Item 1. Business.

GENERAL ORGANIZATION AND BUSINESS

Boston Therapeutics, Inc. (the “Company”) was formed as a Delaware corporation on August 24, 2009, under the name Avanyx Therapeutics, Inc. On November 10, 2010, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Boston Therapeutics, Inc., a New Hampshire corporation (“BTI”) providing for the merger of BTI into the Company with the Company being the surviving entity (the “Merger”), the issuance by the Company of 4,000,000 shares of common stock to the stockholders of BTI in exchange for 100% of the outstanding common stock of BTI, and the change of the Company’s name to Boston Therapeutics, Inc. Boston Therapeutics, headquartered in Lawrence, MA, (OTCQB: BTHE) is a leader in the field of complex carbohydrate chemistry and peptide therapeutic drug discovery and development. The Company’s initial product pipeline is focused on developing and commercializing therapeutic molecules for sugar control more specifically prediabetics and diabetes: investigative material BTI-320, a non- systemic, non-toxic, investigative therapeutic compound designed to reduce post-meal glucose elevation. In addition, under manufacturing control, SUGARDOWN ®, a similar base material to BTI-320 has progressed into market testing as a dietary supplement designed to manage post-meal sugar spikes. Recently, with the acquisition of CureDM in the first quarter of 2018, a new investigative material BTI-410, an injectable peptide, may fulfill the medical need to replace injection of insulin by stimulating the beta cell maturation. And the adjunctive therapeutic material called IPOXYN, is an investigative intravenous fluid therapy for the prevention of necrosis and a treatment for ischemia, with an initial target indication of lower limb ischemic events often associated with diabetes. This covers a wider combined prevention and therapeutic option for the growing worldwide epidemic related to metabolic diseases with diabetes being the leader.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited resources and operating history. As shown in the accompanying financial statements, the Company has an accumulated deficit of approximately $19.8 million and approximately $137,000 cash on hand as of December 31, 2017. We raised $550,000 in gross proceeds from private placements of our Series A Preferred Stock during the year ended December 31, 2017. In addition, we also raised $275,000 in gross proceeds from private placements of our Series A Preferred Stock since January 1, 2018. Management anticipates that our cash resources will be sufficient to fund our planned operations into the second quarter of 2018. There is no guarantee that the Company will be successful in raising capital or if it is successful, that such capital will be on acceptable terms. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its new business opportunities.

The Company may seek to raise additional capital through public or private debt or public or private equity financings, and partnerships or licensing opportunities in order to fund our operations. There can be no assurance that the Company will be successful in accomplishing its objectives. Without such additional capital, the Company may be required to cease operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue operations.

Overview

We are a pre-clinical and clinical-stage pharmaceutical company focused on the development, outsourced contract manufacture and test market commercialization of carbohydrate-based materials as supplements and drugs, and clinical stage of peptide therapeutic drugs. All agents are targeted designed to help manage blood sugar, treat pre-diabetes and diabetes related pathologies. Our present early market entry is under a dietary supplements regulation.

Currently, our lead pharmaceutical drug candidates are:

BTI-320

Following Phase II clinical trial results reported in 2013 and the recent Phase IIb clinical trial concluded in October 2014, the U.S. Food and Drug Administration (“FDA”) accepted the Investigational New Drug Application (or IND), which we filed for BTI-320 to treat Type 2 diabetes and weight management in 2014. The filing has been brought current and Joslin Diabetes Center in Boston MA will serve as the lead clinic in the first phase of a potential multi-center, multi-country trial expected to commence in 2018. The trial is expected to enroll up to 30 patients with the expansion to 360 patients in the 24 week study which is being designed as a randomized, placebo-controlled, double blind international multi-center study with two treatment arms. The trial will employ precision medical monitoring and will target the primary efficacy endpoint of Post Prandial Glucose (PPG) or sugar reduction resulting in a mean change in HbA1c levels from baseline at 24 weeks. We anticipate enrollment at a number of international centers located in the U.S., Europe, Asia and Australia. In addition, we are technically supporting an additional clinical trial in at risk pre-diabetic patients that is being carried out in Hong Kong employing a state of the art retinal image analysis to evaluate the compounds effect on reduction of stroke risk.

We are in negotiation with Conroy Chi-Heng Cheng pursuant to which Mr. Cheng or an affiliate to Mr. Cheng will fund such trial. There is no guarantee that we will be able to successfully close such financing. Mr. Cheng is a director and a shareholder of the Company and a director of Advance Pharmaceutical Company (“Advance Pharmaceutical”), a Hong Kong based, privately held company. On June 24, 2011, prior to his election to the Company’s Board, the Company entered into a definitive Licensing and Manufacturing Agreement with Advance Pharmaceutical. In addition, CJY Holdings Limited, a Company controlled by Mr. Cheng’s brother, Cheng Chi Him, holds a significant amount of convertible debentures payable by the Company.

BTI-410

Following successful IND application in 2012, a Phase 1a First-in-Man study was completed in which ascending doses of BTI-410, ranging from 60 mg to 720 mg, appeared to be safe and well tolerated by all subjects in the study. Phase 1b, entitled “A Randomized, Double-blind, Placebo-controlled Study of the Effect of 49 days of Treatment with Repeated Subcutaneous Doses of HIP2B (BTI-410) to Assess Safety, Tolerability and Measures of islet β-cell Function in Subjects with Type 2 Diabetes Mellitus Treated with Metformin”, was completed in 2015. Two new pivotal clinical trials are designed for the study of BTI-410. One Phase II study will be conducted in 36 type 1 patients on immunosuppression therapy after kidney transplant surgery. A second Phase II study will be conducted in 120 type 2 diabetes patients pending sufficient funding and material. Chinese Peptide Company is contracted to conduct synthesis of material needed for these studies during the first half of 2018.

Development of IPOXYN is in the pre-clinical planning stage by Boston Therapeutics and no inhouse work has been done to date due to lack of financial resources. The Company is actively exploring a partnering alliance for the participation with a funded program in China. We anticipate activity will occur with support funding later this year.

In addition, we currently test marketing and selling SUGARDOWN® in the US, this non-systemic, carbohydrate-based dietary supplement designed to support healthy blood glucose levels, is sustained sales over the Internet and by targeted purchase orders through a piloting program in specialty independent pharmacies in one city.

Novelty of Complex Carbohydrate Science

Carbohydrate molecules, which are essential to the transmission and recognition of cellular information, have been shown to play an important role in major diseases including cancer, cardiovascular disease, Alzheimer’s disease, inflammatory disease and viral infections. We believe this offers a largely untapped area for treatment by utilizing:

We use naturally occurring, available processed plant extracts as starting material to create proprietary complex carbohydrate formulations with specific molecular weights and other pharmaceutical properties. These complex carbohydrate molecules are then formulated into acceptable pharmaceutical material through establishment of dose effect and stability. Using these novel carbohydrate-based candidate compounds that largely bind and inhibit enzymes, we are undertaking the focused pursuit of developing therapies for metabolic diseases like diabetes and other serious diseases in which enzyme activity have a demonstrated role in disease management.

Our management team, including most notably our Board Member and Chief Executive Officer Carl W. Rausch, who has played a role in the applications associated with the development of complex carbohydrate science in Asia and is arranging a pipeline of carbohydrate-based therapeutics in cell metabolism and with other protein chemistries which can address a variety of unmet medical needs. We believe this expertise is particularly valuable as we progress with specialty processes and clinical development of our products. The Company is working to expand, to partner and to build Company and market awareness of these technologies through the introductory sales of SUGARDOWN®.

New for Boston Therapeutics: Novelty of Human Peptide Therapeutics and Proteomic Platform Technology

Following the completion of the human genome project, certain human proteins that are in low abundance and only transiently expressed became known. The REG3A protein is known to be a trigger in the development pathway of endocrine function in the pancreas. BTI-410 was derived from the active region of this larger protein, stabilized for use as a therapeutic and extensively studied in vitro and in animal models. The human proteomic pathway was established using a novel proteomic approach to discovery of potential new mechanisms of action.

