through Day 30. Day 1 is the day of study drug (levosimendan or matching placebo) initiation. Subjects will have screening procedures performed to determine eligibility within the 30 days before CABG surgery.
 
 
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On the day of surgery, following acquisition of vital status measurements, subjects will be randomly assigned to a treatment group using an IVRS after they have met all of the inclusion criteria and none of the exclusion criteria. Every attempt will be made to start treatment with study drug as soon as possible after randomization but generally within 1 hour after randomization. However, in all cases study drug must be initiated after arterial line insertion and before skin incision. If not already in place, a Swan-Ganz catheter should be inserted as soon as possible after study drug initiation. Study drug will be administered as an infusion of 0.2 µg/kg/min for the first hour with adjustment of the dose to 0.1 µg/kg/min for an additional 23 hours. The dose of study drug may be decreased, interrupted, or discontinued for safety reasons. See Section 6, Dosage and Administration, for additional information on dosage adjustment.
 
All subjects may receive additional standard of care medications including inotropes, vasopressors, vasopressin, antiarrhythmics, diuretics, nitrates, and nitric oxide as needed. Due to the potential hypotensive effects of the study drug, the concomitant use of vasodilatory drugs should be used with caution.
 
Concomitant use of nesiritide is not permitted in randomized patients.
 
Cardiac biomarkers (CK and CK-MB fractions and cardiac troponin) will be obtained at baseline and then q 12 hours for the first 48 hours and then if clinically indicated for ischemic symptoms. Electrocardiogram (ECG) will be performed at baseline, postoperative day 0, 1 and 2 and then if clinically indicated for ischemic symptoms. For the use of IABP, LVAD or new dialysis will also be recorded. Following hospital discharge, subjects will be contacted by phone on Day 30 and will be assessed for their need for postoperative dialysis and the occurrence of death. Every effort should be made to acquire source documentation for each endpoint.
 
 
27

 
 
                   Healthcare resource utilization data will be collected through Day 30 of the study.
 
Subjects who were randomly assigned to study drug but did not receive it will be followed through Day 30 for the need for postoperative dialysis, postoperative ventricular assist device (IABP or LVAD) and the occurrence of death.
 
All subjects will be asked to provide contact details, including a named representative who has personal knowledge of the subject, to ensure follow-up for vital signs through Day 30 (see Section 9.1.3, Pre-Surgery Phase, for more on contact information). If the subject has died, every effort will be made to obtain the circumstances, cause and date of death.
 
There will be 2 independent committees used in this study: a Steering Committee (SC) and a Data and Safety Monitoring Committee (DSMC). Further details on these committees and their responsibilities are provided in Section 3.2.5, Study Committees.
 
The study design is shown in Figure 1.
 
 
  Figure 1.       Schematic of levosimendan study design in cardiac surgery patients.
 
 
 
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3.2  
Study Design Rationale
 
3.2.1  
Rationale for Enrolling Patients with Left Ventricular Systolic Dysfunction
 
This clinical trial is designed to determine whether levosimendan initiated prior to cardiac surgery and in addition to current standard care, will reduce the peri- and postoperative morbidity and mortality in patients at risk for LCOS. This management is particularly important in those cardiac surgery patients whose hearts have little margin for further diminished capacity, the cardiac surgery population at high risk for LCOS characterized by low LVEFs. The proposed cardiac patient population with LVEF <25% has been selected to represent those patients at highest risk of reduced cardiac performance (LCOS) through the period of surgical ischemia and its post-surgical impact. Their higher rates of morbidity and mortality, associated with inadequate management of LCOS, can provide sufficient power to demonstrate levosimendan’s efficacy in the cardiac surgery population.
 
The Society of Thoracic Surgeons National Adult Cardiac Surgery Database (STS NCD) have recently published updated risk models of the STS CABG patients, 6, 50 CABG with valve patients, 6, 50 and isolated mitral valve patients. 12 These models include a five year period ending December 31, 2006 at over 800 participating centers. As with all large multicenter databases that span a long period of time there are numerous assumptions in the data and limitations to its analysis and interpretation.
 
These analyses of the STS database indicate the control group in a target population of low LVEF CABG and CABG-mitral valve patients would be expected to have an overall mortality rate in the range of 5-11.5%, with the median being in the 5-7% range (Table 7). Similar risk has been observed in mitral valve patients with low LVEF.
 
 
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Table 7.   Mortality associated with LVEF in CABG and/or valve patients based on STS database.
 
Database/Trial
Death @ 30 days
STS Data Base-CABG only Low LVEF Cohort <25%
(proportion of overall patients, 3.3%)
7.2%
STS Data Base-CABG only Low LVEF Cohort 25-34%.
(proportion of overall patients, 7.4%)
4.6%
Overall STS Data Base-CABG+valve (proportion of overall CABG+valve patients with LVEF <25% =5.7%, between 25-34% 10.8%)
6.8%
Overall STS Data Base-CABG+AVR replacement
5.6%
Overall STS Data Base-CABG+MVR replacement
11.6%
Overall STS Data Base-CABG+MVR repair
7.4%
 
These event rates are supported by placebo event rates in published cardiac surgery trials with similar patient populations, PRIMO-CABG, STICH, and NAPA (Table 8).
 
  
  The PRIMO-CABG Trial was a high risk CABG trial that enrolled high risk patients, including prior CABG and combined CABG+valve surgery patients. (N=3099). 51 In addition, PRIMO CABG included a high risk subset of patients with history of Prior CHF (N = 473). 9
 
  
The STICH trial included a high risk CABG cohort (N = 610). The average EF across the study was approximately 27%. 5
 
  
The NAPA Trial was a small trial of 279 low EF CABG patients (mean EF was 30%). 10
 
   Table 8.  Mortality associated with LVEF in CABG and/or valve patients based on STS database.
 
Database or Trial
N
Death@30 days
Death or nonfatal MI
PRIMO-CABG
3099
4.6%
16.2%
PRIMO-CABG,
Prior CHF Cohort
473
5.3%
18.6%
STICH CABG
610
3.6%
NR
NAPA
EF < 35%
279
5.7%
NR
 
NR = not reported
 
 
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The Duke Clinical Research Institute (DCRI) reviewed several High Risk CABG trial databases to assess event rates in Low EF CABG patients across four controlled clinical trials. This analysis identified event rates at a range of 11.0-23.5% for the dual endpoint of death and mechanical assist (IABP, LVAD) and 28.7-32.1% in the combined endpoint of death, MI, dialysis, and mechanical assist (IABP, LVAD) (DCRI, personal communication).
 
3.2.2  
Rationale for Study Drug Infusion Regimen
 
An infusion dose of 0.1 µg/kg/min for 24 hours has been selected for the proposed levosimendan study in cardiac surgery patients at high risk for post-cardiotomy LCOS. This dose is based on the pharmacokinetics, hemodynamics, metabolism and safety data with the drug in the acute decompensated heart failure and cardiac surgery patients, as well as the empiric data emerging from investigator-initiated studies in cardiac surgery patients.
 
Initial studies of levosimendan in the cardiac surgery population have evaluated the hemodynamic effects of the drug following a bolus dose from 6-24 µg/kg with or without a continuous infusion. The majority of clinical studies in cardiac surgery patients have included a dose regimen ranging from 0.1 to 0.2 µg/kg/min, mainly employed for 24 hours.
 
A study conducted by De Hert et al. 44, 52 is particularly relevant to our proposal to use 24-hour infusion of 0.1 µg/kg/min. The study with milrinone as a comparator demonstrated that levosimendan with a dose of 0.1 µg/kg/min is effective in improving patient hemodynamics within 2-4 hours of administration. Further, the effect is maintained beyond the infusion period, at least to 48 hours (Figure 2).
 
 
 
31

 
 
 
 
Levosimendan (0.1 m g/kg/min) or milrinone started immediately after the release of the aortic crossclamp.
 
  Figure 2.   Stroke Volume with Levosimendan or Milrinone in Cardiac Surgery Patients with Preoperative LVEF < 30%.
 
This dose has been well-tolerated without the increases in the incidence of hypotension and tachycardia that have been observed at higher infusion rates and with the use of bolus. Importantly, several studies utilizing the 0.1 µg/kg/min levosimendan infusion regimen for 24 hours were conducted in cardiac patients with LVEFs within the range of the proposed study.
 
Recent correspondence with European cardiac surgeons with published investigator-initiated studies of levosimendan in treatment of cardiac surgery patients has been consistent in support for an infusion dose of 0.1µg/kg/min without a bolus. A recent meta-analysis of levosimendan studies by Landoni et al. 42 compared studies using low-dose with high-dose levosimendan infusion rate, indicating a trend toward a reduction in mortality in the low-dose group (t = 1.90, p = 0.065). Studies of patients receiving levosimendan at higher doses had a significant increase in hypotension in the levosimendan group; RR = 1.44 (1.25-1.64), p value for effect <0.001. No difference in hypotension was observed between groups that used low-dose levosimendan infusion compared to the control arm.
 
A higher infusion rate of 0.2 µg/kg/min has been selected for the first hour of levosimendan infusion. Levin et al. 48 have demonstrated a 0.17 µg/kg/min initial infusion dose for 1 hour (=10 µg/kg in 60 min) with adjustment of the dose to 0.1 µg/kg/min for an additional 23 hours is effective within 1 hour and sustained for 48 hours (Figure 3).
 
 
 
32

 
 
 
  Figure 3.  Cardiac Index following initiation of levosimendan or dobutamine through 48 hours
 
3.2.3  
Rationale for Co-primary Endpoints
 
The co-primary composite endpoints include clinically important and measureable outcomes of levosimendan’s activity in maintaining the myocardium through surgery and recovery and the consequences of myocardial stunning manifested by LCOS.
 
Mortality: All-cause mortality through 30 days covers the peri- and post-surgical period in which cardiac surgery patients are at highest risk. Extending the period to primary study endpoint analysis to 30 days will provide appropriate demonstration of the durability of levosimendan’s effectiveness and be included within co-primary endpoints.
 
Myocardial Infarction: Perioperative MI is an established clinical risk in cardiac surgery patients and those patients presenting with LCOS. The Joint ESC/ACF/AHA/WHF Task Force for the Redefinition of Myocardial Infarction (2007) identified criteria for perioperative MI representing to the myocardium including CK-MB peaks >5 times the 99 th percentile of the upper reference limit for the biomarker as representative of clinically meaningful damage. This study will define perioperative MIs (through postoperative Day 5) as CK-MB fraction > 100 ng/mL (or CK-MB > 10xULN) irrespective of ECG changes or CK-MB > 50 ng/mL (or CK-MB > 5xULN) with new Q wave in two contiguous leads or LBBB on ECG through postoperative Day 5.
 
 
33

 
 
Need for Dialysis: Studies in cardiac surgery patients have shown that 1% to 5% progressed to renal failure requiring dialysis. Mortality   in this group ranges from 38% to 52% supporting the inclusion of renal failure in the primary composite endpoint. This study will identify Dialysis within 30 days as part of the quad co-primary endpoint.
 
Use of Mechanical Assist (IABP, LVAD) following the start of surgery for poor cardiac function despite inotropic support and adequate fluid replacement: Post-cardiotomy LCOS is generally defined as a patient’s inability to maintain a cardiac index > 2.0 L/min/m 2 . Cardiac surgery patients are treated with inotropic agents, after optimizing for volume status, heart rate, and rhythm, to enhance the cardiac output when a patient’s cardiac index falls below 2.0 L/min/m 2 . If the cardiac output remains suboptimal a second inotrope is generally selected. Mechanical assist devices, such as an IABP or a LVADs, are generally employed where the patient’s cardiac index persists at <2.0 L/min/m 2 despite maximal inotrope therapy, where maximal inotropic support is defined as the use of two inotropes (dobutamine, milrinone, epinephrine, norepinephrine) with the dose at the physician’s discretion. 53 This study will identify Use of Mechanical Assist through post-op Day 5 as part of co-primary endpoints.
 
The use of an IABP is associated with substantial and well-known morbidity, including artery injury, aortic perforation, femoral artery thrombosis, peripheral embolization, femoral vein cannulation, limb ischemia, and visceral ischemia. 20, 54, 55 In their review of IABP use in the Benchmark Registry, Cohen et al. 55 identified a 5-6% incidence of IABP-related mortality, major limb ischemia, severe bleeding, and balloon failure of the >22,000 cases reviewed. Parissis et al. 20 analyzed the early and intermediate outcomes for patients requiring IABP in a cohort of 2697 adult cardiac surgical patients. The subgroup of 136 patients that required IABP support had a higher incidence of reoperation for bleeding (11.8% vs. 4.5%), prolonged ventilation (42.6% vs. 7%), re-intubation rate (18.4% vs. 4.9%), tracheostomy rate (9.6% vs. 1.2%) and new dialysis (23.5% vs. 4.9%).
 
Other studies have reviewed morbidity associated with newer mechanical assist devices. Cheng et al. 56 compared the newer LVADs to the IABP in a meta-analysis of cardiogenic shock patients. Although use of percutaneous LVAD resulted in a better hemodynamic profile compared with IABP counter pulsation, the LVAD use was associated with higher morbidity (increased leg ischemia, device related bleeding), without improvement in 30-day survival.
 
 
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3.2.4  
Rationale for Health Care Utilization Data Collection
 
With the growing demand on limited health care resources and concern about health care expenditures, the adoption of new treatments depends increasingly on the value proposition and cost-effectiveness of the therapy. A critical source for this evidence comes from prospectively collected health care resource utilization in randomized clinical trials alongside clinical endpoints. Health care resource utilization data collected from this study are key inputs for developing a value proposition for levosimendan. Health care resource utilization data will be used in future economic modeling; the construction and reporting of the economic model will be conducted separately from this study.
 
3.2.5  
Rationale for Measuring Biomarkers
 
Perioperative MI (through postoperative Day 5 documented as increased CK-MB levels > 100 ng/mL (or CK-MB > 10xULN) irrespective of ECG changes or CK-MB > 50 ng/dL (or CK-MB > 5xULN) with new Q waves longer than 30 ms or LBBB prospectively identify a cohort of patients with an increased risk for morbidity and mortality in patients undergoing CABG surgery. Therefore it is of interest to evaluate whether levosimendan reduces this event as well as morbidity and mortality in this high-risk cohort of subjects undergoing CABG surgery.
 
3.3  
Study Committees
 
3.3.1  
Steering Committee (SC)
 
The study will be conducted under the leadership of an independent academic SC that will have overall responsibility for protocol design, study conduct, and publication of results. If there is a safety concern raised by the DSMC, the SC will review and consider recommendations from the DSMC and make recommendations to the sponsor.
 
3.3.2  
Data and Safety Monitoring Committee (DSMC)
 
An independent DSMC will be established to monitor the progress of the study and to ensure that the safety of subjects enrolled in the study is not compromised. The DSMC will consist of physician(s) with expertise in clinical trials and cardiac surgery and a statistician with experience in clinical trials. The committee will be supported by an independent unblinded statistician who is not otherwise involved in the conduct or analysis of the study. Details of the composition, roles, responsibilities, and processes of the DSMC are documented in the DSMC Charter. The independent DSMC will review safety data (see Section 12.2.5, Processing Primary Clinical Endpoint Safety Events) on an ongoing basis and may recommend stopping or amending the study based on safety findings. The DSMC will not be otherwise involved in the conduct of the study.
 
 
 
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4.  
STUDY POPULATION
 
4.1  
General Considerations
 
Approximately 760 subjects (380 per treatment group) will be enrolled in this study. The study population will consist of men or women with pre-existing reduced left ventricular ejection fraction £ 25%, and who are undergoing 1) CABG surgery, with or without mitral valve replacement or 2)  isolated mitral valve repair; all patients with CPB. All subjects must be 18 years of age or older.
 
The specific inclusion and exclusion criteria for enrolling subjects in this study are described in the following sections.
 
4.2  
Inclusion Criteria
 
Subjects must satisfy the following criteria to be enrolled in the study:
 
  
Men or women, 18 years of age or older.
 
  
Documented LVEF £ 25% measured by nuclear scan, echocardiogram (ECHO), or ventriculogram, within 60 days before surgery.
 
  
Scheduled to undergo 1) CABG surgery with or without mitral valve replacement, or 2) isolated mitral valve repair; all patients on CPB.
 
  
Signed (by the subjects or their legally acceptable representatives) informed consent document indicating that they understand the purpose of and procedures required for the study and are willing to participate in the study.
 
