RESEARCH AND DEVELOPMENT; PRODUCTS IN DEVELOPMENT, as of last 10K
The Company engages in a research and development program which seeks
to develop and gain regulatory approval of products which are comparable to national brand products under the FDA OTC Drug Monograph status or the RX/OTC switch status. The Company has also recently engaged in R&D efforts related to certain prescription ("ethical") products and is exploring potential acquisition candidates or joint ventures to facilitate its entry into other drug categories.
The Company maintains a staff of five employees in its product
development department, as well as other support staff to assist its customers. The Company's research and development activities are primarily related to the determination of the formula and specifications of the product desired by a customer, as well as the potency, dosage, flavor, quality, efficacy, color, hardness, form (I.E. tablet, caplet or capsule) and its packaging, as well as
costs related to new products in development including costs associated with regulatory approvals. The Company's research and development expenditures in fiscal 1997, 1996 and 1995 were $867,000, $790,000 and $1,488,000, respectively. The rate of R&D expenditures fluctuates significantly from year to year depending primarily on what generic products are coming off patent in the near future and whether or not such products are appropriate for development by the
Company. The decrease of $698,000 between 1995 and 1996 was due to the fact that research projects were not being performed at the same rate as in the prior fiscal year. Expenditures in one year are not necessarily indicative of expenditures in future years. The Company expects to spend in fiscal 1998 nearly double the amount expended in fiscal 1997 on research and development activities consistent with its goal of continually increasing the Company's product line.
In October 1993, the Company entered into an agreement with Farmacon,
Inc. ("Farmacon"), the owner of certain proprietary information and technology relating to sucralfate tablets used for the treatment of ulcers, pursuant to which Farmacon and the Company agreed to develop sucralfate tablets. The contract grants the Company certain exclusive manufacturing, marketing and distribution rights with respect to such product in both the ethical and OTC markets. The agreement (which expires ten years after approval by the FDA of distribution of the product subject to certain rights to extend the agreement)
provides that the cost of all clinical studies and the cost of obtaining regulatory approval will be borne by Farmacon, while the costs of raw materials and components used to produce clinical batches and to produce the product after regulatory approval will be borne by the Company. The Company has agreed, however, to contribute $600,000 (all of which has been contributed through the fiscal year 1997) to the development and approval process based on certain benchmarks as defined in the agreement. The parties further agreed that any
"product profit" (as defined in the agreement) will be distributed 75% to Farmacon and 25% to the Company. An ANDA for the product was filed with the FDA in October 1996. This will be the Company's first entry with the generic prescription market if the ANDA is approved.
The Company, in connection with ICC, is developing the OTC version of
a cimetidine based H2 antagonist, for the relief from heartburn, acid
indigestion and sour stomach. An ANDA for this product was filed with the FDA in October 1996. If an ANDA is approved, sales could not commence before June 1998, when the marketing exclusivity on the brand name equivalent expires.
Cimetidine and sucralfate will be, if approved, the Company's first
major entries into the gastrointestinal category. FDA approvals of ANDA's generally take 18 to 24 months to obtain and there can be no assurance that the Company's ANDA's will be approved. |