Peptides are recognized for being highly selective and efficacious and, at the same time, relatively safe and well tolerated. In general, peptides are selective and efficacious signaling molecules and given their attractive pharmacological profile and intrinsic properties, peptides represent an excellent starting point for the design of novel therapeutics and their specificity has been seen to translate into excellent safety, tolerability, and efficacy profiles in humans. This aspect might also be the primary differentiating factor of peptides compared with traditional small molecules. Furthermore, peptide therapeutics are typically associated with lower production complexity compared with protein-based biopharmaceuticals and, therefore, the production costs are also lower, generally approaching those of small molecules. Thus, in several ways, peptides are in the sweet spot between small molecules and biopharmaceuticals.

Using human protein interaction technology and public and proprietary databases to elucidate pathways of interest, BTI-410 was discovered and developed at CureDM. Preclinical data showed the unique specificity and efficacy of the compound with respect to a novel mechanism of beta cell maturation and the US Food and Drug Administration (FDA) accepted the application for Investigational New Drug (IND) in 2012. Subsequently, Phase 1a studies in healthy human subjects proved that the drug was very well-tolerated and lead to no adverse events. Phase 1b study in type 2 diabetes patients resulted in statistically significant increases in pre-hepatic insulin secretion, increases in fasting insulin and improved response to glucose challenge.

The cause of both type 1 and type 2 diabetes mellitus (T1DM and T2DM) is the loss of functional pancreatic islet mass due to abnormally high rates of destruction that outpace the natural mechanisms for replacement of the islet mass. Currently, there is no treatment option that promotes the regeneration of islets and maturation of beta cells to impact the underlying causes of this disease. BTI-410 is such a compound. Clinical studies will be conducted to show efficacy by this mechanism.

A new member of the management team is Chief Operating Officer, Loraine V. Upham, former founder and CEO of CureDM Group Holdings, now a wholly owned subsidiary of Boston Therapeutics. We believe that Ms. Upham’s expertise in proteomics, peptide discovery and development will be particularly valuable in the continued development and commercialization of BTI-410 for both type 1 and type 2 diabetes.

BTI-320 and SUGARDOWN® Mechanisms of Action

Diabetes is a chronic disease in which a patient’s inability to produce the hormone insulin in sufficient amounts is compromised if not totally lost. This defect leads to high levels of glucose in the blood stream, which in turn leads to many systemic vascular and organ complications such as heart, kidney and retina dysfunction and even premature death. To address this overload the modified mannan in BTI-320 formulation, works to lower the immediate rise in post-meal blood glucose from processed foods and free sugar loads in several ways. First, we have evidence that it binds to long-chain starch polysaccharides in foods and also to the digestive enzymes that cleave these large sugars into glucose. Second, it appears to temporarily coat the inside of the small intestine to slow the early absorption of glucose. Together, these mechanisms have been shown to lower the rate and the availability for glucose absorption in the small intestine and thus slows the amount entering the blood. This delays the exposure time for the digestive process to a region lower in the gut.

This effect of BTI-320 is measured by monitoring the amount of glucose absorption as a difference in sugar increases in the bloodstream over time and in peak height. Most anti-diabetes drugs, also considered to cause hypoglycemic events if not managed well, force blood sugar levels down from the presence in the blood streams by targeting organ systems such as the pancreas, the liver, the kidneys and the body’s cells, thereby increasing the risk of serious side effects if not carefully managed. This has been evidenced in recent FDA findings and concerns for cardiac insult, kidney disease, and even brain dysfunction. In contrast, BTI-320 targets enzymes in the mouth and small intestine to reduce the uptake of glucose during the digestion of carbohydrate foods. We believe this preemptive, non-systemic approach to blood sugar management provides for a broader safety profile as well as the ability to work with other systemic blood lowering agents like insulin. All this leads to lower prescription drug dosing and longer-term effectiveness. The BTI-320 profile is enhanced due to its GRAS (Generally Regarded as Safe) classification of its components. SUGARDOWN® has a similar mechanism of action and designation.

In February 2013, we reported positive results from a Phase II clinical study conducted at Dartmouth-Hitchcock Medical Center that evaluated the safety and efficacy of BTI-320. The study evaluated BTI-320 in 24 patients with Type 2 diabetes between the ages of 18 and 75 with a body mass index (BMI) of 25-40 kg/m2 and with a HbA1c (a lab test that shows the average level of blood glucose over the previous three months) of less than or equal to 9 percent. The primary endpoint of this study was to demonstrate a reduction of incremental area under the curve (AUC) of post-meal blood glucose by 20%.

In this study, forty-five percent (45%) of patients responded positively with a forty percent (40%) reduction of post-meal glucose in the blood compared to baseline in a dose-dependent manner. Additionally, results showed the effect of BTI-320 does not correlate with duration of diabetes, and worked safely regardless of concurrent diabetes medications. There was no severe hypoglycemia (low blood sugar episodes), gastrointestinal side effects were mild and satiety (fullness) was observed. In the article published in the July/August 2013 issue of the peer reviewed journal, Endocrine Practice , there were no serious adverse events (SAEs) from the data analysis of the open-label dose escalation crossover trial on patients with Type 2 diabetes.

In 2012, with Advance Pharmaceutical Ltd, Hong Kong, we conducted a clinical study glycemic test at the University of Sydney in Australia. The results showed the post-meal incremental area under the curve (iAUC) for glucose and insulin were significantly lower following consumption of SUGARDOWN® prior to a controlled high carbohydrate meal of rice in a dose-dependent manner. This resulted in a reduction of up to 61 percent in post-meal elevation of blood glucose compared with the rice consumed alone. On average, there was a 32 percent reduction in the post-meal iAUC for glucose and a 24 percent reduction in post-meal insulin response for the volunteers in the study. No severe adverse effects were reported or observed during the study. SUGARDOWN® was tested in healthy, but overweight, adults with a mean body mass index (BMI) value of 27.3 kg/m2. This clinical study indicated that SUGARDOWN® can maintain healthy glucose levels even after meals, when sugar tends to spike. (Studies are under monograph review)

In October 2014, we reported results from a pilot Phase IIb study of BTI-320 in patients with Type 2 diabetes conducted in the U.S. by Accumed Research Associates. The trial enrolled 23 patients with Type 2 diabetes diagnosed for at least one year and who were on a stable daily dose of Metformin for at least three months. The patients were administered BTI-320 and Metformin using a randomized, double-blind, placebo-controlled, dose-ranging, three-way cross-over study design. Of the 23 patients that completed the trial, 15 patients did not demonstrate a measurable difference in response by reporting a significant reduction from normal to the rice test meal. The remaining eight patients responded to BTI-320 with up to a 34% reduction in post meal blood glucose levels. Patients were given one to two BTI-320 tablets, half of the dose of the Dartmouth study and one third the dose of the University of Sydney trial. The results of the trial showed BTI-320 as safe and well tolerated, with no serious adverse events reported and provided information on different patient populations to be used to design the appropriate protocols for future clinical trials. This also demonstrated the value and the need for continuous glucose monitoring as a way to capture the post prandial effect on sugar reduction, an effect not seen with the present medications in the US.

In 2016, Advance Pharmaceuticals Ltd. HK, completed and reported the 60 patient continuous glucose monitoring (CGM) proof of concept trial, and reported no increases in fructosamine, a short term measure of glycation of plasma protein (none was anticipated due to the non-diabetic population), and a significant decrease in the post prandial blood glucose acute rise in blood sugar in high risk Asia pre-diabetic patients. The trial was fully reported on Clinicaltrials.gov and the abstract was accepted and presented at the June 2017 American Diabetic Association meeting in June. The data sets were embargoed and the manuscript has been submitted for publication.