4.3  
Exclusion Criteria
 
Potential subjects who meet any of the following criteria will be excluded from participating in the study :
 
  
Restrictive or obstructive cardiomyopathy, constrictive pericarditis, restrictive pericarditis, pericardial tamponade, or other conditions in which cardiac output is dependent on venous return.
 
 
 
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Pulmonary disease (severe chronic obstructive pulmonary disease [COPD], asthma, or other condition) that, in the opinion of the investigator, represents an independent clinical risk to the cardiac surgery and recovery of the patient.
 
  
Evidence of systemic bacterial, systemic fungal, or viral infection within 72 hours before surgery.
 
  
Chronic dialysis at baseline or within 30 days of CABG/mitral valve surgery (either hemodialysis, peritoneal dialysis, continuous venovenous hemodialysis).
 
  
Estimated glomerular filtration rate (eGFR) < 30 mL/kg/min or evidence of worsening renal function before CABG/mitral valve surgery.
 
  
Weight ³ 170 kg.
 
  
Patients whose SBP cannot be managed to ensure SBP > 90 mmHg at initiation of study drug.
 
  
Heart rate ³ 120 bpm, persistent for at least 10 minutes.
 
  
Hemoglobin < 80 g/L within 4 hours before baseline.
 
  
Serum potassium < 3.5 mmol/L at baseline.
 
  
A history of Torsades de Pointes.
 
  
Mechanical assist device (IABP, LVAD) in previous 30 days or pre-planned use of IABP or LVAD during or following CABG/mitral valve surgery.
 
  
Patients with aortal femoral inclusive disease that would prohibit use of IABP.
 
  
Planned aortic valve repair or replacement.
 
  
Liver dysfunction Child Pugh Class B or C (see Attachment 3)
 
  
Patients having severely compromised immune function
 
 
 
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Pregnant, suspected to be pregnant, or breast-feeding.
 
  
Received an experimental drug or used an experimental medical device in previous 30 days.
 
  
Known allergic reaction or sensitivity to Levosimendan or excipients.
 
  
Received commercial Levosimendan within 30 days before the planned start of study drug.
 
  
Employees of the investigator or study center, with direct involvement in the proposed study or other studies under the direction of that investigator or study center, as well as family members of the employees or the investigator.
 
4.4  
Prohibitions and Restrictions
 
Potential subjects must be willing to adhere to the following prohibitions and restrictions during the course of the study to be eligible for participation.
 
  
Women of childbearing potential must agree to remain on an effective method of birth control or remain abstinent throughout the study.
 
5.  
RANDOMIZATION AND BLINDING
 
5.1  
Overview
 
Randomization will be used to avoid bias in the assignment of subjects to treatment, to increase the likelihood that known and unknown subject attributes (e.g., demographic and baseline characteristics) are evenly balanced across treatment groups, and to enhance the validity of statistical comparisons across treatment groups. Blinded treatment will be used to reduce potential bias during treatment, data collection and evaluation of clinical endpoints.
 
On the day of surgery, following acquisition of vital signs measurements, subjects will be randomly assigned to a treatment group using an IVRS system after they have met all of the inclusion criteria and none of the exclusion criteria.
 
Study drug (levosimendan or matching placebo) will be initiated as soon as possible after randomization, following arterial line incision, and before surgical incision. If not already in place, a Swan-Ganz catheter should be inserted as soon as possible after study drug initiation.
 
 
 
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5.2  
Procedures
 
Subjects will be assigned to 1 of 2 treatment groups (levosimendan 0.2 µg/kg/hr for first hour, followed by 0.1 µg/kg/min up to 24 hours or matching placebo) in a 1:1 ratio based on a computer-generated randomization schedule prepared before the start of the study by an independent statistical group not otherwise involved in the conduct or analysis of the study.
 
The subject number and treatment code will be assigned after contacting the IVRS. The caller must use their own user identification (ID) and personal identification number (PIN), and then give the requested subject details (e.g., subject initials, subject’s date of birth, and demographics). Based on this information, the IVRS will assign a unique subject number and treatment code, which will dictate the treatment assignment for that subject. The IVRS will then also assign a medication kit that matches the treatment code to which the subject has been randomized.
 
If a potential subject is randomly assigned to treatment but is found to be ineligible before the study drug infusion is started, the investigator will not proceed with study drug administration. The potential subject will be considered randomized but not treated, and the sponsor must be notified. The investigator will document the reason that the potential subject is no longer a study candidate. The investigator will manage the patient’s medical condition according to usual clinical practice, and specific study-related procedures (other than those listed below) will not be performed. Subjects who are randomly assigned to treatment but not treated will be followed through Day 30 for the post-discharge MI, need for postoperative dialysis, IABP or LVAD; and the occurrence of all-cause mortality.
 
The study drug container will have a 2-part, tear-off label with directions for use and other information on each part. The tear-off section of the label will be removed and attached to the subject’s drug accountability form when the drug is dispensed. The second part of the label will remain affixed to the study drug container and will contain all identifying information except for the dose of the drug contained.
 
The investigator will not be provided with randomization codes. The codes will be maintained within the IVRS, which has the functionality to allow the investigator to break the blind for an individual subject if necessary to provide care for the patient.
 
 
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Under normal circumstances, the blind should not be broken until all subjects have completed the study (defined as Day 90) and the database for the Day 90 data is locked. Otherwise, the blind should be broken only if specific emergency treatment would be dictated by knowing the treatment status of the subject. In such cases, the investigator must   contact the sponsor or designee. If the investigator is unable to contact the sponsor or designee, the investigator may, in an emergency, determine the identity of the treatment by telephoning the IVRS. The sponsor must be informed as soon as possible. The date, time, and reason for the unblinding must be documented in the appropriate section of the electronic case report form (eCRF) and in the source document. The fax copy received from the IVRS indicating the code break must be retained with the subject’s file.
 
6.  
DOSAGE AND ADMINISTRATION
 
Subjects should be monitored and their hypotension (mean arterial pressure [MAP] < 60 mmHg, SBP < 90 mmHg) and signs and symptoms of hypovolemia corrected prior to initiation of study drug. Subjects will be administered a continuous intravenous (i.v.) infusion of a standard infusion dose of 0.2 µg/kg/min for first hour with adjustment of the dose to 0.1 µg/kg/min for an additional 23 hours (levosimendan or matching placebo). No bolus of study drug will be administered. Every attempt will be made to start treatment with the study drug as soon as possible after randomization, after arterial line insertion, and before skin incision. If not already in place, a Swan-Ganz catheter should be inserted as soon as possible after study drug initiation.
 
Study drug will be administered for 24 hours. The infusion rate of study drug may be decreased, interrupted, or discontinued for safety reasons, according to the discretion of the investigator, as described in the following sections.
 
To prevent possible medication errors or miscalculations, refer to Attachment 1 of this protocol before administration of study drug to calculate the appropriate infusion rate based on the subject’s preoperative body weight.
 
See Section 13.4, Preparation and Handling for information on study drug preparation.
 
The diluted infusion is administered intravenously by a peripheral or central route. No other treatments should be administered via the same line.
 
 
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The concentration of the diluted infusion is about 50 µg/mL (12.5mg/255mL in a 250 mL bag; 25mg/510mL, 2 vials in a 500 mL bag).
 
The i.v. tubing should be primed to fill the volume to the i.v. entry site before starting the infusion.
 
Infuse study drug at a continuous infusion of 0.2 µg/kg/min over the first 60 minutes.
 
After 1 hour, decrease the flow rate to a continuous infusion of 0.1 µg/kg/min. Continue this dose of study drug for the next 23 hours.
 
6.1  
Dose Adjustment
 
The infusion rate of study drug may be decreased, or interrupted as clinically warranted if the subject has hypotension (SBP < 90 mmHg or MAP < 60 mmHg or signs or symptoms consistent with hypovolemia (e.g., low SBP, decreasing urine output with rising blood urea nitrogen [BUN] and serum creatinine) not responding to fluid challenge for 30 minutes. Record the time of discontinuation or down titration. Patients should be monitored closely until clinically stable. Refer to the following subsections for additional guidance on events that require study drug discontinuation or dosage adjustment, permanent discontinuation, and re-initiating study drug in patients in whom clinical stability has been restored.
 
6.1.1  
Dose-limiting Events
 
The following events occurring at any time during study drug infusion should lead to either a dose reduction or temporary discontinuation of the study drug infusion :
 
  
Decreases in SBP to £ 80 mmHg (or MAP < 55 mmHg) not responding to vasopressors or fluid challenge in 10 minutes
 
  
Heart rate constantly 140 bpm or more for over 10 minutes not related to atrial fibrillation
 
  
The patient that has experienced atrial fibrillation (>140 bpm) lasting for more than 6 h and continues without response to cardioversion and/or 6 h amiodarone treatment
 
The physician judges that it is in the best interest of the patient to reduce the dose or discontinue the infusion.
 
 
 
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6.1.2  
Criteria for the Permanent Discontinuation of Study Drug Infusion
 
The following patients should have their study drug discontinued without dose adjustment.
 
  
The patient develops ventricular fibrillation after the end of operation.
 
  
A new cardiac operation is warranted due to a suspected surgical graft complication.
 
6.1.3  
Re-initiating Study Drug
 
Those patients becoming clinically stable following discontinuing study drug may re-initiate study drug as follows.
 
  
The infusion can be resumed at half the previous infusion rate (0.05 µg/kg/min). If the event recurs at the dose of 0.05 µg/kg/min then the infusion should be discontinued permanently. The elimination half-life of levosimendan (T 1/2 = 1 hour) should be taken into account when assessing the response to a dose reduction.
 
  
Following any dose-reduction the investigator can reinstate a higher dose later during the infusion period provided that the basis for the dose reduction has passed and the dose is well tolerated. Even where the study drug infusion has been temporarily discontinued, the study drug infusion must be stopped 24 hours after the initiation of study drug infusion.
 
All changes to the infusion rate of the study medication should be recorded in the eCRF.
 
7.  
COMPLIANCE
 
Study drug will be administered as an i.v. infusion by qualified staff (e.g., a qualified nurse, a member of the study staff, or an infusion specialist) and the details of each administration will be recorded in the eCRF (including start and stop date and times of the i.v. infusion). The investigator or designated study personnel will maintain a log of all study drug dispensed and returned. Drug supplies for each subject will be inventoried and accounted for throughout the study.
 
 
 
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8.  
CONCOMITANT THERAPY
 
This study is a comparison of standard care plus levosimendan to standard care plus placebo for the treatment of subjects in the immediate perioperative period. All patients should receive standard evidenced based therapies as recommended in local clinical practice guidelines.
 
The patient’s regular per oral concomitant treatments (diuretics, digitalis, ACE inhibitors, nitrates, beta-blockers, and other medications e.g. antibiotics and analgesics) can be administered according to the investigator’s clinical judgment,
 
All subjects may receive additional standard of care medications including inotropes, pressors, vasopressin, antiarrhythmics, diuretics, nitrates, and nitric oxide as needed. Due to the potentially hypotensive effects of the study drug, the concomitant use of vasodilatory active drugs should be used with caution as per the following guidance.
 
Concomitant administration of nesiritide is not permitted; levosimendan should not be initiated within an hour of discontinuing nesiritide therapy.
 
Hypotension
 
Provided that hypovolemia as a cause has been ruled out, hypotension, i.e. MAP < 60 mmHg, may be treated with phenylephrine, ephedrine, norepinephrine or vasopressin according to investigator’s judgment.
 
Hypertension
 
Hypertension, i.e., systolic arterial pressure (SAP) > 160 mmHg may be treated with bolus doses, or an infusion, of nitroglycerin. Alternatively, sodium nitroprusside may be given. However, the concomitant use of nesiritide is not permitted due to its potentially excessive synergistic hypotensive effect with levosimendan.
 
Low cardiac output
 
To ensure sufficient cardiac output, the volume status, heart rate, blood pressure and cardiac rhythm of a patient should be optimized. The target is to maintain cardiac index > 2.2 L/min/m 2 . When a patient’s cardiac index falls below 2.0 L/min/m 2 , the first inotropic agent (dobutamine, milrinone, epinephrine, norepinephrine) should be administered. If this is not sufficient a second inotropic agent may be added. In case inotropic drugs cannot maintain cardiac index > 2.2 L/min/m 2 , mechanical assist device (IABP/LVAD) should be considered.
 
 
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Concomitant treatments from randomization until Day 5 or the end of initial hospitalization will be recorded on the eCRF for Concomitant Treatment.
 
No other investigational drug or device should be used with the study drug.
 
During the 30-day double-blind treatment and post-treatment phases, no use of commercial levosimendan is permitted unless the subject is rehospitalized for congestive heart failure, where approved for treatment of acute decompensated heart failure.
 
Concomitant medications will be recorded in the source document and on eCRFs listing the common medications used in this subject population as per the list of specific medications identified in the study manual and CRF. These include secondary inotropes (dobutamine, milrinone, epinephrine, norepinephrine), pressors and anti-arrhythmics. Only medications on this list (prescriptions or over-the-counter medications) continued at the start of the study or started during the study and different from the study drug must be documented in the concomitant therapy section of the eCRF and in the source document. Record the time of each secondary inotrope’s dose (initiation and conclusion) and peak dose.
 
The sponsor must be notified in advance (or as soon as possible thereafter) of any instances in which prohibited therapies are administered.
 
9.  
STUDY EVALUATIONS
 
9.1  
Study Procedures
 
9.1.1  
Overview
 
The Time and Events Schedule that follows the Synopsis summarizes the frequency and timing of efficacy, safety, or other measurements.
 
The study will be divided into a screening phase, a double-blind treatment phase that consists of the intra- and postoperative periods through hospital discharge, a double-blind post-treatment phase from hospital discharge through Day 30. All randomly assigned subjects will be followed for 30 days, including subjects who were randomly assigned to treatment but not treated.
 
 
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Additional information on efficacy, health economic, and safety evaluations is given in Sections 9.3, 9.5, and 9.6, respectively.
 
The total volume of blood drawn for laboratory evaluations throughout this study is approximately 100 mL for each subject.
 
9.1.2  
Screening Phase
 
Before any study-related procedures are performed, the risks of the study will be explained to a potential subject, and the subject or his/her legal representative will be required to sign an informed consent form.
 
Screening procedures will be performed within 30 days, within the 24 hours before surgery, and after anesthesia induction, as indicated in the Time and Events Schedule that follows the Synopsis.
 
9.1.3  
Presurgery Screening Period
 
In the screening phase, potential subjects will be screened to determine eligibility for participation in the study. Documentation of screening failure details may be recorded using eligibility screening forms or a subject screening failure log.
 
Within 60 days before surgery the subject must have a documented LVEF  £ 25%. If more than one documented LVEF is available, the one closest to the surgery date should be used for screening purposes.
 
At the screening visit and within 24 hours before surgery, an ECG and blood samples for CK and CK-MB and troponins, other routine laboratory tests should be obtained.
 
All subjects will be asked at baseline to provide contact details and additional information when permitted by local regulations, such as name, address, phone numbers, employer (name, address, phone numbers), e-mail address, social security number or equivalent, health insurance provider, health insurance policy number; relatives (name, relationship, address, phone numbers), other contacts who have personal knowledge of the subject (e.g., friends or neighbors), primary care physician, other health care provider (cardiologist, dentist, etc.), to ensure Day 30 and Day 90 follow-up.
 
A reliable contact must be made at Day 30 and Day 90 preferably by speaking directly to the subject or to someone who has knowledge of the subject's vital status or by a documented source containing all of the required study relevant information (e.g., dialysis center records, laboratory reports, medical visit records).
 
 
 
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9.1.4  
Intraoperative Screening Period
 
Following acquisition of baseline information and vital signs measurements, subjects will be randomly assigned to a treatment group using an IVRS system after they have met all of the inclusion criteria and none of the exclusion criteria.
 
Levosimendan or matching placebo will be dispensed according to the kit number provided by the IVRS (see Section 5.2, Procedures).
 
9.1.5  
Double-Blind Treatment Phase
 
All procedures and assessments during the double-blind treatment phase will be performed as detailed in the Time and Events Schedule that follows the Synopsis.
 
9.1.6  
Pre- and Intraoperative Period
 
Every attempt will be made to start treatment with study drug as soon as possible after randomization and generally within 1 hour of randomization. However, in all cases the study drug must be initiated before cardiac surgery. Study drug will be administered according to the directions in Section 6, Dosage and Administration. The day of study drug initiation is designated as Day 1.
 
Subjects who were randomly assigned to treatment but not treated will be followed through Day 5 for MI and the need for IABP/VAD through postoperative Day 5; postoperative dialysis through Day 30, and the occurrence of all-cause mortality through Day 90.
 
