Impede™ Technology
The chemical structure of PSE is very similar to methamphetamine, facilitating a straight-forward chemical conversion to methamphetamine. There are multiple known processes to convert PSE to methamphetamine, all of which are not complex and do not require specialized equipment; however, many do require readily available but uncommon ingredients. The three most popular processes follow two general processing steps: (1) dissolving the PSE tablets in a solvent to isolate the base form of PSE and (2) a chemical reduction of the base PSE into methamphetamine for drying into crystals. Since all the solvents are ultimately dried off, a vast range of solvents are amenable to the process.
Impede Technology utilizes a proprietary mixture of inactive ingredients intended to disrupt the conversion of PSE from the tablets into the illicit drug methamphetamine. Specifically, the Impede Technology forms a viscous, gelatinous mixture when our tablets are dissolved in solvents typically used in the PSE extraction phase of methamphetamine production. The unique mixture of inactive ingredients in Impede are generally recognized as safe by the FDA.
Methamphetamine is a highly addictive illicit drug used non-medically by an estimated 13 million people at some point in their lifetime. In 2006, regulations relating to over-the-counter sale of PSE products were amended with the enactment of the Federal Combat Methamphetamine Epidemic Act, or CMEA. The CMEA was enacted in response to an alarming increase in and widespread conversion of PSE containing products into methamphetamine. Among other things, the CMEA requires retail stores to maintain their inventory of PSE containing products in a secured location and restricts the amount of PSE products a store can sell to an individual customer. Implementation of the CMEA initially reduced the number of illegal methamphetamine laboratory seizures reported by the Drug Enforcement Administration, or DEA, as the then most commonly used process for conversion of PSE to methamphetamine required substantial quantities of PSE. However, a newer process for converting PSE to methamphetamine requires less PSE. Possibly as a result of this new conversion process, the DEA reported 2009 clandestine methamphetamine laboratory seizures increased 62% over the low reported in 2007. Some states have enacted laws that are stricter than federal requirements by requiring PSE products to be sold only upon a doctor’s prescription. Impede™ Technology is designed to deter the conversion of PSE to methamphetamine, including by use of both the older and newer conversion processes. In response to the ongoing methamphetamine problem, several local jurisdictions (state, counties and/or local municipalities) have enacted or propose to enact legislation to require a physician’s prescription to obtain a PSE-containing product.
We expect our Impede Technology products containing PSE to compete in the highly competitive market for cold, sinus and allergy products generally available to consumers without a prescription. In 2009, AC Nielsen reported approximately $1.0 billion in sales of non-prescription products containing either PSE or phenylephrine as a nasal decongestant, of which approximately 47% contained PSE. Products in this category consist of many different formulations containing different active ingredients such as decongestants, analgesics, cough suppressants and antihistamines and have strong consumer brand recognition. The CMEA requires that all non-prescription PSE products be held securely behind the pharmacy counter. The CMEA also sets monthly consumer purchase volume limits and has necessitated consumer interaction with pharmacy personnel to purchase PSE-containing products. We expect that Nexafed will be subject to all of the PSE restrictions of the CMEA and specific state PSE laws. We intend to capitalize on this consumer-pharmacist interaction at the point of sale by soliciting distribution to the pharmacies of national and regional drug store chains and educating and encouraging pharmacists to recommend Nexafed to their customers. In our 2010 survey of 204 pharmacists, pharmacists indicated they would recommend Nexafed, if available in the pharmacy, more than competing products. We also may create Nexafed product awareness through television, radio, and print advertising.
Product Labeling for Impede Technology Products
We believe we can advertise the extraction characteristics and benefits of our OTC Nexafed product which are supported by our research studies. We expect that our other Impede Technology products in development for marketing pursuant to an NDA or ANDA will be subject to a label approved by the FDA. We expect that such a label will require submission of our scientifically derived laboratory data and we intend to seek descriptions of our abuse liability studies in the FDA approved product label, although there can be no assurance that this will be the case.