We expect to commence further trials in 2018, which are subject to structuring a funding arrangement with Mr. Cheng or an affiliate of Mr. Cheng. We have initiated the trial organization and have successfully closed such initial financing. We expect to advance a proof of concept trial for vascular effect by the proprietary analysis of retinal vasculature in 2018. This study which is being performed with 40% grant funds from the Hong Kong granting agency, may demonstrate the use of BTI-320 to reduce risk of vascular disease. The Company is in licensing discussions to secure rights for the use of the proprietary technology.

BTI-410 Mechanism of Action

Both type 1 and type 2 diabetes are the result of a loss of endogenous islet structures, in which mature beta cells are housed in the pancreas. Type 1 diabetes is an autoimmune disease in which the immune system destroys existing insulin producing cells rendering the patient immediately insulin dependent for life. Type 2 diabetes is a slow progressive destructive process of over taxing and “wearing out” of insulin producing cells that leads eventually to insulin dependence. Most medications currently on the market for diabetes are either and insulin derivative or a treatment that affects only the symptoms of diabetes, and not the underlying pathology for the destruction of insulin production and proper control. This beta cell burn out results from insufficient islet mass and function.

BTI-410 or Human proIslet peptide (HIP) has been shown to increase islet mass and insulin secretion. Islet mass includes functional mature beta cells which are the cells that secrete insulin. However, the mechanism of action is still being fully elucidated and appears to be a complicated pathway with several potential modulators. HIP is an active binding fragment of the REG3a protein that is encoded by the REG3a gene (Dusetti et.al. , 1994). REG3a binds to the membrane bound receptor EXTL3 on the surface of progenitor cells in the pancreas. This pathway is key in the development of new insulin producing islet structures in the pancreas. These structures contain all cell types required for insulin secretion, its control and appropriate response to glucose in the blood. Increased insulin production and appropriate control has been at least partially restored after treatment with BTI-410 in a 32 patient Phase 1b study in type 2 diabetes. A further definitive Phase II study in type 2 diabetes will provide pivotal outcome results.

In 2012, a Phase 1a First-in-Man study was completed in which ascending doses of BTI-410, ranging from 60 mg to 720 mg, appeared to be safe and well tolerated by all subjects in the study.

In 2014 a Phase 1b, entitled “A Randomized, Double-blind, Placebo-controlled Study of the Effect of 49 days of Treatment with Repeated Subcutaneous Doses of HIP2B (BTI-410) to Assess Safety, Tolerability and Measures of islet β-cell Function in Subjects with Type 2 Diabetes Mellitus Treated with Metformin”, was initiated.

In 2015, BTI-410 (HIP2B) Phase 1b was completed. Despite the small sample size, compared to treatment with placebo, treatment with HIP2B resulted in improvements in mean insulin concentrations measured by GGI from baseline to Day 46 that trended toward significance. Similarly, mean change in pre-hepatic insulin secretion rate from baseline to Day 46 was statistically significant in the combined HIP2B treatment groups compared to placebo. Trends in increased mean insulin concentrations (as measured via GGI and IVGTT) continued following the cessation of treatment to the follow-up visit in the HIP2B dosing groups.

A study with a larger sample size powered for efficacy along with a longer duration of treatment will be required to more fully describe the magnitude of efficacy of HIP2B on glycemic and insulin secretion parameters.

Based on post-hoc subgroup analyses, subjects with low FPG and HbA _1c levels at baseline showed a more consistent response to HIP2B with respect to changes in insulin and C-peptide levels when compared to placebo. In addition, when data were analyzed by excluding three hyperinsulinemic subjects, the effects of HIP2B on fasting insulin levels measured during the study achieved statistical significance after 84 days. These data also suggest that the effects of HIP2B continue for at least one month after stopping treatment.

IPOXYN and OXYFEX

IPOXYN (research investigative material) is a carbohydrate-based protein associated material, intravenous injectable solution that potentially can prevent hypoxic conditions and cell death due to oxygen debt. Treating these hypoxic conditions may also relate to wound healing (both internal and external) such as diabetic foot ulcers and other vascular complications of diabetes. IPOXYN, an oxygen carrier blood substitute or red blood cell bridging agent, has a very broad range of potential applications, including but not limited to, tissue death prevention, wound healing, traumatic blood loss, traumatic brain injury, stroke, cancer, surgery, transplant and anemia. In addition, since donated human blood needs refrigeration and has a shelf life of less than one month, IPOXYN can serve as an adjunct to or immediate replacement for donated blood in trauma and surgery cases when there are human blood supply deficiencies.

Hypoxia is a condition in which cells lack sufficient oxygen delivery to support metabolic function. As evidenced by the well-established record of data relating to similar products, the IPOXYN carbohydrate molecule contains oxygen rechargeable iron which picks up oxygen in the lungs, is 1,000 times smaller than a red blood cell (or RBC), and can reach hypoxic tissue more effectively than RBCs. IPOXYN is stable at room temperature, has a three year shelf life and requires no blood type matching. We plan to introduce this product in clinical trials for hypoxic medical conditions.

Our pharmaceutical agents are intended for intravenous administration into the circulatory system to target acute and late stage diseases that, we believe, have a great unmet medical need. Acute hypoxic conditions, which we intend to treat with IPOXYN, result from a lack of oxygen supply to living cells. Hypoxia will lead to ischemia, inflammation and the death of living cells. Ischemia is a restriction in blood supply, generally due to factors in the blood vessels, with resultant damage or dysfunction of tissue. Diabetic foot ulcer, which occurs in 15% of patients with diabetes and precedes more than 80% of all lower leg amputations, is one of the major complications of diabetes mellitus. Two major risk factors that cause diabetic foot ulcer are diabetic neuropathy and micro/macro ischemia. Increases in mortality among diabetic patients observed over the past 20 years are considered to be due to the development of macro and micro vascular complications including the failure of the wound healing process. A failure of effective treatment of wounds in this population can often lead to infection, tissue death and amputation of the lower leg and foot as the only treatment option. We believe that IPOXYN represents a potentially effective treatment for lower limb complications of diabetes.

Upon raising the appropriate capital, we intend to develop OXYFEX, a veterinary analog to IPOXYN. We are unaware of any drug currently on the market for animals that can deliver oxygen, and there is only limited “blood banking” for animals despite a constant need. OXYFEX™ can serve as the only available oxygen delivery mechanism for animals suffering ischemia or traumatic and surgical blood loss events.

IPOXYN and OXYFEX consist of a stabilized glycoprotein composition containing oxygen-rechargeable iron, targeting both human and animal tissues and organ systems deprived of oxygen and in need of metabolic support. We have not conducted any clinical trials to confirm the efficacy of or filed any applications with the FDA with respect to, IPOXYN. We are in the process of developing IPOXYN for pre-clinical studies, in order to conduct clinical trials and to file applications with the FDA as applicable. Our goal is to file an IND application with the FDA, provided we obtain adequate funding. We expect to have access to the pilot-scale manufacturing facility of a third party with adequate capacity to produce IPOXYN for clinical trials and market introduction.

We have access, subject to adequate funding, to both sufficient raw materials at commodity pricing and processing facilities to produce sufficient quantities of IPOXYN to complete pre- clinical pharmacokinetic, safety and efficacy studies in support of an investigative new drug (IND) filing in the United States in 2018. The primary raw material for IPOXYN is extracted from controlled sourced bovine blood, which can be obtained from multiple sources at commodity prices under Good Manufacturing Practice (GMP). There are numerous facilities capable of processing source verified red blood cell extract. We expect to put in place agreements for obtaining and processing these materials upon funding.