9.1.7  
Postoperative Period through Hospital Discharge
 
Blood samples will be collected for hematology and serum chemistry analysis, vital signs will be measured, and health care resource utilization data will be recorded at the time points listed in the Time and Events Schedule that follows the Synopsis. Refer to Section 9.5, Health Economic Evaluations, and 9.6, Safety Evaluations, for additional information on procedures. An ECG will be recorded following surgery on postoperative Day 1 and on postoperative Day 5 as well as at the time of any new ischemic event and the day following the event.
 
 
 
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9.1.8  
Double-Blind Follow-up Phase
 
Day 30 (+5 Days)
 
On Day 30 (+5 days), the subjects will be contacted by phone to determine their survival status and if dialysis or IABP or LVAD has been required. In addition, information regarding re-hospitalization at 30-days along with days and cause of rehospitalization will also be obtained.
 
If the subject has died, every effort should be made to obtain the circumstances and the cause and date of death. See Section 9.1.2, Screening Phase, for details of the follow-up contact with the subject or a representative. All effort will be made via telephone with a representative who has personal knowledge of the subject (e.g., friends, neighbors, primary care physician) to obtain information on the subject’s need for postoperative dialysis, and their survival status will be ascertained. The study coordinator will use a scripted list of questions to collect information during the telephone contact.
 
If a subject received dialysis, the dates and type of dialysis should be recorded from information obtained by contacting the subject or representative and by obtaining documentation from the facility providing dialysis. Dates of use of IABP or LVAD should also be recorded. If the subject has died, every effort should be made to obtain the circumstances and the cause and date of death and information on date of initiation and type of dialysis. See Section 9.1.2, Screening Phase, for details of the follow-up contact with the subject or a representative.
 
Subjects will be asked to provide contact information for additional follow-up call required at Day 90.
 
Day 90 (+5 days)
 
On Day 90 (+5 days), the subject will be contacted by phone to determine subject’s survival status,
 
9.2  
Efficacy Evaluations
 
All efficacy evaluations will be performed at the time points detailed in the Time and Events Schedule that follows the Synopsis.
 
The day of study drug initiation is designated as Day 1.
 
 
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9.2.1  
All-cause Mortality
 
All-cause mortality data (e.g., the cause and date of death) will be collected for all subjects up to Day 30 (+5). A follow-up call will document mortality between Day 30 visit and Day 90.
 
9.2.2  
Perioperative Myocardial Infarction (defined through postoperative Day 5)
 
Serum CK-MB (and CK and troponin) levels will be measured at baseline and then following cardiac surgery at time points listed in the Time and Events Schedule that follows the Synopsis. Similarly, an ECG will be obtained at baseline, on postoperative Day 1 and then on postoperative Day 5.  Investigators will evaluate and record new Q waves (>30ms) and new left bundle branch block on all post-operative ECGs. All post-operative ECG’s in patients with peak CK-MB >50 ng/dL, but < 100 ng/dL, and in those with CK-MB <50 ng/dL where investigators have identified new Q waves (>30ms), and new left bundle branch block (LBBB) will be obtained from the site and reviewed by an independent cardiologist blinded to treatment at DCRI. Most peri-operative MIs will be classified by algorithm. All MIs (suspected or triggered) will be adjudicated automatically using standardized definitions. Perioperative MIs (through postoperative Day 5) will be defined as CK-MB >100 ng/mL (or CK-MB >10xULN) irrespective of ECG changes or CK-MB >50 ng/dL (or CK-MB >5xULN) with evidence of new Q waves >30 ms in two contiguous leads or new LBBB. An analysis of patients with new Q waves >30 ms in two contiguous leads, or new LBBB in patients with CK-MB values < 50 ng/dL ( £ 5xULN), or with no CK-MB data will be included in sensitivity analyses listed in the study’s Statistical Analysis Plan.
 
9.2.3  
Need for Dialysis (through Day 30)
 
Throughout the protocol the general term “dialysis” is used to refer to hemodialysis or other forms of dialytic support (e.g., hemodialysis, peritoneal dialysis, continuous venovenous hemodialysis).
 
Information on postoperative dialysis (e.g., onset and completion date, type of dialytic support) will be collected through Day 30.
 
 
 
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9.2.4  
Use of Mechanical Assist: Intra-Aortic Balloon Pump or Ventricular Assist Devices (through Day 5)
 
Information on the use of IABP will be obtained and recorded for all patients during index hospitalization and procedure. Similarly, the data on use of LVAD (left ventricular, right ventricular or biventricular) will also be collected.
 
The endpoint applies to the use of mechanical assist (IABP, LVAD) following the start of surgery for poor cardiac function despite inotropic support and adequate fluid replacement.
 
Note: Investigators are encouraged to use IABP or LVAD in patients presenting with LCOS following the start of surgery. The investigator must identify that the patient has presented with “poor cardiac function despite inotropic support and adequate fluid replacement” in the eCRF.
 
9.3  
Efficacy Criteria
 
9.3.1  
Composite Co-primary Efficacy Endpoints
 
The composite co-primary efficacy endpoints of the trial will be the
 
  
30-day composite event rate of all-cause death, perioperative MI (through Day 5), need for dialysis (through Day 30), or use of mechanical assist (IABP or LVAD) (through Day 5) tested at two-sided alpha of 0.01; the “quad” co-primary endpoint.
 
and
 
·  
30-day composite event rate of all-cause death or use of mechanical assist (IABP or LVAD) (through Day5) tested at two-sided alpha of 0.04; the “dual” co-primary endpoint..
 
9.3.2  
Secondary Efficacy Endpoints
 
Secondary endpoints of the trial include the:
 
  
Duration of ICU/CCU LOS during the index hospitalization
 
  
Incidence of LCOS defined as cardiac index ³ 2.0 L/min/m 2 for > 30 minutes despite optimal fluid balance and maximal inotropic support (dobutamine, milrinone, epinephrine, norepinephrine), with the fluid balance and maximal inotropic dose at the investigator’s discretion
 
 
 
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Postoperative use of secondary inotrope (dobutamine, milrinone, epinephrine, norepinephrine) associated with index surgical procedure
 
The secondary endpoints will only be analyzed if at least one of the co-primary endpoints achieves statistical significance. A fixed-sequence step-down procedure will be applied for hypothesis testing for the secondary efficacy endpoints.
 
9.4  
Pharmacokinetic Evaluation
 
Pharmacokinetic assessments will be conducted on samples collected from patients consenting to participation in the pharmacokinetic substudy. Blood samples (3 ml) for determining the plasma concentrations of levosimendan and its metabolites OR-1855 and OR-1896 will be drawn at the conclusion of infusion and at 48 hours following initiation of study drug. Detailed instructions for collecting, handling, storing and shipping of the plasma samples will be provided in the study manual.
 
The plasma levels of the levosimendan metabolites will be summarized and reported from all samples. In addition, the ratio of OR-1896 and OR-1855 will be calculated to determine the acetylation status of a subject. This ratio has been shown to reliably predict the acetylation genotype; OR-1896/OR-1855 is > 1 in rapid acetylators and < 1 in slow acetylators. 27 A substudy of 200 is targeted to provide a sufficient sample size of both acetylator groups (see Attachment 2).
 
9.5  
Health Economic Evaluations
 
Healthcare Resource Utilization Data
 
Healthcare resource utilization data (total hospital LOS for the index hospitalization, time in operating room, ICU/CCU LOS during the index hospitalization, and rehospitalizations for medical cause that occur from randomization through Day 30) will be collected as part of the other efficacy evaluations in Section 9.3.
 
9.6  
Safety Evaluations
 
 
All safety evaluations will be performed at the time points listed in the Time and Events Schedule that follows the Synopsis.
 
 
The study will include the following evaluations of safety and tolerability:
 
 
 
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Adverse Events
 
Adverse events will be reported by the subject (or, when appropriate, by the subject’s physician, a caregiver, surrogate, or the subject’s legally acceptable representative) for the duration of the study. Adverse events will be followed by the investigator for a length of time as determined by the sponsor. Specific details on adverse event reporting are provided in Section 12.
 
Study-specific definitions are provided in Section 12.2.2 for adverse event reporting of hypotension (symptomatic, asymptomatic, neither) and arrhythmias.
 
·  
Clinical Laboratory Tests
 
Blood samples for hematology and serum chemistry will be taken at the time points detailed in the Time and Events Schedule that follows the Synopsis. The investigator must review the laboratory report, document this review, and record any clinically relevant changes occurring during the study in the adverse event section of the eCRF. The following tests will be performed by the central or local laboratories, as shown in the Time and Events Schedule:
 
Hematology and Coagulation Panel
 
Hematocrit
Hemoglobin
White blood cell (WBC) count with differential
Platelet count
Prothrombin time
Partial thromboplastin time

 
 
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Serum Chemistry Panel
 
Sodium
Potassium
Bicarbonate
Blood urea nitrogen (BUN)
Creatinine
Aspartate aminotransferase (AST)
Alanine aminotransferase (ALT)
Lactic acid dehydrogenase (LDH)
Uric acid
Gamma-glutamyltransferase (GGT)
Creatine kinase (CK)
Creatine kinase MB fraction (CK-MB)
Troponins
 
Any abnormal laboratory results will be repeated as clinically indicated, until the abnormality has resolved or an alternate explanation of the cause has been discovered. Any other laboratory evaluations not specified in this protocol will be the responsibility of the investigator. See Section 12.2.3, Clinical Laboratory Abnormalities for information on reporting clinical laboratory abnormalities as adverse events.
 
  
Electrocardiogram (ECG)
 
Subjects should have an ECG at screening and within 24 hours before surgery.
 
·  
Vital Signs
 
Subjects vital signs should be recorded at screening and prior to surgery, including: body temperature, heart rate, respiratory rate, and blood pressure [systolic and diastolic blood pressure]), height and weight
 
·  
Serum Pregnancy Test
 
For female subjects with childbearing potential, a serum pregnancy test ( beta-human chorionic gonadotropin [ b -hCG]) will be performed at screening and a urine pregnancy test will be performed within 24 hours before surgery. Samples collected for pregnancy testing may be analyzed at either the central or local laboratory; results must be available before study drug administration. Additional serum or urine pregnancy testing may be performed as required by local regulations (if performed, pregnancy tests must be negative for subjects to continue in the study).
 
 
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Mortality Status
 
Vital status, including   all-cause mortality data (e.g., the cause and date of death), will be collected for all subjects on Day 30 (+5), as well as on Day 90 (+5).
 
  
Perioperative and Post-operative Measurements
 
Heart rate and Blood Pressure Measurements (systemic systolic and diastolic blood pressure) will be recorded at least every 4 hours through surgery and post-op.
 
Any clinically significant abnormalities persisting at the end of the study will be followed by the investigator until resolution or until reaching a clinically stable endpoint.
 
9.7  
Safety Criteria
 
Mortality
 
Occurrence of all-cause mortality.
 
Atrial Fibrillation
 
The incidence of atrial fibrillation reported for the index hospitalization will be reported.
 
Ventricular Fibrillation
 
The incidence of ventricular fibrillation reported for the index hospitalization will be reported.
 
Aborted Resuscitated Death
 
The incidence of survival following a cardiac arrest post-termination of coronary artery bypass surgery during the index hospitalization will be reported.
 
Stroke
 
Stroke will be defined as a new the rapid onset of new neurological deficit of cerebrovascular cause that persists beyond 24 hours (non-fatal) or is interrupted by death within 24 hours (any) with evidence of new neurological lesion on imaging modalities.
 
 
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9.8  
Other Exploratory Evaluations
 
Rehospitalization for any cause through Day 30
 
10.  
SUBJECT COMPLETION/WITHDRAWAL
 
If, at any time after randomization and before the start of study drug, the subject is no longer considered to be an appropriate candidate, the investigator should not proceed with study drug administration, and should document the reason that the subject is no longer a study candidate. The sponsor must be notified of this action. The potential subject will be considered randomized but not treated.
 
10.1  
Completion
 
A subject will be considered as having completed the study if he/she has completed all assessments up to and including Day 30 of the double-blind phase. Subjects who discontinue study treatment will be considered to have completed the study if follow-up is obtained for the planned duration of the double-blind period.
 
Subjects who were randomly assigned to treatment but not treated will be followed for MI and the need for IABP/LVAD through postoperative Day 5; postoperative dialysis through Day 30.
 
The follow-up contact at Day 30 (+5) should be conducted for all subjects that are randomized regardless of their completion status (for details on contact with subject or other documented follow-up, see Section 9.1.2, Screening Phase).
 
A follow-up call will be made at Day 90 (+5) to identify survival status through Day 90.
 
10.2  
Withdrawal from the Study
 
In case a subject is lost-to-follow-up, every possible effort must be made by the study site personnel to contact the subject and determine the reason for withdrawal. The measures taken to follow up must be documented.
 
Subjects have the right to withdraw from the study at any time for any reason. If a subject withdraws from the study before Day 30, the subject should have a complete evaluation performed at the time of withdrawal that includes all Day 30 procedures (see Time and Event Schedule that follows Synopsis). Subjects will be followed for MI and the need for IABP/LVAD through postoperative Day 5; postoperative dialysis through Day 30, and the occurrence of all-cause mortality through Day 90 unless they specifically withdraw their consent for further contact or for medical records review (for details on contact with subject or other documented follow-up, see Section 9.1.2, Screening Phase). When a subject withdraws before completing the study, the reason for withdrawal is to be documented on the eCRF and in the source document. Study drug assigned to the withdrawn subject may not be assigned to another subject. Subjects who withdraw will not be replaced.
 
 
 
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11.  
STATISTICAL METHODS
 
11.1  
Sample Size Determination and Statistical Analyses
 
11.1.1  
General Analytic Considerations
 
The full analysis dataset will include all patients randomized to either levosimendan or placebo. All analyses will be based on the intent-to-treat (ITT) principle using the full analysis dataset and SAS version 9 or higher software. The full details of the analysis will be described in a statistical analysis plan.
 
11.1.2  
Sample Size Determination
 
The composite co-primary endpoint of death, MI, dialysis, or need for a mechanical assist device has an assumed 30-day event rate of 32%. A clinically meaningful relative reduction of 35% for the levosimendan treated subjects (20.8% event rate at 30 days) is assumed for the trial. Thus, a total sample size of 760 will provide 201 events and 80% power to detect a statistically significant difference with a two-sided type I error of 0.01. In the placebo treated arm, the assumed 30-day event rate for the composite of death or need for a mechanical assist device is 18%. With an assumed clinically meaningful relative reduction of 35% for the levosimendan treated patients (11.7% event rate at 30 days) and two-sided type 1 error of 0.04, a total sample size of 760 will provide 113 events and 61% power to detect a statistically significant difference. The assumed event rates for co-primary endpoints are conservative and supported by event rates from prior trials and registries in similar patient populations. 6, 12, 50 The assumed event rate reduction of 35% is somewhat conservative based on recent meta-analyses of levosimendan in similar patient populations 42, 49 and data from the largest randomized clinical trial in which levosimendan was administered in advance of the patient’s cardiac surgery. 57
 
 
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A simulation with 10,000 iterations using the assumptions for each co-primary endpoint identified above and a sample size of 760 indicated a combined ~86% power to demonstrate that levosimendan treatment is significantly better than placebo in one or both of the co-primary endpoints.
 
These sample size calculations assumed a 1 levosimendan: 1 placebo allocation ratio and were calculated using nQuery Advisor 6.0 software.
 
11.1.3  
Randomization
 
A complete randomization scheme will be applied with a 1 levosimendan : 1 placebo allocation ratio. The complete randomization scheme will eliminate the possible bias due to predictability of treatment assignment. 58
 
11.2  
Interim Analyses
 
The planned interim efficacy analyses will focus on the dual composite endpoint of all-cause death or mechanical assist.   (No hypothesis testing of the co-primary quad endpoint will be conducted on interim data sets).  Two interim reviews are planned to occur after roughly 50% and 70% of the planned 113 events for the dual co-primary endpoint (57and 80 events, respectively).  Futility assessments will be conducted at the same meetings. The guidelines for the futility assessment will recommend stopping the study if the all-cause death endpoint and both co-primary endpoints have odds ratios > 1.0 suggesting better outcomes for the control group. The interim efficacy analyses will be assessed using a one-sided O’Brien Fleming (OBF) type spending function on the dual co-primary endpoint of death or mechanical assist. 59, 60   Recommendations for stopping for efficacy will include crossing the O’Brien Fleming boundary in analysis of the dual co-primary endpoint of all-cause mortality and mechanical assist AND having at least a 1% benefit for levosimendan for the all-cause death endpoint at 30 days.
 
An independent DSMC will be established to monitor the progress of the study and ensure that the safety of subjects enrolled in the study is not compromised. The DSMC will review enrollment and safety data at regular intervals. The first DSMC review will be conducted after the first 200 enrolled patients have completed 30 days of follow-up.  In addition to reviewing patient safety, the DSMC will review event rates.  Should the event rate in the control arm be below the planned 32%, the DSMC may recommend an increase in the percentage of patients with LVEF ≤20% to bring the event rate to the planned 32%.   Additional reviews will be conducted after 50% and 70% of the113 study events for the co-primary endpoint of all-cause mortality or mechanical assist (57 and 80 events, respectively).  Additionally the DSMC will conduct the interim efficacy and futility reviews described above.
 
 
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11.3  
Primary and Secondary Analyses
 
The composite primary endpoints include individual binary events.  The primary analyses for the composite endpoints will be evaluated in a logistic regression models with an indicator variable for the treatment group, an indicator variable for CABG+mitral valve surgery or isolated mitral valve surgery, the baseline value of LVEF, age, and sex. The same approach will be used in tests for efficacy at the conclusion of the study and at each interim analysis.  The treatment effect will be s ummarized using the odds ratio with a 96% CI for the dual endpoint (α=0.04) and 99% CI for the quad endpoint (α=0.01).
 
If the study should continue to conclusion (201events for the quad endpoint) the statistical significance for the dual co-primary endpoint will be based on a comparison of the p-value with the alpha level adjusted for the planned interim reviews. If the null hypothesis for the dual co-primary endpoint is rejected, there will be no formal analysis of the quad endpoint; rather there will be a descriptive analysis of the quad endpoint and its components.  If the final analysis fails to show a significant difference for the dual co-primary endpoint at the OBF adjusted 0.04 significance level, the Bonferroni method will be applied to test the quad co-primary endpoint at the two-sided 0.01 level. 61
 
Statistical significance for the secondary endpoints will be based on the procedure of Hung, Wang, and O’Neill 62 to ensure strong control of the overall type I error.  Specifically, the second option of Hung et al. with OBF adjust ment for interim looks will be applied as a more conservative adjustment of the type I error (initially set at α=0.05).
 
Binary endpoints will be summarized using frequencies and percentages. Analyses of binary endpoints will be conducted using logistic regression models using adjustments as described above.
 
In secondary analyses, time-to-event endpoints will be summarized using cumulative incidence rates (or Kaplan-Meier estimates if appropriate). Unadjusted comparisons of time-to-event endpoints will be conducted using log rank tests; adjusted comparisons will be based on hazard ratio estimates from Cox proportional hazards models.
 
 
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Continuous endpoints will be summarized using the five number summary (median, 25 th percentile, 75 th percentile, mean, and standard deviation). Adjusted comparisons for continuous endpoints will be evaluated using linear regression models.
 
11.4  
Other Efficacy Endpoint Analyses
 
Rehospitalization for any cause through Day 30 will be summarized and compared across treatment groups.
 
11.5  
Subgroup Analyses
 
Subgroup analyses based on age, sex, combined CABG/mitral valve repair patients, isolated mitral valve repair patients, re-do CABG procedure, medical history (e.g., diabetes, hypertension, and anemia), level of LVEF, and baseline right heart pressures, baseline BNP and NT pro-BNP will be performed. Other subgroups may be prespecified in the statistical analysis plan.
 
11.6  
Health Economics Analyses
 
Health economic analyses will be exploratory. Resource utilization assessments will be summarized by treatment group.
 
11.7  
Safety Analyses
 
The safety population will be based on the treated population, and will be analyzed according to the actual treatment received.
 
Data collected on all subjects who were randomized but did not receive study drug will be listed and summarized, if appropriate.
 
Adverse Events
 
The original terms used in the eCRFs by investigators to identify adverse events will be coded using the Medical Dictionary for Regulatory Activities (MedDRA). A listing of all adverse events by subject and treatment will be produced.
 
Adverse events reported during surgery, after surgery, during treatment, and during the entire study will be summarized. The incidence rates of symptomatic and asymptomatic hypotension will be presented. The incidence rates of treatment-emergent serious adverse events and adverse events leading to discontinuation of study drug will be summarized by treatment, system organ class, and preferred term. Adverse events reported after the first study drug exposure will be summarized, and a separate summary will be provided for adverse events reported before the first study drug exposure. Adverse event data will also be summarized by maximum severity and relationship to study drug.
 
 
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Concomitant Medications
 
Concomitant medications recorded on an eCRF that lists the common medications used in this subject population will be summarized. Concomitant medications will be classified using the World Health Organization Drug Dictionary (WHODRL). The frequency of use of selected concomitant medications specified in the study manual including secondary inotropes (dobutamine, milrinone, epinephrine, norepinephrine), pressors, and antiarrhythmics will be summarized.
 
Clinical Laboratory Tests
 
Laboratory data will be summarized by the type of laboratory test. Normal reference ranges and markedly abnormal results (specified in the Statistical Analysis Plan) will be used in the summary of laboratory data. Descriptive statistics will be calculated for each laboratory analyte at baseline and at each scheduled time point.
 
Mortality
 
The mortality rates from randomization through Day 90 will be analyzed for all safety evaluable subjects and the ITT population using the chi-square..
 
Atrial Fibrillation
 
The incidence of atrial fibrillation reported for the index hospitalization will be analyzed for all safety evaluable subjects and the ITT population using the chi-square as specified above in Statistics Section.
 
Ventricular Fibrillation
 
The incidence of ventricular fibrillation reported for the index hospitalization will be analyzed for all safety evaluable subjects and the ITT population using the chi-square as specified above in Statistics Section.
 
 
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Aborted Resuscitated Death
 
The incidence of survival following a cardiac arrest post-termination of coronary artery bypass surgery during the index hospitalization will be analyzed for all safety evaluable subjects and the ITT population using the chi-square as specified above in Statistics Section.
 
Stroke
 
The incidence of stroke during the index hospitalization will be analyzed for all safety evaluable subjects and the ITT population using the chi-square as specified above in Statistics Section. Stroke will be adjudicated using the following criteria: a new the rapid onset of new neurological deficit of cerebrovascular cause that persists beyond 24 hours (non-fatal) or is interrupted by death within 24 hours (any) with evidence of new neurological lesion on imaging modalities.
 
11.8  
Interim Analyses
 
An independent DSMC will be established to monitor the progress of the study, ensure that the safety of subjects enrolled in the study is not compromised, and determine if the study should be stopped for futility/efficacy or the study population should be enhanced with a higher percentage of patients with lower baseline LVEF to meet the initial event rate assumptions included in calculations of study sample size/power. The DSMC will not be otherwise involved in the conduct of the study. See Section 3.3, Study Committees and Section 12.2.5, Processing Primary Clinical Endpoint Safety Events for additional information on the DSMC.
 
12.  
ADVERSE EVENT REPORTING
 
Timely, accurate, and complete reporting and analysis of safety information from clinical studies are crucial for the protection of subjects, investigators, and the sponsor, and are mandated by regulatory agencies worldwide. The sponsor has established Standard Operating Procedures (SOPs) in conformity with regulatory requirements worldwide to ensure appropriate reporting of safety information; all clinical studies conducted by the sponsor or its affiliates will be conducted in accordance with those procedures.
 
All subjects will be asked to provide contact details, including a named representative with personal knowledge of the subject, to ensure follow-up at Day 90 (for details on contact with subject or other documented follow-up, see Section 9.1.2, Screening Phase).
 
 
 
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12.1  
Definitions
 
12.1.1  
Adverse Event Definitions and Classifications
 
  
Adverse Event
 
An adverse event is any untoward medical occurrence associated with the use of a drug in humans, whether or not considered drug related. An adverse event does not necessarily have a causal relationship with the treatment. An adverse event can therefore be any unfavorable and unintended sign (including an abnormal finding), symptom, or disease temporally associated with the use of a medicinal (investigational) product, whether or not related to the medicinal (investigational) product. (Definition per International Conference on Harmonization [ICH]).
 
This includes any occurrence that is new in onset or aggravated in severity or frequency from the baseline condition, or abnormal results of diagnostic procedures, including laboratory test abnormalities.
 
Note: The investigator will record adverse events in the eCRF starting with the signing of the informed consent.
 
  
Life-threatening Adverse Event or Life-threatening Suspected Adverse Reaction
 
An adverse event or suspected adverse reaction is considered ‘‘life-threatening’’ if, in the view of either the investigator or sponsor, its occurrence places the patient or subject at immediate risk of death. It does not include an adverse event or suspected adverse reaction that, had it occurred in a more severe form, might have caused death.
 
  
Serious Adverse Event or Serious Suspected Adverse Reaction
 
An adverse event or suspected adverse reaction is considered ‘‘serious’’ if, in the view of either the investigator or sponsor, it results in any of the following outcomes:
 
–  
death
 
–  
life-threatening adverse event
 
 
(The subject was at risk of death at the time of the event. It does not refer to an event that hypothetically might have caused death if it were more severe.)
 
–  
inpatient hospitalization or prolongation of existing hospitalization
 
 
 
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–  
persistent or significant incapacity or substantial disruption of the ability to conduct normal life functions, or
 
–  
a congenital anomaly/birth defect
 
Note: Medical and scientific judgment should be exercised in deciding whether expedited reporting is also appropriate in situations other than those listed above. For example, important medical events may not be immediately life threatening or result in death or hospitalization but may jeopardize the subject or may require intervention to prevent one of the outcomes listed in the definition above. Any adverse event is considered a serious adverse event if it is associated with clinical signs or symptoms judged by the investigator to have a significant clinical impact
 
Suspected adverse reaction
 
A suspected adverse reaction means any adverse event for which there is a reasonable possibility that the drug caused the adverse event. For the purposes of IND safety reporting, ‘‘reasonable possibility’’ means there is evidence to suggest a causal relationship between the drug and the adverse event. Suspected adverse reaction implies a lesser degree of certainty about causality than adverse reaction, which means any adverse event caused by a drug.
 
Unlisted Adverse Event or Unexpected Suspected Adverse Reaction
 
An adverse event or suspected adverse reaction is considered ‘‘unexpected’’ if it is not listed in the investigator brochure or is not listed at the specificity or severity that has been observed.
 
Note: ‘‘Unexpected,’’ as used in this definition, also refers to adverse events or suspected adverse reactions that are mentioned in the investigator brochure as occurring with a class of drugs or as anticipated from the pharmacological properties of the drug, but are not specifically mentioned as occurring with the particular drug under investigation.
 
Associated With the Use of the Drug
 
An adverse event is considered associated with the use of the drug if the attribution is possible, probable, or very likely by the definitions listed in Section 12.1.2.
 
 
 
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12.1.2  
Attribution Definitions
 
·  
Not related
 
 
An adverse event that is not related to the use of the drug.
 
·  
Doubtful
 
 
An adverse event for which an alternative explanation is more likely, e.g., concomitant drug(s), concomitant disease(s), or the relationship in time suggests that a causal relationship is unlikely.
 
·  
Possible
 
 
An adverse event that might be due to the use of the drug. An alternative explanation, e.g., concomitant drug(s), concomitant disease(s), is inconclusive. The relationship in time is reasonable; therefore, the causal relationship cannot be excluded.
 
  
Probable
 
 
An adverse event that might be due to the use of the drug. The relationship in time is suggestive (e.g., confirmed by dechallenge). An alternative explanation is less likely, e.g., concomitant drug(s), concomitant disease(s).
 
·  
Very likely
 
 
An adverse event that is listed as a possible adverse reaction and cannot be reasonably explained by an alternative explanation, e.g., concomitant drug(s), concomitant disease(s). The relationship in time is very suggestive (e.g., it is confirmed by dechallenge and rechallenge).
 
12.1.3  
Events That Do Not Qualify as an Adverse Event
 
Adverse events should not be recorded in the eCRF if they are represented by any of the following:
 
  
Medical or surgical procedures (e.g., surgery, endoscopy, tooth extraction, transfusion); however, the condition that required the procedure is considered an adverse event if the situation developed or worsened after enrollment into the study.
 
  
Pre-existing diseases or baseline conditions present or detected at the start of the study that do not worsen.
 
 
 
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Situations where an untoward medical occurrence has not taken place (e.g., hospitalization for elective surgery, social or convenience admissions).
 
For the purposes of this study in cardiac surgery patients undergoing CABG/mitral valve surgery, the following adverse events will be considered to be part of the expected postoperative course and will NOT be reported on either the SAE form or the Adverse Event eCRF unless the investigator feels they deviate from the typical course :
 
  
Expected incisional pain, paresthesia, and dysesthesias requiring analgesics or narcotics;
 
  
Expected edema of the lower leg or foot (due to vein harvesting) or mild post-pump systemic edema;
 
  
Expected alteration in appetite, including anorexia or mild nausea/vomiting;
 
  
Expected alteration in bowel habits, including constipation, flatulence and mild diarrhea;
 
  
Expected mild degrees of insomnia, confusion or anxiety requiring treatment with sedatives, anxiolytics or hypnotics;
 
  
Mild hypokalemia or hypocalcemia requiring modest replacement unless prolonged beyond the immediate post-CPB pump period (i.e., within 12 hours);
 
  
Mildly decreased hematocrit/hemoglobin due to intraoperative blood loss/dilution with onset during the post-CPB period (e.g., loss of > 5.0 g/L hemoglobin or requiring > 2 U red blood cell transfusion);
 
  
Expected mild post-thoracotomy pleural effusion and/or atelectasis;
 
  
Expected low-grade, self-limited fever ( £ 101 o F or 38.3 o C).
 
12.2  
Procedures
 
12.2.1  
All Adverse Events
 
Non-serious adverse events will be reported from the time a signed and dated informed consent form is obtained until 14 days after the start of study drug or discharge from the hospital, whichever occurs first.
 
 
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Those adverse events meeting the definition of serious adverse events will be reported from the time a signed and dated informed consent form is obtained until 30 days after the start of study drug and must be reported using the Serious Adverse Event eCRF, Clinical Endpoint eCRF, or Death eCRF. For additional information on reporting serious adverse events and reporting primary clinical endpoint (PCE) safety events refer to Section 12.2.4 (Serious Adverse Events) and Section 12.2.5 (Processing Primary Clinical Endpoint Safety Events).
 
No use of commercial levosimendan (Simdax) is permitted within 30 days before study drug initiation. During the 30-day double-blind treatment and post-treatment phases, no use of levosimendan is permitted unless the subject is rehospitalized for congestive heart failure. If subjects are treated with commercial Levosimendan, adverse events that are observed related to commercially available levosimendan during the follow-up period (30 day follow-up contact), are considered postmarketing events and should be transmitted within 24 hours . Facsimiles should be forwarded to:
 
–  
Fax information for expedited reporting will be identified in the study manual
 
Any subject with a continuing adverse event will be treated according to accepted medical standards and an attempt should be made to follow all adverse events until one of the following criteria has been met: (1) the adverse event resolves; (2) the investigator, after conferring with the sponsor’s medical monitor, determines that the subject’s condition is stable; or (3) the subject is considered lost to follow-up. Subjects who withdraw from the study and have an ongoing adverse event at the time of withdrawal, will be followed until one of the above criteria is met or for 90 days after the start of study drug.
 
Subjects who are randomly assigned to treatment but not treated will be followed for 14 days after randomization (or through discharge from hospital, if earlier) for new non-serious adverse events and for 30 days after randomization for new serious adverse events.
 
All adverse events, regardless of seriousness, severity, or presumed relationship to study therapy, must be recorded using medical terminology in the source document and the eCRF. Whenever possible, diagnoses should be given when signs and symptoms are due to a common etiology (e.g., cough, runny nose, sneezing, sore throat, and head congestion should be reported as “upper respiratory infection”). Investigators must record in the eCRF and in the source document their opinion concerning the relationship of the adverse event to study therapy. All measures required for adverse event management must be recorded in the source document and reported according to sponsor instructions.
 
 
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The sponsor assumes responsibility for appropriate reporting of adverse events to the regulatory authorities. The sponsor will also report to the investigator all serious adverse events that are unlisted and associated with the use of the drug. The investigator (or sponsor where required) must report these events to the appropriate Independent Ethics Committee/Institutional Review Board (IEC/IRB) that approved the protocol unless otherwise required and documented by the IEC/IRB.
 
Subjects (or their designees, if appropriate) must be provided with a “study card” indicating the name of the investigational product, the study number, the investigator’s name, a 24-hour emergency contact number, and, if applicable, excluded concomitant medications.
 