Drug Development Status

BTI-320 is one of our lead product candidates and is currently in Phase II clinical development. We have contracted a CRO (contract research organization) in New York City and plan to initiate trials in the first half of 2018 subject to raising adequate capital. Following Phase II clinical trial results reported in 2013 and the Phase IIb clinical trial concluded in October 2014, the FDA accepted the first Investigational New Drug Application (or IND) We proposed for BTI-320 to treat Type 2 diabetes and weight management. Joslin Diabetes Center in Boston may serve as a lead clinic for the multi-center, multi-country trial that is planned to commence in 2018 subject to use receiving adequate funding. The trial may enroll up to 360 patients in the 24-week study which is being designed as a randomized, placebo-controlled, double blind international multi-center study with two treatment arms. One of the primary endpoints of efficacy of the trial is the mean change in HbA1c levels from baseline at 24 weeks. This is anticipated to be conducted at a number of international centers located possibly in the U.S., Europe, Asia and Australia. BTI-410 is our other lead product candidate and, pending production of new Active Pharmaceutical Ingredient (API) material, is ready for Phase II development in both type 1 and type 2 diabetes patients, pending sufficient funding. Development of IPOXYN is in the pre-clinical planning stage and further development is on hold pending the securing of adequate funding.

BTI-320

In March 2014, following the successful results of the Dartmouth study, we received and additional Institutional Review Board (IRB) approval to initiate a clinical study of BTI-320 in the United States. In October 2014, we completed a Phase II trial in the United States and we are currently delaying any additional Phase II trial efforts in France due to enrollment performance issues and lack of resources to support the effort. These trials were designed to add CGM (continuous glucose monitoring) and better define PPG effects that support the results from our Dartmouth study for BTI-320. In the Dartmouth study, BTI-320 was well tolerated in patients taking various anti-diabetic agents, including Metformin. The recent additional clinical trial in the U.S. showed BTI-320 was safe and well tolerated with no serious adverse events reported. The FDA has accepted an IND, which was filed for BTI-320 to treat Type 2 Diabetes and weight management. Subject to adequate funding, we tentatively are planning to commence additional clinical trials in 2018 for BTI-320.

BTI-410

In January 2018, Boston Therapeutics acquired the exclusive worldwide rights to the patent portfolio for the HIP2B peptide. In 2012, a Phase 1a study established a good safety and tolerability profile of BTI-410. In 2015, with the completion of Phase 1b study and based on promising results in type 2 diabetes patients, the company is planning two pivotal clinical studies pending sufficient funding. One study will be in type 1 diabetes patients who are immunosuppressed after having undergone kidney transplant, and one study will be in type 2 diabetes patients on metformin, but who are still experiencing post-prandial high glucoses and remain on the trajectory toward the need for insulin.

IPOXYN

We believe IPOXYN is a safe and effective intervention for reversing acute hypoxia, fulfilling an unmet clinical need; and that IPOXYN can alleviate acute deficiency of oxygen and avert further life-threatening complications and muscle and tissue death which can result from a sustained deficiency of oxygen. Our belief about the safety and efficacy of IPOXYN is based on preliminary good laboratory practices (GLP) testing of a material that is proposed to be bio-similar to IPOXYN, where it was found that such bio-similar formulation had no material toxicity on a small group of animals. We understand that this testing of GLP intent investigative materials produced bio-similar materials or, for that matter, pre-clinical testing, will not necessarily predict levels of toxicity and efficacy in humans. However, if clinical trials ultimately support this belief, in many clinical situations IPOXYN could become a significant new management tool to moderate the inconsistencies and logistics of RBC transfusion in all parts of the world.

In addition to the expansive and broad application field development of human medical management, we envision a sizable and very accepting market in the veterinary field. We could expect to make a registration filing for this market as soon as we can complete pre-clinical safety and efficacy studies. Clinical safety and efficacy studies under Good Manufacturing Practices have not yet been initiated.

Preliminary data from animal testing conducted by third parties as well as similarity testing suggests successful use of OXYFEX in hypoxia and critical anemic situations, where hypoxic conditions were critical to animal survival. Other early experiments with similarly experimental materials with dogs suggest intervention with OXYFEX will significantly improve survival in induced canine anemia models. This veterinary treatment of signs and symptom of canine anemia may be one of our first targets for seeking early regulatory approval in the European Union. As there is substantial commonality between the metabolic functions of humans and other mammals, animal testing becomes a starting point for many clinical development programs that can directly translate into clinical development programs for humans. The third-party testing described here was conducted by a company that developed a bio-similar product to OXYFEX. Testing included repeated intravenous infusions of the product in dogs that was reported in documented literature and private regulatory filings, and the testing did not result in reported mortality/morbidity of the subject animals. Reports concerning anemic dogs infused with the bio-similar materials showed increased plasma hemoglobin levels resulting in an increase of the oxygen carrying capacity of the treated animals. We have no agreements with the third party that conducted these toxicity tests, or its successors. No further development work has been conducted on IPOXYN pending securing adequate funding and finalizing strategy as to the best development plan. We also will move forward with new designations at to these investigative biosimilar materials as the funding or alliance partnering is secured. We recently were issued composition of matter patents in this line of material development.

Market Opportunity

Diabetes and Metabolic Disease Related Illness

According to the International Diabetes Federation, in 2017, 425 million people worldwide are living with diabetes and that number is projected to increase to 629 million by 2045. In the United States alone, the Center for Disease Control estimated that there were 30.3 million people living with diabetes and an estimated 84 million people who were pre-diabetic in 2017. Standard therapies for diabetes include physician recommended diet and exercise, oral hypoglycemic drugs such as Metformin for Type 2 diabetes and insulin injection regimens for people with Type 1 diabetes. The objective of each is to manage a daily blood glucose level range recommended by a physician. Each of the current therapies alone has its limitations including numerous side effects and all treat the lack of control the system has to reduce the excesses of immediate sugar exposure absorbed in the gut.

According to Standard & Poor’s, the diabetes drug market is estimated to be $26.8 billion in 2016 and is on pace to grow to more than $64 billion by 2025. Pharmaceutical companies have been investigating new approaches to treating diabetes and market value has been maintained in the industry due to the introduction of these new products. We believe that both BTI-320 and BTI-410 represents a near-term commercial opportunity in a large and growing diabetes market worldwide. BTI-320 is pharmacologically differentiated from commercially available PPG drugs via its apparent efficacy without severe side effect. BTI-410 is pharmacologically differentiated from commercially available diabetes treatments by virtue of its novel mechanism and long pharmacodynamics profile, and therefore short term treatment phase.  

Hypoxia

Development of IPOXYN (investigational material) is in the pre-clinical stage and no work has been done in the past 2 years due to the lack of funding. Our injectable drug candidate, IPOXYN, will potentially compete with existing therapies for the treatment of hypoxia or anti-necrosis that according to Global Industry Analysts, Inc. has a global market opportunity of $1 billion. Hypoxia is a condition in which cells lack sufficient oxygen supply to support metabolic function. The standard therapy for acute anemia resulting from blood loss is infusion of RBCs mainly from supplies of donated blood. For prophylactic or long-term treatment of anticipated or chronic anemia, medications that stimulate the creation of new RBCs are frequently used.

Presently, there is no substitute for human red blood cells to deliver oxygen to the body; and transfusions involve many risks and limitations, the most significant is the ability to “deliver oxygen”. The standard therapy for reversing hypoxia is blood infusion, RBCs or hyperbaric oxygen. Hyperbaric medicine or hyperbaric oxygen therapy (HBOT) is a medical term for using oxygen at a level higher than atmospheric pressure. The HBOT treatment can only be done at a medical facility and each session can cost from $200 to more than $1,000 for the 90-minute chamber exposure. For decades, oxygen carriers have been developed for perfusion and oxygenation of ischemic tissue; none have yet succeeded in becoming an artificial blood component or an immediate blood or oxygen carrier substitute for the RBC’s. These past products were either expired blood-derived elements, synthetic perfluorocarbons, or red blood cell modifiers. According to a Brown University study, there is a global shortage of safe transfusion suitable blood of 110 million units, and the need for blood is rising 6-7% annually. IPOXYN, a blood substitute, has a broad range of potential applications, including but not limited to, tissue death prevention, wound healing, traumatic blood loss, traumatic brain injury, stroke, cancer, surgery, transplant and anemia.