12.2.2  
Study-specific Adverse Events
 
Hypotension
 
Since there is no single blood pressure measurement that will define hypotension for all study subjects, hypotension is to be recorded as an adverse event if the observed decrease in blood pressure was in excess of what the investigator anticipated.
 
In the conscious subject, whenever hypotension is recorded as an adverse event it is to be classified as either:
 
a significant decrease in SBP or sufficiently low blood pressure defined as £ 80 mmHg.
 
Postoperative Atrial Fibrillation
 
New-onset of postoperative atrial fibrillation from the end of surgery through index hospitalization. Clinical significant atrial fibrillation will be recorded as an adverse event on the adverse event eCRF.
 
Other Clinically Significant Arrhythmias
 
With the exception of new-onset postoperative atrial fibrillation (a secondary endpoint in this study), clinically significant arrhythmias will be defined as any rhythm that requires medical intervention such as pacing, or the addition, removal, or dose adjustment of any drugs in an attempt to treat the abnormal rhythm. Clinically significant arrhythmias will be recorded as an adverse event on the adverse event eCRF.
 
 
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Aborted Resuscitated Death
 
The incidence of survival following a cardiac arrest post-termination of coronary artery bypass surgery during the index hospitalization will be reported.
 
Stroke
 
Stroke will be defined as a new the rapid onset of new neurological deficit of cerebrovascular cause that persists beyond 24 hours (non-fatal) or is interrupted by death within 24 hours (any) with evidence of new neurological lesion on imaging modalities.
 
12.2.3  
Clinical Laboratory Abnormalities
 
Laboratory test results and associated units and reference ranges will be recorded on the laboratory results pages of the eCRF, or appear on electronically produced laboratory reports submitted directly from the central laboratory, if applicable. Laboratory test value abnormalities or additional safety laboratory tests not specified in this protocol should be reported as adverse events only if they result in a clinically relevant condition.
 
Clinically significant changes in the clinical laboratory evaluations should be reported within 24 hours by the investigator (or designee) to the sponsor or designee, if necessary. Additionally, any abnormal clinically significant laboratory finding should be repeated as soon as possible and followed up until the values have returned to the normal range or an adequate explanation of the abnormality is determined.
 
12.2.4  
Serious Adverse Events
 
All serious adverse events occurring during clinical studies must be reported to the appropriate sponsor contact person by investigational staff within 24 hours of their knowledge of the event. All serious adverse events, regardless of causality will be collected for 30 days after the start of study drug.
 
For additional information on reporting safety events that are included in co-primary study endpoints, refer to Section 12.2.5, Processing Primary Clinical Endpoint Safety Events.
 
 
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A large number of subjects will experience other well-recognized adverse events during the intra- and postoperative periods that are typical comorbidities of the CABG/mitral valve surgery procedure. Comorbidities associated with CABG/mitral valve surgery often provides a likely alternative explanation for the occurrence of these specific events. The following table lists some of these events should typically not be expedited as SAEs.
 
C ommon Cardiothoracic Postoperative Complications;
Typically Not to be Expedited as SAEs
Deep venous thrombosis
Pulmonary embolism
Respiratory failure
Pneumonia
Congestive heart failure worsening
Wound infections
 
Postoperative pain
 
All serious adverse events that have not resolved by the end of the study, or that have not resolved upon discontinuation of the subject’s participation in the study, must be followed until any of the following occurs:
 
  
the event resolves
 
  
the event stabilizes
 
  
the event returns to baseline, if a baseline value is available
 
  
the event can be attributed to agents other than the study drug or to factors unrelated to study conduct
 
  
when it becomes unlikely that any additional information can be obtained (subject or health care practitioner refusal to provide additional information, lost to follow-up after demonstration of due diligence with follow-up efforts)
 
Any event requiring hospitalization (or prolongation of hospitalization) following the index hospitalization and CABG/mitral valve surgery must be reported as a serious adverse event.
 
The sponsor will evaluate any safety information that is spontaneously reported by an investigator beyond the time frame specified in the protocol.
 
 
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12.2.5  
Processing Primary Clinical Endpoint Safety Events
 
Deaths (through Day 90), MI (perioperative through postoperative Day 5), dialysis (through Day 30), and mechanical assist (perioperative through Day 5 are included in co-primary study endpoints should be entered on a Clinical Endpoint eCRF, and should not be recorded on the SAE eCRF.
 
As these are also safety events, applying standard serious adverse event reporting practices may lead to unblinding and loss of statistical power. Therefore, these events will be collected on the aforementioned specialized Clinical Event eCRFs but not reported in an expedited manner.
 
The sponsor will have an independent DSMC monitor mortality rates, as well as frequencies of safety specific adverse events of interest, study specific serious adverse events (Section 12.2.2), and clinical events (included in co-primary study endpoints) in both study groups to ensure that any untoward trend be promptly identified and communicated to the sponsor so that subject safety will be protected at all times.
 
12.2.6  
Pregnancies
 
Studies with levosimendan have not been performed in pregnant women. Subjects of childbearing potential should use effective contraception with their partners during the period of study treatment.
 
A female subject must be instructed that, if she becomes pregnant during the study, she must immediately inform the investigator. Pregnancies occurring up to 90 days after discontinuation of levosimendan also must be reported to the investigator. The subject should be advised of the risks of continuing the pregnancy and the possible teratogenic effects of levosimendan.
 
The investigator should report all pregnancies to the sponsor within 24 hours of becoming aware of the pregnancy. Within 24 hours of learning of the pregnancy, the investigator should complete a Serious Adverse Event Report eCRF. Monitoring of the subject should continue until conclusion of the pregnancy. The investigator will complete eCRFs to provide the sponsor with information concerning the subject’s pregnancy and information after birth.
 
Pregnancy occurring in the partner of a male subject participating in the study similarly should be reported to the investigator and the sponsor. The partner should be counseled and followed as described above.
 
 
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12.2.7  
Contacting Sponsor Regarding Safety
 
The names of the individuals (and corresponding telephone numbers) who should be contacted regarding safety issues or questions regarding the study are listed on the Contact Information page(s), which will be provided as a separate document.
 
13.  
STUDY DRUG INFORMATION
 
13.1  
Physical Description of Study Drugs
 
13.1.1  
Levosimendan
 
Levosimendan and matching placebo will be provided to investigators by the sponsor as a sterile clear, yellow to orange solution in clear glass vials. Each vial contains a 5 mL volume and is intended for a single use. Levosimendan is supplied at 2.5 mg/mL (12.5 mg/5 mL) and includes levosimendan, povidone, citric acid and ethanol.
 
13.1.2  
Matching Placebo
 
Placebo is a sterile infusion solution that includes a coloring agent in order to achieve a similar color to levosimendan. The complete composition of placebo for levosimendan 2.5 mg/mL infusion concentrate includes: riboflavin sodium phosphate, ethanol and water for injection.
 
13.2  
Packaging
 
Levosimendan and placebo will be provided in sterile, single-use clear rubber-stoppered glass vials. Details on the packaging of study drug will be provided in the study manual.
 
13.3  
Labeling
 
Study drug labels and cartons will contain information to meet the applicable regulatory requirements.
 
Each vial will have a double-panel tear-off label with directions for use and other information on each part.
 
Specialized drug accountability forms will be provided for tracking study drug administration. The tear-off labels from the vial will be affixed to the subject’s drug accountability form to document drug reconstitution (vial usage). See the Pharmacy Manual for detailed instructions.
 
 
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13.4  
Preparation and Handling
 
Study drug (levosimendan, placebo) will be prepared by study personnel blinded to the treatment group.
 
Levosimendan 2.5 mg/mL (Simdax, Orion Corporation, Espoo, Finland) infusion concentrate is supplied in a volume of 5 mL (with a small overage) in clear rubber-stoppered glass vials. The composition of levosimendan 2.5 mg/mL infusion concentrates includes: Levosimendan, povidone, citric acid and ethanol.
 
Study drug (levosimendan infusion concentrate, placebo concentrate) must be stored between 2-8°C (35-46°F) in a temperature monitored refrigerator which can be locked and protected from light.
 
The study drug must be prepared immediately prior to use. Dilution of the study drug should be performed as described below.
 
One (or two) 5 mL vials of study drug (from one of the two patient pack boxes in a numbered package) are added to one 250 mL (or 500 mL) infusion bag of 5% Dextrose according to the patient’s body weight as follows.
 
  
For patients < 85 kg by adding one (1) 5 mL vial of levosimendan/placebo infusion concentrate to one 250 mL infusion bag or bottle of 5% Dextrose.
 
  
For patients ³ 85 kg by adding two (2) 5 mL vials of levosimendan/placebo infusion concentrate to one 500 mL infusion bag or bottle of 5% Dextrose.
 
The concentration of the study drug is approximately 50 µg/mL (12.5 mg/255 mL in a 250 mL bag; 25 mg/510 mL in a 500 mL bag). Immediately after dilution, the infusion bags are covered with light amber IV/tubing sleeves to protect the infusion solution from light. The two-part label found within the box is completed by the study nurse and then attached to the infusion bag to confirm dilution. The smaller “tear off” label is removed by the investigator (study nurse) on starting the infusion and attached to the drug accountability documentation with the CRF to confirm the study drug received by an individual subject. Empty vials must not be discarded but placed back in the box and the supplied tamper evident seals applied.
 
 
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Since the stability of the diluted medication has been established for 24 hours only, the study drug infusion must not continue for more than 24 hours after the time of initial dilution. On completion of the 24 hour infusion period, all study medication bags (and contents) still covered by the amber sleeving should be destroyed appropriately and destruction will be documented. The colored plastic sleeves must not be removed or tampered with by the study center team members.
 
13.5  
Drug Accountability
 
The clinical investigator is responsible for ensuring that all study drug received at the site is inventoried and accounted for throughout the study. The dispensing of study drug to the subject, and the return of study drug from the subject (if applicable), must be documented on the drug accountability form. Contents of the study drug containers must not be combined.
 
Study drug must be handled strictly in accordance with the protocol and the container label and will be stored in a limited access area or in a locked cabinet under appropriate environmental conditions. Unused study drug, and study drug returned by the subject (if applicable), must be available for verification by the sponsor’s or designee’s site monitor during on-site monitoring visits. The return to the sponsor of unused study drug, or used returned study drug for destruction, will be documented on the Drug Return Form.
 
Procedures for final disposition of unused study drug (e.g., return to the sponsor, third-party contractor, or designee, or destruction at the site) may vary from region to region. Please refer to the Study Reference Manual (Accountability) for specific guidance.
 
Study drug should be dispensed under the supervision of the investigator, a qualified member of the investigational staff, or by a hospital/clinic pharmacist. Study drug will be supplied only to subjects participating in the study. Returned study drug must not be dispensed again, even to the same subject. Study drug may not be relabeled or reassigned for use by other subjects. The investigator agrees neither to dispense the study drug from, nor store it at, any site other than the study sites agreed upon with the sponsor.
 
 
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14.  
STUDY-SPECIFIC MATERIALS
 
The investigator will be provided with the following supplies, including but not limited to:
 
  
Study Reference Manual
 
  
Pharmacy Manual
 
  
IVRS Manual
 
  
Laboratory Manual
 
15.  
ETHICAL ASPECTS
 
15.1  
Study-Specific Design Considerations
 
The current study is a randomized, double-blind study of levosimendan in addition to standard of care compared with standard of care. The study population is well defined (documented LVEF £ 30% with or without congestive heart failure [NYHA Class I to IV] who are undergoing 1) CABG with or without mitral valve repair or replacement or 2) isolated mitral valve repair/replacement, and who will be placed on CPB during surgery and 18 years or older). Both treatment groups will receive the standard of care therapy in addition to study drug (levosimendan or placebo). The study is blinded to reduce treatment and assessment bias during the study. Levosimendan is approved for the treatment of acute decompensated heart failure and has been shown to decrease morbidity and mortality in small studies that included similar subject population to the target population in this study. Therefore, it is reasonable to study whether or not the addition of levosimendan to standard of care therapy can provide additional and meaningful clinical benefit to patients with left ventricular systolic dysfunction undergoing cardiac surgery.
 
The assessment of the safety of levosimendan in the literature is consistent in that no clinical studies evaluating patients with either heart failure or patients undergoing cardiac surgery have reported increased all-cause mortality.
 
The target population in this study is quite distinct from those previously studied in large randomized clinical trial (e.g., acute decompensated heart failure, chronic heart failure) in that subjects in this study not only have left ventricular systolic dysfunction with or without a history of congestive heart failure, but are also undergoing cardiac surgery on CPB. The pathophysiology of their condition, the effect of surgery and CPB, as well as the type and proportion of standard of care therapies are therefore quite unique in this study. Further, a meta-analysis performed by DCRI of all available studies evaluating levosimendan in patients undergoing cardiac surgery showed encouraging results from morbidity and mortality standpoint.
 
 
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All participating subjects will receive standard of care treatment and will be followed closely for safety and efficacy. This study is therefore undertaken to further clarify the benefit-risk profile associated with levosimendan in subjects with pre-existing left ventricular systolic dysfunction undergoing cardiac surgery on CPB.
 
Efficacy assessments will occur according to generally accepted measures of MI, need for dialysis, need for IABP or LVAD, as well as mortality. Safety assessments will occur through regular clinical assessments, clinic visits, and laboratory analyses. Approximately 100 mL of blood will be drawn from each subject for study-specific procedures during the double-blind phase (through Day 30) of the study. Overall, the volume of blood to be drawn for study-specific procedures is deemed reasonable over the time frame of the study.
 
A DSMC will follow safety during the study at regular intervals and in any prespecified interim analyses. The initial safety review will include the first 450 patients completing the 30 day follow-up. Efficacy variables will be derived from ECG and laboratory measurements and information recorded on eCRFs throughout the study.
 
Subjects will be informed that their participation is voluntary and that they may withdraw consent to participate at any time. Subjects will be provided all necessary information about the study and the study drug involved so that they can provide fully informed consent. Subjects will be updated as new information about the study drug becomes available.
 
Pregnancy testing will be done on all women of childbearing potential before randomization and as determined necessary by the investigator or required by local regulations.
 
 
 
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15.2  
Regulatory Ethics Compliance
 
15.2.1  
Investigator Responsibilities
 
The investigator is responsible for ensuring that the clinical study is performed in accordance with the protocol, current ICH guidelines on Good Clinical Practice (GCP), and applicable regulatory requirements.
 
GCP is an international ethical and scientific quality standard for designing, conducting, recording, and reporting studies that involve the participation of human subjects. Compliance with this standard provides public assurance that the rights, safety, and well-being of study subjects are protected, consistent with the principles that originated in the Declaration of Helsinki and that the clinical study data are credible.
 
15.2.2  
Independent Ethics Committee or Institutional Review Board (IEC/IRB)
 
Before the start of the study, the investigator (or sponsor where required) will provide the IEC/IRB with current and complete copies of the following documents:
 
  
Final protocol and, if applicable, amendments
 
  
Sponsor-approved informed consent form (and any other written materials to be provided to the subjects)
 
  
Investigator’s Brochure (or equivalent information) and amendments
 
  
Sponsor-approved subject recruiting materials
 
  
Information on compensation for study-related injuries or payment to subjects for participation in the study, if applicable
 
  
Investigator’s curriculum vitae or equivalent information (unless not required, as documented by IEC/IRB)
 
  
Information regarding funding, name of the sponsor, institutional affiliations, other potential conflicts of interest, and incentives for subjects
 
  
Any other documents that the IEC/IRB requests to fulfill its obligation
 
This study will be undertaken only after IEC/IRB has given full approval of the final protocol, amendments (if any), the informed consent form, applicable recruiting materials, and subject compensation programs, and the sponsor has received a copy of this approval. This approval letter must be dated and must clearly identify the documents being approved.
 
 
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During the study the investigator (or sponsor where required) will send the following documents to the IEC/IRB for their review and approval, where appropriate:
 
  
Protocol amendments
 
  
Revision(s) to informed consent form and any other written materials to be provided to subjects
 
  
If applicable, new or revised subject recruiting materials approved by the sponsor
 
  
Revisions to compensation for study-related injuries or payment to subjects for participation in the study, if applicable
 
  
Investigator’s Brochure amendments or new edition(s)
 
  
Summaries of the status of the study (at least annually or at intervals stipulated in guidelines of the IEC/IRB)
 
  
Reports of adverse events that are serious, unlisted, and associated with the investigational drug
 
  
New information that may adversely affect the safety of the subjects or the conduct of the study
 
  
Deviations from or changes to the protocol to eliminate immediate hazards to the subjects
 
  
Report of deaths of subjects under the investigator's care
 
  
Notification if a new investigator is responsible for the study at the site
 
·  
Any other requirements of the IEC/IRB
 
For protocol amendments that increase subject risk, the amendment and applicable informed consent form revisions must be submitted promptly to the IEC/IRB for review and approval before implementation of the change(s).
 