Veterinary Market

Development of OXYFEX™ is in the pre-clinical stage and no work has been done to date due to the lack of funding. We plan to commence marketing OXYFEX™ for veterinary applications, which we view as a potentially lucrative market once we receive the necessary approvals in the U.S. and globally. As of now, no development work has been conducted on OXYFEX pending securing adequate funding and finalizing strategy as to the development plan. We estimate that there are at least 15,000 small animal veterinary practices in the United States, another 4,000 mixed animal practices treating small and large animals in the United States and approximately 22,000 small animal practices in Europe. We believe that the average veterinary practice treats only a small percentage of canine anemia cases with red blood cell transfusion. The remaining animals receive either cage rest or treatment such as fluid administration, iron supplements, dietary supplements or inspired oxygen.

Our Product Candidates

Our primary business is the development, manufacture and commercialization of therapeutic drugs with a focus on complex carbohydrate chemistry and peptide therapeutics to address diabetes and diabetes related complications. We are currently focusing on two drug candidates. BTI-320, a non-systemic, non-toxic, drug candidate taken before carbohydrate meals, is designed to improve post-meal blood sugar control in patients with Type 2 diabetes. BTI-410 is a peptide injectable compound designed to stimulate development of new insulin producing cells in the pancreas to alleviate stress on existing cells in type 2 diabetes patients and in type 1 diabetes patients who are on immune suppression after having undergone kidney transplant surgery. We intend to develop BTI-320 and BTI-410 to commercialization or commercial partnership to the extent that opportunities exist.

We intend to develop IPOXYN pending securing adequate financing and finalizing strategy, which may include partnerships, to establish the best development plan. We may also develop IPOXYN, an injectable drug candidate for prevention of necrosis and treatment of hypoxia. IPOXYN is a polysaccharide based therapeutic agent using proprietary processes and patented technology. Our IPOXYN drug consists of a stabilized polysaccharide composition containing oxygen-rechargeable iron, targeting both human and animal tissues and organ systems deprived of oxygen and in need of metabolic support.

According to Global Industry Analysts, Inc., the global market opportunity for anti-hypoxia or anti-necrosis technology is $1 billion. Early entry global markets include the following:

BTI-320

Overview

BTI-320 is one of our lead product candidates and is currently in Phase II clinical development. Subject to us obtaining adequate funding, we expect to begin additional clinical trials in 2018.

BTI-320 is a Carbohydrate Hydrolyzing Enzyme Inhibitors (CHEI) for treatment of patients with Type 2 diabetes. BTI-320 initially targets improved management of post-meal blood sugar in patients currently taking Metformin and potentially other anti-diabetic agents.

BTI-320, a non-systemic, non-toxic, drug candidate taken before carbohydrate meals, is designed to improve post-meal blood glucose control in patients with Type 2 diabetes. BTI-320 acts non-systemically in the gastrointestinal tract to inhibit the enzymes that cleave complex carbohydrates from foods into simple sugars, reducing available glucose during the period following a meal. BTI-320 initially targets improved management of post-meal blood sugar in patients currently taking Metformin and potentially other anti-diabetic agents.

According to the International Diabetes Federations 2011 report, Guideline for Management of Post-meal Glucose in Diabetes, addressing both post-meal plasma glucose and fasting plasma glucose is an important strategy for achieving optimal glucose control, and that evidence points to a relationship between an acute increase in blood sugar, particularly after a meal, and cardiovascular disease. We completed a BTI-320 Phase II clinical trial in patients with Type 2 diabetes.

Status of Development of BTI-320

BTI-320 is fully developed as a drug candidate. In October 2011, we announced the initiation of our clinical trial at Dartmouth-Hitchcock Medical Center in New Hampshire to evaluate the safety and efficacy of BTI-320 when added to oral agents or insulin regimen in patients with Type 2 Diabetes Mellitus. In July 2012, we announced the completion of patient enrollment. In February 2013, we announced that BTI-320 reduced the elevation of post-meal blood sugar by forty percent with no serious adverse events. The study evaluated BTI-320 in 24 patients with Type 2 diabetes between the ages of 18 and 75 with a body mass index (BMI) of 25-40 kg/m2 and with HbA1c of less than or equal to nine percent. HbA1c is a lab test that indicates the average level of blood sugar (glucose) over the previous three months.

Forty-five percent of patients responded with an average forty percent reduction of post-meal glucose in the blood compared to baseline in a dose-dependent manner. Additionally, results showed the effect of BTI-320 does not correlate with duration of diabetes and works regardless of concurrent diabetes medications. There was no severe hypoglycemia and gastrointestinal side effects were mild. Satiety was also observed. There were no serious adverse events from the data analysis of the open-label dose escalation crossover trial on Type 2 diabetic patients.

The full article for the clinical study was published in the July/August 2013 issue of Endocrine Practice , a peer-reviewed journal.

In October 2014, we reported results from a Phase IIb study of BTI-320 in patients with Type 2 diabetes conducted in the U.S. by Accumed Research Associates. The trial enrolled 23 patients with Type 2 diabetes diagnosed for at least one year and who were on a stable daily dose of Metformin for at least three months. The patients were administered BTI-320 and Metformin using a randomized, double-blind, placebo-controlled, dose-ranging, three-way cross-over study design. Of the 23 patients that completed the trial, 15 patients did not yield measurement differences from normal to the rice test meal. The remaining eight patients responded to BTI-320 with up to a 34% reduction in post meal blood glucose levels. Patients were given one to two BTI-320 tablets, half of the dose of the Dartmouth study and one third the dose of the University of Sydney trial. The results of the trial showed BTI-320 as safe and well tolerated, with no serious adverse events reported and provided information on different patient populations to be used to design the proper protocols for future clinical trials.

BTI-410

Overview

BTI-410 is another of our lead product candidates and is currently ready for Phase II clinical development. Subject to us obtaining adequate funding, we expect to begin additional clinical trials in 2018.

BTI-410 is a Beta Cell Maturation Stimulator (BCMS) for treatment of patients with Type 2 diabetes and type 1 diabetes patients who are on immunosuppression. BTI-410 initially targeted improved insulin secretion in type 2 patients currently taking Metformin and potentially other anti-diabetic agents. However, type 1 patients who are immunosuppressed are a specific population in need of this type of treatment and may provide a faster path to approval.

BTI-410, a short term, injectable drug candidate taken twice daily, is designed to stimulate beta cell maturation in patients with Type 2 diabetes. BTI-410 acts in the pancreas to stimulate the pathway that leads to the differentiation of new islet structures that include new populations of beta cells. BTI-410 initially targets improved management insulin secretion in patients currently taking Metformin and potentially other anti-diabetic agents.

Status of Development of BTI-410

BTI-410 is fully developed as a drug candidate. In 2011, IND was established and Phase 1a was completed with Celerion in Lincoln, NE. In 2014, patient enrollment began and for Phase 1b in type 2 diabetes patients on Metformin with Profile Institute for Clinical Research in Chula Vista, CA. In 2015, dataset was locked and in 2016 results of this study were presented at the 77th Conference of the American Diabetes Association. Publication is being completed for submission in 2018.

As the primary objective, results indicated that twice daily subcutaneous injections of HIP2B at 400 mg and 600 mg for 49 days were well tolerated in subjects with T2DM on metformin, with no clinically significant changes in clinical laboratory values, ECGs or vital signs during the study, and no deaths or withdrawals due to AEs.

Despite the small sample size, compared to treatment with placebo, treatment with HIP2B resulted in improvements in mean insulin concentrations measured by GGI from baseline to Day 46 that trended toward significance, mean change in pre-hepatic insulin secretion rate from baseline to Day 46 was statistically significant in the combined HIP2B treatment groups compared to placebo, improvements in mean insulin concentrations as measured by GGI and IVGTT, including some that seemed to persist during the post- treatment period. Improvements in insulin secretion levels, and improvements in control of insulin secretion under glucose challenge, is the benefit of beta cell maturation as a mechanism, which lead to improvement in HbA1c. Based on these results, we plan a larger definitive Phase II study will quantitatively elucidate these effects of HIP2B as an important new treatment option for Type 2 Diabetes. 