At least once a year, the IEC/IRB will be asked to review and reapprove this clinical study. This request should be documented in writing.
 
 
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At the end of the study, the investigator (or sponsor where required) will notify the IEC/IRB about the study completion.
 
15.2.3  
Informed Consent
 
Each subject or a legally acceptable representative must give written consent according to local requirements after the nature of the study has been fully explained. The consent form must be signed before performance of any study-related activity. The consent form that is used must be approved by both the sponsor and by the reviewing IEC/IRB. The informed consent should be in accordance with principles that originated in the Declaration of Helsinki, current ICH and GCP guidelines, applicable regulatory requirements, and sponsor policy.
 
Before entry into the study, the investigator or an authorized member of the investigational staff must explain to potential subjects or their legally acceptable representatives the aims, methods, reasonably anticipated benefits, and potential hazards of the study, and any discomfort it may entail. Subjects will be informed that their participation is voluntary and that they may withdraw consent to participate at any time. They will be informed that choosing not to participate will not affect the care the subject will receive for the treatment of his/her disease. Subjects will be told that alternative treatments are available if they refuse to take part and that such refusal will not prejudice future treatment. Finally, they will be told that the investigator will maintain a subject identification register for the purposes of long-term follow-up if needed and that their records may be accessed by health authorities and authorized sponsor or designee staff without violating the confidentiality of the subject, to the extent permitted by the applicable law(s) or regulations. By signing the informed consent form the subject or legally acceptable representative is authorizing such access, and agrees to be recontacted after study completion, by health authorities and authorized sponsor staff, for the purpose of obtaining consent for additional safety evaluations if needed.
 
The subject or legally acceptable representative will be given sufficient time to read the informed consent form and the opportunity to ask questions. After this explanation and before entry into the study, consent should be appropriately recorded by means of either the subject's or his/her legally acceptable representative's dated signature. After having obtained the consent, a copy of the informed consent form must be given to the subject.
 
 
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If the subject or legally acceptable representative is unable to read or write, an impartial witness should be present for the entire informed consent process (which includes reading and explaining all written information) and should personally date and sign the informed consent form after the oral consent of the subject or legally acceptable representative is obtained.
 
15.2.4  
Privacy of Personal Data
 
The collection and processing of personal data from subjects enrolled in this study will be limited to those data that are necessary to investigate the efficacy, safety, quality, and utility of the investigational product(s) used in this study.
 
These data must be collected and processed with adequate precautions to ensure confidentiality and compliance with applicable data privacy protection laws and regulations.
 
The sponsor ensures that the personal data will be
 
  
Processed fairly and lawfully
 
  
Collected for specified, explicit, and legitimate purposes and not further processed in a way incompatible with these purposes
 
  
Adequate, relevant, and not excessive in relation to said purposes
 
  
Accurate and, where necessary, kept current
 
Explicit consent for the processing of personal data will be obtained from the participating subject (or his/her legally acceptable representative) before collection of data. Such consent should also address the transfer of the data to other entities and to other countries.
 
The subject has the right to request through the investigator access to his/her personal data and the right to request rectification of any data that are not correct or complete. Reasonable steps should be taken to respond to such a request, taking into consideration the nature of the request, the conditions of the study, and the applicable laws and regulations.
 
Appropriate technical and organizational measures to protect the personal data against unauthorized disclosures or access, accidental or unlawful destruction, or accidental loss or alteration must be put in place. Sponsor personnel whose responsibilities require access to personal data agree to keep the identity of study subjects confidential.
 
 
 
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16.  
ADMINISTRATIVE REQUIREMENTS
 
16.1  
Protocol Modifications
 
Neither the investigator nor the sponsor will modify this protocol without a formal amendment. All protocol amendments must be issued by the sponsor, and signed and dated by the investigator. Protocol amendments must not be implemented without prior IEC/IRB approval, or when the relevant competent authority has raised any grounds for non-acceptance, except when necessary to eliminate immediate hazards to the subjects, in which case the amendment must be promptly submitted to the IEC/IRB and relevant competent authority. When the change(s) involves only logistic or administrative aspects of the study, the IRB (and IEC where required) only needs to be notified.
 
In situations requiring a departure from the protocol, the investigator or other physician in attendance will contact the appropriate sponsor representative by fax or telephone (see Contact Information pages provided separately). If possible, this contact will be made before implementing any departure from the protocol. In all cases, contact with the sponsor must be made as soon as possible in order to discuss the situation and agree on an appropriate course of action. The data recorded in the eCRF and source document will reflect any departure from the protocol, and the source documents will describe this departure and the circumstances requiring it.
 
16.2  
Regulatory Documentation
 
16.2.1  
Regulatory Approval/Notification
 
This protocol and any amendment(s) must be submitted to the appropriate regulatory authorities in each respective country, if applicable. The study may not be initiated at a study site until all local regulatory requirements are met.
 
16.2.2  
Required Prestudy Documentation
 
The following documents must be provided to the sponsor before shipment of study drug to the investigational site:
 
  
Protocol and amendment(s), if any, signed and dated by the investigator.
 
  
A copy of the dated and signed written IEC/IRB approval of the protocol, amendments, informed consent form, any recruiting materials, and if applicable, subject compensation programs. This approval must clearly identify the specific protocol by title and number and must be signed by the chairman or authorized designee.
 
 
 
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Name and address of the IEC/IRB including a current list of the IEC/IRB members and their function, with a statement that it is organized and operates according to GCP and the applicable laws and regulations. If accompanied by a letter of explanation from the IEC/IRB, a general statement may be substituted for this list. If an investigator or a member of the investigational staff is a member of the IEC/IRB, documentation must be obtained to state that this person did not participate in the deliberations or in the vote/opinion of the study.
 
  
Regulatory authority approval or notification, if applicable.
 
  
Signed and dated statement of investigator (e.g., Form FDA 1572), if applicable
 
  
Documentation of investigator qualifications (e.g., curriculum vitae).
 
  
Completed investigator financial disclosure form from the investigator.
 
  
Signed and dated clinical trial agreement, which includes the financial agreement.
 
  
Any other documentation required by local regulations.
 
The following documents must be provided to the sponsor before enrollment of the first subject:
 
  
Completed investigator financial disclosure forms from all subinvestigators.
 
  
Documentation of subinvestigator qualifications (e.g., curriculum vitae).
 
  
Name and address of any local laboratory conducting tests for the study, and a dated copy of current laboratory normal ranges for these tests.
 
  
Local laboratory documentation demonstrating competence and test reliability (e.g., accreditation/license), if applicable.
 
         The following document must also be provided to the sponsor:
 
  
Photocopy of the site signature log, describing delegation of roles and responsibilities at the start of the study.
 
 
 
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16.3  
Subject Identification Register and Subject Screening Log
 
The investigator agrees to complete a subject identification register to permit easy identification of each subject during and after the study. This document will be reviewed by the sponsor site contact for completeness.
 
The subject identification register will be treated as confidential and will be filed by the investigator in the trial center file. To ensure subject confidentiality, no copy will be made. All reports and communications relating to the study will identify subjects by initials and assigned number only.
 
The investigator must also complete a subject screening log, which reports on all subjects who were seen to determine eligibility for inclusion in the study.
 
16.4  
Case Report Form Completion
 
Electronic Data Capture (EDC) will be used for this study. The majority of the study data will be transcribed by study personnel from the source documents onto an eCRF and transmitted in a secure manner to the sponsor or designee. Worksheets will be provided for the capture of some data for easier transfer to the eCRF. The electronic file will be considered as the eCRF.
 
All data relating to the study must be recorded in eCRFs prepared by the sponsor or designee. Data must be entered into eCRFs in English. The eCRFs are to be completed within 7 days of the index hospitalization and within 24 hours of the Day 30 visit or contact, with the exception of results of tests performed outside the investigator’s office, so that they always reflect the latest observations on the subjects participating in the study.
 
The investigator must verify that all data entries in the eCRFs are accurate and correct.
 
All eCRF entries, corrections, and alterations must be made by authorized study site personnel and approved by the investigator. The investigator’s electronic signature is recorded in the database as verification that all data are complete and accurate.
 
16.5  
Data Quality Assurance
 
Steps to be taken to ensure the accuracy and reliability of data include the selection of qualified investigators and appropriate study centers, review of protocol procedures with the investigator and associated personnel before the study, periodic monitoring visits by the sponsor, and direct transmission of clinical laboratory data from a central laboratory into the sponsor’s data base. Written instructions will be provided for collection, preparation, and shipment of blood, plasma, serum, and urine samples. Electronic CRF completion guidelines will be provided and reviewed with study personnel before the start of the study. The sponsor or designee will review eCRFs for accuracy and completeness during on-site monitoring visits; any discrepancies will be resolved with the investigator or designee, as appropriate.
 
 
 
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16.6  
Record Retention
 
In compliance with the ICH/GCP guidelines, the investigator/institution will maintain all information in the eCRFs and all source documents that support the data collected from each subject, as well as all study documents as specified in ICH/GCP Section 8, Essential Documents for the Conduct of a Clinical Trial, and all study documents as specified by the applicable regulatory requirement(s). The investigator/institution will take measures to prevent accidental or premature destruction of these documents.
 
Essential documents must be retained until at least 2 years after the last approval of a marketing application in an ICH region and until there are no pending or contemplated marketing applications in an ICH region or until at least 2 years have elapsed since the formal discontinuation of clinical development of the investigational product. These documents will be retained for a longer period if required by the applicable regulatory requirements or by an agreement with the sponsor. It is the responsibility of the sponsor to inform the investigator/institution as to when these documents no longer need to be retained.
 
If the responsible investigator retires, relocates, or for other reasons withdraws from the responsibility of keeping the study records, custody must be transferred to a person who will accept the responsibility. The sponsor must be notified in writing of the name and address of the new custodian. Under no circumstance shall the investigator relocate or dispose of any study documents before having obtained written approval from the sponsor.
 
If it becomes necessary for the sponsor or the appropriate regulatory authority to review any documentation relating to this study, the investigator must permit access to such reports.
 
16.7  
Monitoring
 
The sponsor or designee will perform on-site monitoring visits as frequently as necessary. The monitor will record dates of the visits in a study center visit log that will be kept at the site. The first post-initiation visit will usually be made as soon as possible after enrollment has begun. At these visits, the monitor will compare the data entered into the eCRFs with the hospital or clinic records (source documents). The nature and location of all source documents will be identified to ensure that all sources of original data required to complete the eCRF are known to the sponsor and investigational staff and are accessible for verification by the sponsor site contact. The method of verification of the eCRF data must be discussed with the investigational staff. At a minimum, source documentation must be available to substantiate: subject identification, eligibility, and participation; proper informed consent procedures; dates of visits; adherence to protocol procedures; records of safety and efficacy parameters; adequate reporting and follow-up of adverse events; administration of concomitant medication; drug receipt/dispensing/return records; study drug administration information; and date of subject completion, discontinuation from treatment, or withdrawal from the study, and the reason if appropriate. Specific items required as source documents will be reviewed with the investigator before the study.
 
Direct access to source documentation (medical records) must be allowed for the purpose of verifying that the data recorded in the eCRF are consistent with the original source data. Findings from this review of eCRFs and source documents will be discussed with the investigational staff. The sponsor expects that, during monitoring visits, the relevant investigational staff will be available, the source documentation will be available, and a suitable environment will be provided for review of study-related documents. The monitor will meet with the investigator on a regular basis during the study to provide feedback on the study conduct.
 
If corrections to an eCRF are needed after the initial eCRF entry by the investigational site, electronic discrepancy records will be created to track all issues and resolutions.
 
 
 
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16.8  
Study Completion/Termination
 
16.8.1  
Study Completion
 
The study is considered completed with the last visit of the last subject undergoing the study. The final data from the investigational site will be sent to the sponsor (or designee) in a timely manner as agreed upon with the sponsor, following completion of the final subject visit at that site.
 
16.8.2  
Study Termination
 
The sponsor reserves the right to close the investigational site or terminate the study at any time. Investigational sites will be closed upon study completion. An investigational site is considered closed when all required documents and study supplies have been collected and a site closure visit has been performed.
 
The investigator may initiate site closure at any time, provided there is reasonable cause and sufficient notice is given in advance of the intended termination.
 
Reasons for the early closure of an investigational site by the sponsor or investigator, or termination of a study by the sponsor, may include but are not limited to:
 
  
Failure of the investigator to comply with the protocol, the sponsor’s procedures, or GCP guidelines
 
  
Safety concerns
 
  
Sufficient data suggesting lack of efficacy
 
  
Inadequate recruitment of subjects by the investigator
 
  
Significant delays in submitting data or inability to follow subjects
 
16.9  
On-Site Audits
 
Representatives of the sponsor’s clinical quality assurance department may visit the site to conduct an audit of the study in compliance with regulatory guidelines and company policy. These audits will require access to all study records, including source documents, for inspection and comparison with the eCRFs. Subject privacy must, however, be respected.
 
 
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Similar auditing procedures may also be conducted by agents of any regulatory body reviewing the results of this study in support of a regulatory submission. The investigator should immediately notify the sponsor if they have been contacted by a regulatory agency concerning an upcoming inspection.
 
16.10  
Use of Information and Publication
 
All information, including but not limited to information regarding levosimendan or the sponsor’s operations (e.g., patent application, formulas, manufacturing processes, basic scientific data, prior clinical data, formulation information) supplied by the sponsor to the investigator and not previously published, and any data generated as a result of this study, are considered confidential and remains the sole property of the sponsor. The investigator agrees to maintain this information in confidence and use this information only to accomplish this study, and will not use it for other purposes without the sponsor’s prior written consent.
 
The investigator understands that the information developed in the clinical study will be used by the sponsor in connection with the continued development of levosimendan, and thus may be disclosed as required to other clinical investigators or regulatory agencies. To permit the information derived from the clinical studies to be used, the investigator is obligated to provide the sponsor with all data obtained in the study.
 
The results of the study will be reported in a Clinical Study Report generated by the sponsor and will contain all data from all investigational sites. Any work created in connection with performance of the study and contained in the data that can benefit from copyright protection (except any publication by the investigator as provided for below) shall be the property of the sponsor as author and owner of copyright in such work.
 
The sponsor shall have the right to publish such data and information without approval from the investigator. If an investigator wishes to publish information from the study, a copy of the manuscript must be provided to the sponsor for review at least 60 days before submission for publication or presentation. Expedited reviews will be arranged for abstracts, poster presentations, or other materials. If requested by the sponsor in writing, the investigator will withhold such publication for up to an additional 60 days to allow for filing of a patent application. In the event that issues arise regarding scientific integrity or regulatory compliance, the sponsor will review these issues with the investigator. The sponsor will not mandate modifications to scientific content and does not have the right to suppress information. The investigator will recognize the integrity of a multicenter study by not publishing data derived from the individual site until the combined results from the completed study have been published in full, within 12 months after conclusion, abandonment, or termination of the study at all sites, or the sponsor confirms there will be no multicenter study publication. Authorship of publications resulting from this study will be based on generally accepted criteria for major medical journals.
 

 
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17.  
REFERENCES
 
 
1.
IB (2011) Levosimendan (Simdax) Investigator's brochure edition 5. Orion Pharma.
 
2.
Algarni KD et al. Decreasing prevalence but increasing importance of left ventricular dysfunction and reoperative surgery in prediction of mortality in coronary artery bypass surgery: Trends over 18 years. J Thorac Cardiovasc Surg. 2011;
 
3.
Ferguson TB, Jr. et al. Preoperative beta-blocker use and mortality and morbidity following CABG surgery in North America. JAMA. 2002; 287(17):2221-7.
 
4.
O'Connor CM et al. Comparison of coronary artery bypass grafting versus medical therapy on long-term outcome in patients with ischemic cardiomyopathy (a 25-year experience from the Duke Cardiovascular Disease Databank). Am J Cardiol. 2002; 90(2):101-7.
 
5.
Velazquez EJ et al. Coronary-artery bypass surgery in patients with left ventricular dysfunction. N Engl J Med. 2011; 364(17):1607-16.
 
6.
Shahian DM et al. The Society of Thoracic Surgeons 2008 cardiac surgery risk models: part 1--coronary artery bypass grafting surgery. Ann Thorac Surg. 2009; 88(1 Suppl):S2-22.
 