We also plan a Phase II study in type 1 diabetes patients who are on immunosuppression as a function of a kidney transplant. This patient population produces almost no endogenous insulin, so stimulation of new insulin producing beta cells in this population will be transformative and a clear proof of concept for BTI-410 as an important therapeutic strategy in the treatment of diabetes.

Products Competitive with BTI-320 and BTI-410

Anti-diabetic drugs. Anti-diabetic drugs treat diabetes mellitus by lowering glucose levels in the blood. With the exceptions of insulin, insulin analogues and Glucagon-like Peptide-1 Agonists, all are administered orally and are thus also called oral hypoglycemic agents or oral anti-hyperglycemic agents. There are different classes of anti-diabetic drugs, and their selection depends on the nature of the diabetes, age and situation of the person, as well as other factors. BTI-320 is the first compound in a new class of therapies called Carbohydrate-Hydrolyzing Enzyme Inhibitor (CHEI) for treatment of patients with Type 2 diabetes. BTI-320 acts non-systematically in the gastrointestinal tract to inhibit the enzymes that cleave complex carbohydrates from foods into simple sugars, reducing postprandial glucose excursion (post-meal blood sugar elevation). BTI-410 is a first in the new class compounds that stimulate beta cell maturation to regenerate endogenous insulin production and its control.

Secretagogues. Secretagogues, which include Sulfonylureas and Meglitinides, help enhance insulin secretion. Sulfonylureas were the first widely used oral hypoglycemic medications. They are insulin secretagogues , triggering insulin release by direct action on the KATP channel of the pancreatic beta cells. Glipizide (Glucotrol®) falls into this category with side effects including GI discomfort, diarrhea and hypoglycemia.

Sensitizers. Insulin sensitizers address the core problem in Type 2 diabetes—insulin resistance—and include Biguanides and Thiazolidinediones. Among oral hypoglycemic agents, insulin sensitizers are the largest category. Biguanides reduce hepatic glucose output and increase uptake of glucose by the periphery, including skeletal muscle. Although it must be used with caution in patients with impaired liver or kidney function, metformin, a biguanide, has become the most commonly used agent for Type 2 diabetes in children and teenagers. Amongst common diabetic drugs, Metformin is the only widely used oral drug that does not cause weight gain. Metformin is the most prescribed drug in this category whose side effects may be hypoglycemia and lactic acidosis.

Thiazolidinediones (TZDs), also known as “glitazones,” bind to PPARγ, a type of nuclear regulatory protein involved in transcription of genes regulating glucose and fat metabolism. Rosiglitazone (Avandia®) and Pioglitazone (Actos®) fall into this category of anti-diabetic agent.

Alpha-glucosidase inhibitors. Alpha-glucosidase inhibitors are “diabetes pills” but not technically hypoglycemic agents because they do not have a direct effect on insulin secretion or sensitivity. These agents slow the digestion of starch in the small intestine, so that glucose from the starch of a meal enters the bloodstream more slowly and can be matched more effectively by an impaired insulin response or sensitivity. These agents are effective by themselves only in the earliest stages of impaired glucose tolerance but can be helpful in combination with other agents in Type 2 diabetes. Acarbose, marketed as Prandase® and Glucobay® is an Alpha-glucosidase Inhibitor.

IPOXYN and OXYFEX™

Overview

Development of IPOXYN is in the pre-clinical stage and no work has progressed due to financial constraints. IPOXYN is designed for delivery as an intravenous solution, with the expectation that it can support an inadequate supply of RBC oxygen needed to maintain metabolic functions in the body. It may function without the limitations of compatibility, availability, short shelf life, volume and logistical challenges commonly associated with transfusions of whole blood and packed red blood cells. Other intravenous fluids commonly used in emergency trauma to restore blood volume, such as Ringer’s lactate or saline, are not designed to and do not carry oxygen. At present we have not conducted any clinical trials to confirm the efficacy of or filed any applications with the FDA with respect to, IPOXYN. IPOXYN will not be ready for commercialization until these steps are completed. Preclinical animal study results for IPOXYN were presented at the XIII International Symposium on Blood Substitutes and Oxygen Therapeutics in July 2011.

Upon securing adequate funding, we plan to introduce this investigational product into clinical trials for hypoxic medical conditions. Hypoxia promotes resistance to conventional treatments, as well as treatments for other diseases. IPOXYN has the potential to greatly improve survival of patients in multiple indications in which hypoxia is a factor. Hypoxia is a condition in which cells lack sufficient oxygen supply to support normal metabolic functions. It is widely known through research that lack of oxygen will result in a cascade of biochemical reactions which promote resistance to many helpful therapeutic substances and which interfere with the body’s own repair mechanisms. Antibiotics for the treatment of infection are less effective when hypoxic conditions are involved. Similarly, hypoxic cancer cells are resistant to chemotherapy treatments; most chemotherapy drugs rely on rapid cell division which requires normal oxygenation of cells, but in a hypoxic condition, cells proliferate by other pathways and therefore resist many chemotherapy treatments.

Another unmet clinical need is in various acute ischemic conditions, where hypoxia can develop from a local restriction of constrained blood vessels, or poor and compromised flow which leads to insufficient supply of oxygen by otherwise well-oxygenated and distributed RBCs, e.g. cerebral ischemia, ischemic heart disease and intrauterine hypoxia which is an unchallenged cause of perinatal death. In these cases, IPOXYN, as a rechargeable soluble oxygen delivery agent, may not be restrained whereas well-oxygenated RBCs may be prevented due to size from free flow and distribution and thus the delivery of oxygen. RBCs are large biological structures compared to the size of IPOXYN, which is a modified single-protein function oxygen carrier. In ischemic and hypoxic conditions, RBCs may not be able to perfuse the small vessels which have lost their ability to permit RBC distribution and thus oxygen delivery. Due to its small molecular size, IPOXYN can carry and distribute oxygen widely without risk of clot formation and flow stoppage.

In veterinary medicine applications, OXYFEX™ will be used as an oxygen delivery agent similar to an RBC replacement for ischemia and trauma, as well as for blood loss during surgery.

Status of development of IPOXYN

We are in the process of developing IPOXYN for pre-clinical studies, in order to conduct clinical trials and to file applications with the FDA as applicable.

Products Competitive with IPOXYN

Many biotechnology and pharmaceutical companies are developing new technologies for the treatment of hypoxia and other diseases. The standard therapy for reversing hypoxia due to acute blood loss may be blood infusion, RBCs or hyperbaric oxygen. Hyperbaric medicine, also known as hyperbaric oxygen therapy (HBOT), is the medical terminology for using oxygen at a level higher than atmospheric pressure. There are many conditions being treated using this approach including acute blood loss (Hart GB, Lennon PA, Strauss MB. (1987) “Hyperbaric oxygen in exceptional acute blood-loss anemia,” J. Hyperbaric Med 2 (4): 205–210). In the United States, HBOT is recognized as a reimbursable treatment for 14 “approved” conditions and an HBOT session can cost anywhere from $200 in private clinics, to over $1,000 in hospitals. The most common intervention in hypoxic patients is RBC transfusion. The need for intervention to reduce hypoxia can also be affected by medical conditions such as ischemia or cardiopulmonary failure, claudication (cramping caused by blocked arteries in the leg), poor perfusion and other indications, where a combination of below optimal flow and capacity are compromising oxygen delivery.

When compared to RBC transfusion, we believe IPOXYN will have the following advantages:

For chronic anemia situations, erythropoietin-based formulations are available from two suppliers. Erythropoietin stimulates the erythropoietic system in the bone marrow to produce its own RBCs. These products are slow acting, and only administered in anticipation of blood loss during surgery and are not effective for temporary use or in emergency situations when acute blood loss requires RBC infusion to deliver oxygen.

The fields of treatment of oxygen-deprived states have been approached in many ways. These include such techniques as high oxygen concentration, hyperbaric chambers, as well as the more mechanical approaches of vessel dilation and blood thinning. All have met with minor measures of improvement. In the early 1980’s a number of companies focused on creating specific oxygen carriers that were either (a) blood derived elements, (b) synthetics consisting of Perfluoro chemicals or (c) elements created using recombinant and molecular engineering approaches (red cell modifiers). Companies including Baxter, Abbot, and Biopure and OPK Biotech, for example, used the blood derived approach; Green Cross, Alliance Pharmaceuticals and Synthetic blood focused on synthetics, and Somatogen and Allos Therapeutics tried recombinant and molecular engineering. All of these approaches were early attempts to meet a need whose main focus has been on a “blood substitute”. Our approach is fundamentally different. Instead of a blood substitute, we are offering a new chemical entity that will deliver oxygen to hypoxic cells.

We are aware of other companies researching the use of hemoglobin as a therapeutic, including programs in China and Japan. We expect IPOXYN to compete with traditional therapies and with other oxygen delivery pharmaceuticals. Some of our competitors and potential competitors may have greater financial and other resources to develop, manufacture and market their products. We believe the most immediate competition comes from companies currently conducting clinical trials of investigational hemoglobin solutions.

We believe that these programs are still in the preclinical stage of development. We believe that our use of controlled source bovine materials for the production of IPOXYN is an advantage over products made from donated expired human red blood cells stored for a long period of time and other competitive approaches because of the availability, abundance, ability to control source, cost and relative safety of bovine red blood cells.

SUGARDOWN®

Overview

We have developed and currently produce and test market sell SUGARDOWN®, a non-systemic complex carbohydrate-based dietary food supplement to support healthy post-meal blood glucose using proprietary processes and technology. We will have unrestricted access to both sufficient raw materials at commodity pricing and processing facilities to produce sufficient supply of SUGARDOWN® to support product distribution across multiple sales channels regulated as a dietary supplement. Our SUGARDOWN® designated dietary supplement consists of a complex carbohydrate composition.

Status of Development of SUGARDOWN®

We completed development of SUGARDOWN ® as an over the counter (OTC) dietary supplement. We filed a structure and function claim application with the United States Food and Drug Administration (FDA) with respect to SUGARDOWN ®, which describes the proposed mechanism of action of SUGARDOWN ® in reducing post-meal elevation of glucose in the blood. We have submitted thirty structural and functional claims with the FDA. We currently have strategically filed national stage patent applications pending that are directed to the Composition of purified mannans, which are utilized in the formulation of SUGARDOWN ®. We have also received a registered mark for SUGARDOWN ® . General Product Liability Insurance for SUGARDOWN ® has been in effect since April 2010. On January 24, 2012, we announced the clinical test results in healthy volunteers performed at the Sydney University Glycemic Institute for Research with SUGARDOWN ® . On January 28, 2013, we announced the final results of the study conducted at the University of Sydney that showed the post- meal incremental area under the curve (iAUC) for glucose and insulin were significantly lower following consumption of SUGARDOWN ® tablets prior to a high carbohydrate meal of rice in a dose-dependent manner. This resulted in a reduction of up to 61% in post-meal elevation of blood glucose compared with the rice consumed alone. On average, there was a 25.5% reduction in the post-meal iAUC for glucose and a 20% reduction in post-meal insulin response for the 10 volunteers in the study. No severe adverse effects were reported or observed during the study.

Licensing Agreement with Advance Pharmaceutical Company

On June 24, 2011, we entered into a definitive Licensing and Manufacturing Agreement (the “Agreement”) with Advance Pharmaceutical Company (“Advance Pharmaceutical”), a Hong Kong-based, privately-held company and a significant stockholder of ours.

Under terms of the Agreement, we will manufacture and supply product in bulk for Advance Pharmaceutical. Advance Pharmaceutical may be responsible for the packaging, marketing and distribution of SUGARDOWN™ in Hong Kong, China and Macau. In November 2014, we agreed to expand their marketing agreement to include 12 additional countries: Korea, Taiwan, Singapore, Thailand, Malaysia, Vietnam, Philippines, Myanmar, Indonesia, Laos, Brunei and Cambodia. In March 2015, we agreed to expand their marketing agreement to include Japan. Advance Pharmaceutical will also have rights to develop and manufacture SUGARDOWN™ for commercial sale in these countries, subject to establishment of quality assurance and quality control standards set forth by us. The Agreement provides that Advance Pharmaceutical will pay royalties to us for SUGARDOWN™ and related products developed by us and a reduced royalty rate for products based on our intellectual property and developed by Advance Pharmaceutical. Revenue generated through this agreement for the years ended December 31, 2017 and 2016 were approximately $0 and $52,000 in sales and $7,000 and $0 in royalties, respectively.

Marketing SUGARDOWN®

We believe SUGARDOWN® is a safe and effective designated dietary supplement that can help support healthy after-meal blood sugar excursions out of normal ranges and support a weight management plan by helping to curb appetite if taken before meals. The product is ready for limited market release and is currently available for distribution in some Asian markets and is available for sale in the U.S. through our product website, www.sugardown.com .

To date, our marketing plan for SUGARDOWN® has been test marketing and to out-license marketing rights to strategic partners in their jurisdictions of expertise. In June 2011, we entered into an agreement with Advance Pharmaceutical Co. Ltd., our Hong Kong-based strategic partner that is also a significant stockholder of ours, to develop markets for SUGARDOWN® in Hong Kong, China and Macau. (See licensing partnership above)

Overview of Diabetes

Diabetes Mellitus

Diabetes mellitus, known simply as diabetes, is a chronic metabolic disorder in which a person has abnormally high levels of glucose in the circulating blood. This condition is caused by a failure of the pancreas to produce sufficient insulin and/or an inability of the body to respond adequately to circulating insulin. When glucose builds up in the blood instead of going into cells, it can lead to diabetes complications, which include limb Ischemia and neuropathy, retinopathy, kidney, cardiovascular and cerebrovascular diseases. According to the Centers for Disease Control and Prevention (CDC), diabetes affected approximately 30.3 million people in the United States in 2017. The estimated cost of diabetes in the United States alone is $245 billion, according to a study commissioned by the American Diabetes Association entitled, Economic Costs of Diabetes in the U.S. in 2012.

Pre-Diabetes

Pre-diabetes is the state in which a person has higher than normal blood glucose level, but not high enough to be diagnosed with diabetes. While in this range between normal and diabetic, patients are at risk for not only developing Type 2 diabetes, but also for cardiovascular complications. According to the CDC, pre-diabetes affected an estimated 84 million Americans in 2017.

Diabetes Mellitus is categorized into three general areas:

Type 1 diabetes: results from the body’s failure to produce insulin, and presently requires the person to inject insulin. Only 5-10% of people with diabetes have this form of the disease. It is considered an auto-immune disease, since the body’s immune system attacks and destroys insulin producing beta cells in the pancreas.

Type 2 diabetes: results from insulin resistance by the body’s cells, deficient insulin production by the Pancreas or a combination of both. Insulin resistance is a condition in which the cells in the body ignore or have become desensitized to insulin.

Gestational diabetes: is determined when pregnant women, who have never had diabetes before, have a high blood glucose level during pregnancy. It may precede development of Type 2 diabetes and affects approximately 4% of all pregnant women.

People with Type 2 and Type 1 diabetes generally manage their blood glucose level on a meal-to-meal basis. High levels of glucose in the bloodstream for prolonged periods can lead to complications of diabetes caused by reduced oxygen supply and nerve tissue damage to eyes, kidney, brain, heart and limbs.

Standard therapies for diabetes include physician-recommended exercise and diet, oral hypoglycemic drugs such as Metformin for Type 2 diabetics, and insulin injection regimens for Type 1 diabetics. The objective of each is to maintain a daily blood glucose level range recommended by a physician.