7.
Topkara VK et al. Coronary artery bypass grafting in patients with low ejection fraction. Circulation. 2005; 112(9 Suppl):I344-50.
 
8.
Filsoufi F et al. Results and predictors of early and late outcome of coronary artery bypass grafting in patients with severely depressed left ventricular function. Ann Thorac Surg. 2007; 84(3):808-16.
 
9.
Haverich A et al. Pexelizumab reduces death and myocardial infarction in higher risk cardiac surgical patients. Ann Thorac Surg. 2006; 82(2):486-92.
 
10.
Mentzer RM, Jr. et al. Effects of perioperative nesiritide in patients with left ventricular dysfunction undergoing cardiac surgery:the NAPA Trial. J Am Coll Cardiol. 2007; 49(6):716-26.
 
11.
Algarni KD et al. Predictors of low cardiac output syndrome after isolated coronary artery bypass surgery: trends over 20 years. Ann Thorac Surg. 2011; 92(5):1678-84.
 
12.
O'Brien SM et al. The Society of Thoracic Surgeons 2008 cardiac surgery risk models: part 2--isolated valve surgery. Ann Thorac Surg. 2009; 88(1 Suppl):S23-42.
 
13.
Williams JB et al. Postoperative inotrope and vasopressor use following CABG: outcome data from the CAPS-care study. J Card Surg. 2011; 26(6):572-8.
 
14.
Thackray S et al. The effectiveness and relative effectiveness of intravenous inotropic drugs acting through the adrenergic pathway in patients with heart failure-a meta-regression analysis. Eur J Heart Fail. 2002; 4(4):515-29.
 
15.
Fellahi JL et al. Perioperative use of dobutamine in cardiac surgery and adverse cardiac outcome: propensity-adjusted analyses. Anesthesiology. 2008; 108(6):979-87.
 
16.
Mebazaa A et al. Short-term survival by treatment among patients hospitalized with acute heart failure: the global ALARM-HF registry using propensity scoring methods. Intensive Care Med. 2011; 37(2):290-301.
 
 
 
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17.
Theologou T et al. P reoperative intra aortic balloon pumps in patients undergoing coronary artery bypass grafting. Cochrane Database Syst Rev. 2011; (1):CD004472.
 
18.
Holman WL et al. Prophylactic value of preincision intra-aortic balloon pump: analysis of a statewide experience. J Thorac Cardiovasc Surg. 2000; 120(6):1112-9.
 
19.
Miceli A et al. Prophylactic intra-aortic balloon pump in high-risk patients undergoing coronary artery bypass grafting: a propensity score analysis. Interact Cardiovasc Thorac Surg. 2009; 9(2):291-4.
 
20.
Parissis H et al. The need for intra aortic balloon pump support following open heart surgery: risk analysis and outcome. J Cardiothorac Surg. 2010; 5:20.
 
21.
Antila S et al. Site dependent bioavailability and metabolism of levosimendan in dogs. Eur J Pharm Sci. 1999; 9:85-91.
 
22.
Erdei N et al. The levosimendan metabolite OR-1896 elicits vasodilation by activating the K(ATP) and BK(Ca) channels in rat isolated arterioles. Br J Pharmacol. 2006; 148(5):696-702.
 
23.
Szilagyi S et al. The effects of levosimendan and OR-1896 on isolated hearts, myocyte-sized preparations and phosphodiesterase enzymes of the guinea pig. Eur J Pharmacol. 2004; 486(1):67-74.
 
24.
Louhelainen M et al. Effects of calcium sensitizer OR-1986 on a cardiovascular mortality and myocardial remodelling in hypertensive Dahl/Rapp rats. J Physiol Pharmacol. 2009; 60(3):41-7.
 
25.
Segreti JA et al. Evoked changes in cardiovascular function in rats by infusion of levosimendan, OR-1896 [(R)-N-(4-(4-methyl-6-oxo-1,4,5,6-tetrahydropyridazin-3-yl)phenyl)acetamid e], OR-1855 [(R)-6-(4-aminophenyl)-5-methyl-4,5-dihydropyridazin-3(2H)-one], dobutamine, and milrinone: comparative effects on peripheral resistance, cardiac output, dP/dt, pulse rate, and blood pressure. J Pharmacol Exp Ther. 2008; 325(1):331-40.
 
26.
Banfor PN et al. Comparative effects of levosimendan, OR-1896, OR-1855, dobutamine, and milrinone on vascular resistance, indexes of cardiac function, and O 2 consumption in dogs. Am J Physiol Heart Circ Physiol. 2008; 294(1):H238-48.
 
27.
Kivikko M et al. Acetylation status does not affect levosimendan's hemodynamic effects in heart failure patients. Scand Cardiovasc J. 2010; 45(2):86-90.
 
28.
Kivikko M et al. Pharmacokinetics of levosimendan and its metabolites during and after a 24-hour continuous infusion in patients with severe heart failure. Int J Clin Pharmacol Ther. 2002; 40(10):465-71.
 
29.
Eriksson HI et al. Levosimendan facilitates weaning from cardiopulmonary bypass in patients undergoing coronary artery bypass grafting with impaired left ventricular function. Ann Thorac Surg. 2009; 87(2):448-54.
 
30.
Nieminen MS et al. Hemodynamic and neurohumoral effects of continuous infusion of levosimendan in patients with congestive heart failure. J Am Coll Cardiol. 2000; 36(6):1903-12.
 
31.
Lilleberg J et al. Dose-range study of a new calcium sensitizer, levosimendan, in patients with left ventricular dysfunction. J Cardiovasc Pharmacol. 1995; 26 Suppl 1:S63-9.
 
 
 
 
86

 
 
32.
Kivikko M et al. Sustained hemodynamic effects of intravenous levosimendan. Circulation. 2003; 107(1):81-6.
 
33.
Lilleberg J et al. Duration of the haemodynamic action of a 24-h infusion of levosimendan in patients with congestive heart failure. Eur J Heart Fail. 2007; 9(1):75-82.
 
34.
Bergh CH et al. Intravenous levosimendan vs. dobutamine in acute decompensated heart failure patients on beta-blockers. Eur J Heart Fail. 2010; 12(4):404-10.
 
35.
Follath F et al. Efficacy and safety of intravenous levosimendan compared with dobutamine in severe low-output heart failure (the LIDO study): a randomised double-blind trial. Lancet. 2002; 360(9328):196-202.
 
36.
Ukkonen H et al. Myocardial efficiency during levosimendan infusion in congestive heart failure. Clin Pharmacol Ther. 2000; 68(5):522-31.
 
37.
Lilleberg J et al. Effects of a new calcium sensitizer, levosimendan, on haemodynamics, coronary blood flow and myocardial substrate utilization early after coronary artery bypass grafting. Eur Heart J. 1998; 19(4):660-8.
 
38.
Sonntag S et al. The calcium sensitizer levosimendan improves the function of stunned myocardium after percutaneous transluminal coronary angioplasty in acute myocardial ischemia. J Am Coll Cardiol. 2004; 43(12):2177-82.
 
39.
Teerlink JR et al. (2006) Levosimendan provides rapid and sustained improvement in patient global assessment and dyspnea. ESICM19 th Annual Conference Barcelona, Spain.
 
40.
Packer M (2005) REVIVE II: Multicenter Placebo-controlled Trial of Levosimendan on Clinical Status in Acutely Decompensated Heart Failure. American Heart Association.  Dallas, Texas, USA.
 
41.
de Lissovoy G et al. Hospital costs for treatment of acute heart failure: economic analysis of the REVIVE II study. Eur J Health Econ. 2010; 11(2):185-93.
 
42.
Landoni G et al. Mortality reduction in cardiac anesthesia and intensive care: results of the first International Consensus Conference. Acta Anaesthesiol Scand. 2011; 55(3):259-66.
 
43.
Mebazaa A et al. Levosimendan vs dobutamine for patients with acute decompensated heart failure: the SURVIVE Randomized Trial. JAMA. 2007; 297(17):1883-91.
 
44.
De Hert SG et al. The effects of levosimendan in cardiac surgery patients with poor left ventricular function. Anesth Analg. 2007; 104(4):766-73.
 
45.
Levin R et al. [The calcium sensitizer levosimendan gives superior results to dobutamine in postoperative low cardiac output syndrome]. Rev Esp Cardiol. 2008; 61(5):471-9.
 
46.
Tritapepe L et al. Levosimendan pre-treatment improves outcomes in patients undergoing coronary artery bypass graft surgery. Br J Anaesth. 2009; 102(2):198-204.
 
47.
Lahtinen P et al. Levosimendan reduces heart failure after cardiac surgery: a prospective, randomized, placebo-controlled trial. Crit Care Med. 2011; 39(10):2263-70.
 
48.
Levin R et al. The Preoperative Utilization of Levosimendan (Preoperative Optimization) Reduced Mortality and Low Output Syndrome After Cardiac Surgery in Patients With Low Ejection Fraction (EF<25%) (Abstract 3044). Circulation. 2007; 116:II_682.
 
 
 
87

 
 
49.
Maharaj R and Metaxa V Levosimendan and mortality after coronary revascularisation: a meta-analysis of randomised controlled trials. Crit Care. 2011; 15(3):R140.
 
50.
Shahian DM et al. The Society of Thoracic Surgeons 2008 cardiac surgery risk models: part 3--valve plus coronary artery bypass grafting surgery. Ann Thorac Surg. 2009; 88(1 Suppl):S43-62.
 
51.
Smith PK et al. Effect of pexelizumab in coronary artery bypass graft surgery with extended aortic cross-clamp time. Ann Thorac Surg. 2006; 82(3):781-8; discussion 788-9.
 
52.
De Hert SG et al. A randomized trial evaluating different modalities of levosimendan administration in cardiac surgery patients with myocardial dysfunction. J Cardiothorac Vasc Anesth. 2008; 22(5):699-705.
 
53.
Bojar RM (2005), Manual of Perioperative Care in Adult Cardiac Surgery, Fourth edition. Blackwell Publishing, pp. 346-358.
 
54.
Overwalder PJ Intra Aortic Balloon Pump (IABP) Counterpulsation mirror with better quality. Internet J Thorac Cardiovasc Surg. 1999; 2(2)
 
55.
Cohen M et al. Intra-aortic balloon counterpulsation in US and non-US centres: results of the Benchmark Registry. Eur Heart J. 2003; 24(19):1763-70.
 
56.
Cheng JM et al. Percutaneous left ventricular assist devices vs. intra-aortic balloon pump counterpulsation for treatment of cardiogenic shock: a meta-analysis of controlled trials. Eur Heart J. 2009; 30(17):2102-8.
 
57.
Levin R et al. Levosimendan reduces mortality in postoperative low cardiac output syndrome after coronary surgery (Abstract 4701). Circulation. 2009; 120:S987-S988.
 
58.
Hewitt CE and Torgerson DJ Is restricted randomisation necessary? BMJ. 2006; 332(7556):1506-8.
 
59.
Lan GKK and DeMets DL Discrete sequential boundaries for clinical trials. Biometrika. 1983; 70(3):659-663.
 
60.
O'Brien PC and Fleming TR A multiple testing procedure for clinical trials. Biometrics. 1979; 35(3):549-56.
 
61.
Chen YH et al. Monitoring mortality at interim analyses while testing a composite endpoint at the final analysis. Control Clin Trials. 2003; 24(1):16-27.
 
62.
Hung HM et al. Statistical considerations for testing multiple endpoints in group sequential or adaptive clinical trials. J Biopharm Stat. 2007; 17(6):1201-10.
 

 
88

 

 
  ATTACHMENTS

 
89

 
 
ATTACHMENT 1: Study Drug Dose and Dosing Table
 
Preparation of the infusion
 
Levosimendan/placebo infusion for the 24-hour infusion is prepared as follows:
 
1)  
for patients < 85 kg by adding one (1) 5 mL vial of levosimendan/placebo infusion concentrate to one 250 mL infusion bag or bottle of 5% Dextrose
 
2)  
for patients ³ 85 kg by adding two (2) 5 mL vials of levosimendan/placebo infusion concentrate to one 500 mL infusion bag or bottle of 5% Dextrose
 
The concentration of the diluted infusion is about 50 µg/mL (12.5mg/255mL in a 250mL bag; 25mg/510mL in a 500mL bag).
 
The diluted infusion is administered intravenously by a peripheral or central route. No other treatments should be administered via the same line.
 
The dosing regimen
 
1)  
a continuous infusion of 0.2 µg/kg/min is administered over the first 60 minutes
 
2)  
followed by a continuous infusion of 0.1 µg/kg/min for the next 23 hours.
 
On completion of the 24-hour infusion period, the study drug infusion is switched off abruptly.
 
Placebo is diluted and infused intravenously according to the same schedule as levosimendan.
 
Dose-limiting events
 
If the patient meets the dose-limiting event criteria (see the protocol, section 6), the following actions on study drug infusion should be undertaken:
 
During the first 60 minutes, the original dose (0.2 µg/kg/min) may be reduced to 0.1 µg/kg/min and then to 0.05 µg/kg/min as appropriate.
 
During the following 23 hours, the original dose (0.1µg/kg/min) may be reduced to 0.05 µg/kg/min as appropriate.
 
Patients not tolerating this lowest dose should have medication permanently discontinued.
 
 
90

 
 
The following table provides detailed infusion rates (for given patient weight as mL/h) for the different infusion rates of a 50 µg/mL   preparation of levosimendan/placebo infusion.
 
Patients weight (kg)
Infusion rate during
first 60 min (mL/h)
Infusion rate during
1 h -24 h (mL/h)
Reduced infusion rate
as needed (mL/h)
 
0.2 µg/kg/min
0.1 µg/kg/min
0.05 µg/kg/min
40-44
10
5
2
45-49
11
5
3
50-54
12
6
3
55-59
13
7
3
60-64
14
7
4
65-69
16
8
4
70-74
17
8
4
75-79
18
9
5
80-84
19
10
5
85-89
20
10
5
90-94
22
11
5
95-99
23
11
6
100-104
24
12
6
105-109
25
13
6
110-114
26
13
7
115-119
28
14
7
120-124
29
14
7
125-129
30
15
8
130-134
31
16
8
135-139
32
16
8
140-144
34
17
8
145-149
35
17
9
150-154
36
18
9
155-159
37
19
9
160-164
38
19
10
165-169
40
20
10

 
Example for calculating infusion rates: To be used, if the patient’s weight is not indicated on the table.
 
For a patient weighing 38 kg patient,
 
0.2 μg/kg/min infusion rate: 0.2 x 38 ÷ 50 x 60 = 9 mL/h
 
0.1 μg/kg/min infusion rate: 0.1 x 38 ÷ 50 x 60 = 5 mL/h
 
50 x 60 = 5 mL/h
 
 
91

 
 
ATTACHMENT 2: Pharmacokinetic Substudy
 
A substudy to evaluate the pharmacokinetics of levosimendan and its metabolites, and the effect of acetylation status on pharmacokinetics and pharmacodynamics, will be performed. The sample size for the substudy is 200 patients.
 
Background
 
Earlier data suggest that the formation of the metabolites OR-1855 and OR-1896 is delayed in cardiac surgery patients compared to chronic heart failure patients. 29
 
Further, the formation of the metabolites has been shown to depend on the acetylation status both in heart failure patients 27 and in healthy volunteers. 63 Rapid acetylators produce more OR-1896 metabolite and less OR-1855; in slow acetylators the opposite is seen. Although preclinical data indicate that OR-1896 is much more potent than OR-1855, the hemodynamic effects in heart failure patients have been the same in rapid and slow acetylators. 27
 
The acetylation phenotype is genetically determined. The activity of the enzyme, N-acetyltransferase, responsible for the acetylation, is determined by two distinct genes, N-acetyltransferase 1 (NAT1) and N-acetyltransferase 2 (NAT2) at chromosome 8p22. The NAT2 gene is responsible for the acetylation polymorphism, which determines if an individual is a rapid or slow acetylator. The acetylation polymorphism concerns the metabolism of a variety of arylamine and hydrazine drugs as well as several carcinogens. The proportions of rapid and slow acetylator phenotype vary considerably in different ethnic or geographic populations. Most Caucasian populations in Europe and North America have 40 to 70% slow acetylators, whereas most Asian populations have only 10 to 30% slow acetylators. 64
 
Aims of the substudy
 
The aims of the substudy are to:
 
1)  
Evaluate, whether similar pharmacokinetics of the levosimendan metabolites as in earlier cardiac surgery study, is seen in the present study population
 
2)  
Verify, whether the effect of acetylation status on the formation of the metabolites of levosimendan is similar to heart failure and healthy volunteer data
 
3)  
Evaluate the effect of acetylation status on the pharmacodynamic responses
 
 
 
92

 
 
Collection of specimens
 
Blood samples (3 mL) for determining the plasma concentrations of levosimendan and its metabolites OR-1855 and OR-1896 will be drawn at the completion of study drug infusion and 48 hours after study drug initiation for pharmacokinetic analysis. Additional samples for pharmacokinetic analysis will be collected on Day 5 and Day 10 or at hospital discharge should it proceed either of these time points.
 
During the infusion, the blood sample will be drawn from pre-existing arterial lines, if available, or from a vein of the arm opposite to infusion arm. The exact sampling times of the pharmacokinetic blood samples will be recorded on eCRF.
 
A buccal cell sample for the determination of the acetylator status of a patient will be taken within 24 hours post-CABG/mitral valve surgery and the sampling time is recorded on eCRF.
 
Detailed instructions for collecting, handling, storing and shipping of the plasma buccal samples will be provided in the study manual
 
Determination of plasma levels and the acetylation status
 
The concentrations of levosimendan and its metabolites OR-1855 and OR-1896 will be determined by liquid chromatography tandem mass spectrometry. Bioanalytical issues and criteria for the acceptance of the results will be described in the Bioanalytical Plan and reported in a Bioanalytical Report to accompany the final study report. Only the samples of patients receiving active treatment will be analyzed. The analyses will be performed by an independent laboratory and executed with appropriate measures to maintain the blind of the study. The laboratory address for sample shipments will be identified in the study manual.
 
DNA will be extracted from the buccal cell samples and NAT2 single-nucleotide polymorphisms will be analyzed to determine the acetylator status of the patients. The analyses will be performed by an independent laboratory with expertise in DNA analysis. The patients’ acetylator status will be identified in a report to the clinical study CRO’s data management team and become source data. Specific instructions for reporting this information will be included in the study manual.
 
The samples will be stored at the laboratory for 6 months following the reporting of data, after which they will be destroyed.
 
Pharmacokinetic evaluations
 
The scope of the study does not allow sufficient number of blood samples to be collected for a thorough pharmacokinetic evaluation of both the parent drug and the metabolites.
 
The elimination half-life of the parent drug, levosimendan, is about one hour and within 4 hours post-infusion, no relevant plasma concentrations are seen. 28 Therefore, the plasma levels of levosimendan will be reported from the first sample only (taken during the study drug infusion). This represents the steady state concentration (C ss ), with the provision that no dose adjustments have been performed within 4 hours before sampling (  4 elimination half-lives of the parent drug).
 
 
93

 
 
The plasma levels of the levosimendan metabolites will be reported from all samples. Descriptive analyses of the concentrations will be reported for both metabolites. In addition, population pharmacokinetic analysis of the metabolites will be performed.
 
The effect of acetylation status on the pharmacokinetic variables will be determined.
 
Pharmacodynamic evaluations
 
Earlier data indicate that acetylation status does not affect the plasma levels or pharmacokinetics of the parent drug, levosimendan. 27 Therefore, the eventual differences in pharmacodynamics are likely to be seen only after the infusion is stopped, when sufficient time for the formation of the levosimendan metabolites has passed. Invasive hemodynamic assessments will only be performed during the study drug infusion (until 1 st post-surgery day), which is too early to evaluate the eventual differences between rapid and slow acetylators. Prolonging the duration of invasive hemodynamic monitoring is not ethically justified.
 
However, earlier data indicate that non-invasive hemodynamic variables, especially heart rate, remain elevated several days beyond the study drug infusion period. 28, 43 The same applies, to a lesser extent, to decreased blood pressure levels. Further, the higher the total dose of levosimendan is, the greater is the formation of the metabolites and consequently greater increase in heart rate and decrease in blood pressure at post-infusion period. 65 Therefore, these non-invasive hemodynamic variables will be used to evaluate eventual differences in the pharmacodynamic responses in rapid and slow acetylators. Heart rate and blood pressure will be assessed at the same time-points as the pharmacokinetic samples are drawn.
 
Statistical considerations
 
Earlier data from cardiac surgery patients 1 suggest that the mean±SEM (95% CI) heart rate increase from baseline to 2-5 days post-surgery with levosimendan is 9.8 ± 3.0 bpm (3.9-15.7) greater compared to placebo (data not published). The study did not include any later timepoints or pharmacogenomic sampling to characterize acetylation status.
 
In the current study the dose of levosimendan is approximately half of that administered in the reference study 1 . The heart rate increase compared to placebo is anticipated to be one third lower, i.e. 6.9 bpm. With the proposed sample size of approximately 100 patients per group, the expected variation (SEM) will be 1.6 bpm providing a 95% CI of 3.6-10.1 for the heart rate increase. The precision of these estimates with proposed sample size is considered adequate.
 
 
94

 
 
All pharmacokinetic and –dynamic data will be summarized using appropriate descriptive statistics by treatment groups and time. The data will be further summarized by patients’ acetylation status. Pharmacokinetic parameters will be summarized similarly and comparison between the acetylation status performed using one-way ANOVA. Differences at 5% level will be considered statistically significant. Effect of acetylation status to pharmacodynamic response will be analyzed using repeated measures ANCOVA model with baseline heart rate as covariate, treatment, acetylation status, assessment day and first order interactions as fixed effects, using day as within subject and treatment and acetylation status as between factors. Differences will be described using model based least square means. Treatment by acetylation status interaction test at 10% level will be used to declare statistical significance.
 
References
 
 
1.
Eriksson HI et al. Levosimendan facilitates weaning from cardiopulmonary bypass in patients undergoing coronary artery bypass grafting with impaired left ventricular function. Ann Thorac Surg. 2009; 87(2):448-54.
 
2.
Kivikko M et al. Acetylation status does not affect levosimendan's hemodynamic effects in heart failure patients. Scand Cardiovasc J. 2010; 45(2):86-90.
 
3.
Antila S et al. Pharmacokinetics of levosimendan and its active metabolite OR-1896 in rapid and slow acetylators. Eur J Pharm Sci. 2004; 23(3):213-22.
 
4.
Meyer UA and Zanger UM Molecular mechanisms of genetic polymorphisms of drug metabolism. Annu Rev Pharmacol Toxicol. 1997; 37:269-96.
 
5.
Kivikko M et al. Pharmacokinetics of levosimendan and its metabolites during and after a 24-hour continuous infusion in patients with severe heart failure. Int J Clin Pharmacol Ther. 2002; 40(10):465-71.
 
6.
Mebazaa A et al. Levosimendan vs dobutamine for patients with acute decompensated heart failure: the SURVIVE Randomized Trial. JAMA. 2007; 297(17):1883-91.
 
7.
Kivikko M et al. Pharmacodynamics and safety of a new calcium sensitizer, levosimendan, and its metabolites during an extended infusion in patients with severe heart failure. J Clin Pharmacol. 2002; 42(1):43-51.
 

 
 
95

 
 
 
ATTACHMENT 3: Child Pugh Classification
 
Scoring System
 
 
The score employs five clinical measures of liver disease. 1 Each measure is scored 1-3, with 3 indicating most severe derangement.
 
Measure
1 point
2 points
3 points
Total bilirubin
μmol/l (mg/dl)
<34 ( £ 2)
34-50 (2-3)
>50 (>3)
Serum albumin, g/l
>35
28-35
<28
PT INR
<1.7
1.71-2.30
> 2.30
Ascites
None
Mild
Moderate to Severe
Hepatic encephalopathy
None
Grade I-II (or suppressed with medication)
Grade III-IV (or refractory)
 
Different textbooks and publications use different measures. Some older reference works substitute PT prolongation for INR.
 
In primary sclerosing cholangitis (PSC) and primary biliary cirrhosis (PBC), the bilirubin references are changed to reflect the fact that these diseases feature high conjugated bilirubin levels. The upper limit for 1 point is 68  μmol/l (4 mg/dl) and the upper limit for 2 points is 170 μmol/l (10 mg/dl).
 
Classification designation
 
Chronic liver disease is classified into Child Pugh class A to C, employing the added score from above.
 
Points
Class
5-6
A
7-9
B
10-15
C

 
 
Reference
 
1.
Pugh RN et al. Transection of the oesophagus for bleeding oesophageal varices. Br J Surg. 1973; 60(8):646-9.

 
 
96

 
EXHIBIT C

SALES LEVEL ESTIMATES

To be attached later pursuant to Chapter 8.5.
 
 
 
97

 
 
EXHIBIT D


KEY TERMS FOR THE SUPPLY AGREEMENT- DEVELOPMENT

  
Product and Placebo-Product required by Licensee to conduct, or have conducted, the Study shall be supplied by Orion to Licensee at no charge.

  
“Placebo-Product” means a product which is by visual inspection identical with Product in terms of packaging and appearance but contains no active ingredients in the composition.

  
Product and Placebo-Product shall be supplied in bulk, the bulk vials packed as separately agreed later.

  
Product and Placebo-Product vials shall be supplied unlabeled.

  
Product and Placebo-Product will be supplied by Orion to Licensee only against receipt of Licensee’s written order and Orion’s written confirmation of the same. The delivery shall be within one hundred twenty (120) days from confirmation by Orion of Licensee’s firm order.

  
Accepted orders of Product and Placebo-Product shall be delivered to Licensee CIP, New York (Incoterms 2010), unless the Parties agree in writing in connection with Product(s) order, and on a case by case basis, on delivery to another destination.

  
Licensee shall be solely responsible for all customs clearance for Product and Placebo-Product, and it shall bear and pay all taxes, duties, levies and other charges, if any, imposed on it by reason of its import of the Product.

  
Each Product and Placebo-Product delivered hereunder shall have been manufactured in accordance with current GMP and agreed specifications, and shall comply, on the date of dispatch from Orion, with all applicable laws and regulations in the country of manufacture.
 
 
 
98

 
 
EXHIBIT E


KEY TERMS FOR THE SUPPLY AGREEMENT- COMMERCIAL

  
The transfer price for the Product shall be [***].

  
The Product(s) shall be delivered by Orion in finished consumer packs in accordance with the Packaging Requirements (as defined in the Supply Agreement – Commercial).

  
Licensee agrees to provide Orion no later than the tenth (10th) day of each calendar month, its then current forecast for the quantities of the Product that Licensee will require during the following twenty four (24) months period. Each monthly forecast issued shall reflect a continuously rolling/progressive twenty four (24) month cycle. The forecast placed by Licensee shall be binding in respect of the first three months of the forecast in that Licensee undertakes to place binding orders for the amount of the Product indicated in the latest forecast for the next three (3) months. Orion shall not be under any obligation to accept any order of the Product which is in excess of one hundred and twenty per cent (120 %) or more of the latest forecast relating to Licensee's requirements for the first six (6) months of any forecast.

  
Product will be supplied by Orion to Licensee only against receipt of Licensee’s written purchase order and Orion’s written confirmation of the same. The delivery shall be within ninety (90) days from confirmation by Orion of Licensee’s firm purchase order.

  
Accepted orders of Product shall be delivered to Licensee CIP, New York (Incoterms 2010), unless the Parties agree in writing in connection with Product(s) order, and on a case by case basis, on delivery to another destination.

  
Licensee shall be solely responsible for all customs clearance for Product, and it shall bear and pay all taxes, duties, levies and other charges imposed on it by reason of its purchase, import or resale of the Product.

  
Each Product delivered hereunder shall have been manufactured in accordance with current GMP and agreed specifications, and shall comply, on the date of dispatch from Orion, with all applicable laws and regulations in the country of manufacture.

  
Licensee shall be invoiced and pay for all purchases of Product in US Dollars and payment for delivered Product shall be due and payable within forty-five (45) days from the date of invoice. Payments shall be made by bank transfer (e.g. “SWIFT” or comparable bank transfer method) shall be made to Orion’s designated bank account and be deemed paid when freely received by Orion. Licensee shall bear all costs in connection with effecting payments. Orion reserves the right to charge and Licensee hereby agrees to pay interest on any overdue amount of any payment under this Agreement at the rate of ten (10) per cent per annum from the date any payment was due and payable until full payment is made.
_________________
 
[***]  Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.
 
99
 

Exhibit 10.4
 
AMENDMENT TO COMMON STOCK PURCHASE WARRANT

THIS AMENDMENT TO COMMON STOCK PURCHASE WARRANT (this “ Amendment ”), dated as of January 31, 2014, by and between Oxygen Biotherapeutics, Inc., a Delaware corporation (the “ Company ”) and JP SPC 3 obo OXBT FUND, SP (the “ Holder ”) amends that certain Common Stock Purchase Warrant issued by the Company to the Holder with respect to 2,358,975 shares of the Company’s Common Stock and with an Initial Exercise Date of August 22, 2013 (the “ Warrant ”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Warrant.

RECITALS

WHEREAS , Section 5(l) of the Warrant provides that the Warrant may be amended by the written consent of the Company and the Holder.

NOW, THEREFORE , in consideration of the premises, covenants and agreements set forth herein and of other good and valuable consideration, the receipt and legal sufficiency of which they hereby acknowledge, and intending to be legally bound hereby, the parties hereby agree as follows:

1.   Section 3(b) of the Warrant is hereby deleted in its entirety and the following new section 3(b) is inserted in lieu thereof:

“b)            Subsequent Equity Sales .  From the Issue Date until such date immediately following the earlier to occur of (i) the date the Company completes an equity financing, in a single transaction or a series of related transactions, resulting in cumulative gross proceeds actually received by the Company of at least $20,000,000, or (ii) the date on which, for 25 Trading Days during any 30 consecutive Trading Days period, (x) the VWAP for each of the 25 Trading Days exceeds $6.50 (subject to adjustment for forward and reverse stock splits and the like) and (y) the daily dollar trading volume for each Trading Day during such 30 consecutive Trading Days period exceeds $350,000 per Trading Day, unless the Holder shall have otherwise given prior written consent, neither the Company nor any Subsidiary, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, issuance, grant or any option to purchase or other disposition thereof) any Common Stock or Common Stock Equivalents at an effective price per share less than the Exercise Price then in effect.  Notwithstanding the foregoing, the restrictions in this Section 3(b) shall not apply in respect of an Exempt Issuance.”

2.   Except as specifically provided for herein, all terms of the original Warrant shall remain in full force and effect.

3.   This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.

 
 
 

 

 
IN WITNESS WHEREOF, the Company and the Holder have caused this Amendment to be signed by their respective officers thereunto duly authorized as of the date first written above.
 
 
COMPANY:
 
     
 
OXYGEN BIOTHERAPEUTICS, INC.
 
       
 
By:
/s/  Michael B. Jebsen  
    Name:   Michael B. Jebsen  
    Title:    Chief Financial Officer  
       
 
 
HOLDER:
 
     
 
JP SPC 3 obo OXBT FUND, SP
 
       
 
By:
/s/  Gregory Pepin  
    Name:  Gregory Pepin  
    Title:   Fund Manager  
       
 

2

 

 
 

 


Exhibit 31.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, John P. Kelley, certify that:
 
1.  
I have reviewed this Quarterly Report on Form 10-Q of Oxygen Biotherapeutics, Inc.;
2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.  
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.  
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)  
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)  
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
c)  
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)  
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.  
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)  
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)  
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 17, 2014 
   
 
/s/ John P. Kelley
 
John P. Kelley
 
Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Michael B. Jebsen, certify that:
 
1.  
I have reviewed this Quarterly Report on Form 10-Q of Oxygen Biotherapeutics, Inc.;
2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.  
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.  
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)  
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)  
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
c)  
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)  
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.  
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)  
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)  
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 17, 2014 
   
 
/s/ Michael B. Jebsen
 
Michael B. Jebsen
 
Chief Financial Officer
(Principal Financial Officer)

Exhibit 32.1
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Oxygen Biotherapeutics, Inc. (the “Company”) on Form 10-Q for the period ended January 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John P. Kelley, Chief Executive Officer (Principal Executive Officer) of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
 
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: March 17, 2014 
   
 
/s/ John P. Kelley
 
John P. Kelley
 
Chief Executive Officer
(Principal Executive Officer)
 
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
 
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
 

 
Exhibit 32.2
 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Oxygen Biotherapeutics, Inc. (the “Company”) on Form 10-Q for the period ended January 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael B. Jebsen, Chief Financial Officer (Principal Financial Officer) of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
 
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
 
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date: March 17, 2014 
   
 
/s/ Michael B. Jebsen
 
Michael B. Jebsen
 
Chief Financial Officer
(Principal Financial Officer)
 
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
 
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.