Overview of Hypoxia

Hypoxic conditions are detrimental to maintaining normal functionality in all living tissues. In mammals, red blood cells (RBCs) deliver oxygen throughout the body using red blood cell contained (RBC) hemoglobin, a protein responsible for carrying and releasing oxygen to the body’s tissues. Under normal conditions, approximately 98% of oxygen is delivered by hemoglobin in the RBCs, while less than two percent is dissolved in the plasma, the fluid part of the blood.

As the heart pumps blood, RBCs take up oxygen in the lungs and carry it to various parts of the body. Blood travels through progressively smaller blood vessels to the capillaries, some of which are so narrow that RBCs can only pass through them in single file. Most of the oxygen release occurs in the capillaries. Oxygen depleted RBCs return to the lungs to be reloaded. Adequate blood flow, pressure and RBC counts are crucial to this process. Hypoxia, or oxygen deprivation, even for several minutes, can result in cell damage, organ dysfunction and, if prolonged, death.

The causes of inadequate tissue oxygenation generally can be classified into three major categories:

Ischemia : inadequate RBC flow for tissue oxygenation. Ischemia may be caused by obstructed or constricted blood vessels and can lead to stroke, heart attack or other organ or tissue dysfunction.

Cardiopulmonary failure : impaired function of the heart or lungs. Cardiopulmonary failure may be caused by the inability of the heart to pump sufficient quantities of blood to meet the needs of the tissues or the failure of the lungs to oxygenate blood adequately.

Anemia: insufficient RBCs in circulation. This condition can be caused by chronic disorders affecting RBCs functionality or production like chemotherapy and radiation for treatment of cancer, or blood borne diseases like bone marrow diseases. Anemia may be also caused by acute blood loss from accidental injury or surgery.

The standard therapy for acute anemia resulting from blood loss is infusion of RBCs mainly from supplies of donated blood. For prophylactic or long-term treatment of anticipated or chronic anemia, medications that stimulate the creation of new RBCs are frequently used.

Presently, there is no substitute for human blood to deliver oxygen to the body; and transfusions involve certain risks and limitations. Despite the effort by blood banks around the world to screen the blood supply for HIV, hepatitis and other blood borne diseases, there is a continuing risk of an unsafe blood supply in many parts of the world; donated blood continues to carry the risk of disease transmission.

Blood compatibility and handling and storage requirements and limitations limit the use of RBCs transfusions to hospital environment only. Shortages of certain types of blood thus occur due to seasonal factors or disasters. Since RBCs’ oxygen-delivering capacity breaks down with storage (approximately 75% capacity remains after eight days of storage) their shelf-life is less than 42 days, limiting the ability for significant stockpiles of RBCs. In addition, for ischemic conditions due to constricted blood vessels where normal passage of RBCs is restricted or due to impaired heart or lung function, RBC transfusions are generally not effective.

Business Strategy

Our business strategy primarily consists of the following:

We intend to establish and implement clinical development programs that add value to our business in the shortest period of time possible and to seek strategic partners when a program becomes advanced and requires additional resources. We intend to continue focusing our expertise and resources to develop novel formulations, and to leverage development partnerships to apply our complex carbohydrate chemistry and peptide therapeutic design in other medical indications. We may seek to enter into licensing, co-marketing, or co-development agreements across different geographic regions, in order to avail ourselves of the marketing expertise of one or more seasoned marketing and/or pharmaceutical companies. Our strategy is to leverage considerable industry experience, expertise in complex carbohydrate chemistry, peptide therapeutic discovery and development and clinical development experience to continue to identify, develop and commercialize product candidates with strong market potential that can fulfill unmet medical needs in the treatment of diabetes and diabetes related complications. We plan to further develop new and proprietary drug candidates to provide improved efficacy and safety by using novel development pathways specific to each candidate.

A core part of our strategy relies upon creating safe and efficacious drug formulations that can be administered as standalone therapies or in combination with existing medications. We believe our novel approach of creating safe and efficacious drug formulations that can be combined with existing therapies and potentially deliver valuable products in areas of high unmet medical needs. We intend to assemble a new scientific medical advisory board consisting of scientists and medical people with both academic and corporate research and development experience that will provide leadership and counsel in the medical, scientific, technological and regulatory aspects of our current and future projects.

We believe that our highly experienced drug development leadership provides us with a significant competitive advantage in designing highly efficient clinical programs to deliver valuable products in areas of high unmet medical needs.

Key Strengths

We believe that our key differentiating elements include:

Subsidiaries

Effective January 1, 2018, we acquired CureDM Group Holdings, LLC as a wholly owned subsidiary. This provides for our exclusive world-wide rights to the peptide composition and uses for both type 1 and type 2 diabetes. Because this acquisition was in 2018, it is not included in our consolidated financial statements at December 31, 2017.

Employees

The Company employs Loraine Upham as a full-time Chief Operating Officer in the US, and Carl W Rausch is our Chief Executive Officer. Mr. Rausch works under consultant contract with the Company for significant cost savings at the present time. The Company employs other consultants to assist with the operation of the business as needed.

Facilities

We currently lease office space at 354 Merrimack Street, Lawrence, MA 01843 on a month to month basis. Prior to this location, we leased office space at 233 Needham Street, Newton MA 02464. This lease expired July 31, 2016 and no further obligation exists. With the acquisition of CureDM, we now also lease office space on a month-to-month basis at The BioScience Center 5901 Indian School Rd., Albuquerque, NM 87110.

Manufacturing

We currently contract with a third-party to manufacture BTI-320 and SUGARDOWN® in the United States at a Good Manufacturing Practices (GMP) compliant facility. We are evaluating whether to gain access to a pilot-scale manufacturing facility with adequate capacity to produce IPOXYN for clinical trials and market introduction following FDA/European Medicines Evaluation Agency (EMEA) approval, but no agreement for such access is currently in place. We intend to only utilize manufacturing facilities that we believe are fully compliant with GMP as required by the regulatory authorities in Europe or the United States. We in the evaluating a contract with Chinese Peptide Company (CPC) in Hangzhou, China to manufacture the Active Pharmaceutical Ingredient (API) of BTI-410 and the formulation, fill and finish will be completed through third-party suppliers in the US. CPC and all other contractors are fully FDA compliant and are required to pass regular FDA inspections.

Environmental Regulation

Pharmaceutical research and development involves the controlled use of hazardous materials. Biotechnology and pharmaceutical companies must comply with laws and regulations governing the use, generation, manufacture, storage, air emission, effluent discharge, handling and disposal of certain materials, biological specimens and wastes. We do not anticipate building in-house research, development or manufacturing facilities, and, accordingly, do not expect to have to comply directly with environmental regulation. However, our contractors and others conducting research, development or manufacturing activities for us may be required to incur significant compliance cost, and this could in turn could increase our expense or delay our completion of research or manufacturing programs.

Lack of Major Customers

To date we have had limited sales of our products in the United States. We have one significant customer, Advance Pharmaceutical Co. Ltd., the Hong Kong-based pharmaceutical company (alliance partner), a significant stockholder of ours, for distribution of SUGARDOWN ® in Hong Kong, China and Macau. These authorized territories were recently expanded to include Korea, Taiwan, Singapore, Thailand, Malaysia, Vietnam, Philippines, Myanmar, Indonesia, Laos, Brunei, Cambodia and Japan. One of our directors, Conroy Chi-Heng Cheng, is also a director of Advance Pharmaceutical Co. Ltd.  

Intellectual Property

Patents, trademarks, trade secrets, technological know-how and other proprietary rights are important to our business. Our patent portfolio is directed to four main areas, peptide composition of matter and uses, mannans, hemoglobin composition and methods of use, and taste masking in chewable tablets. The active ingredient in BTI-410 is a peptide derived from a human protein. It is synthesized chemically and not extracted or purified from a biologic source. It is stabilized and all compositions and modifications are patent protected. The uses of this peptide for the treatment of type 1 and type 2 diabetes is also protected. The active ingredient in BTI-320 is a mannan, and BTI-320 is a proprietary fractionated mannan. Mannans are a group of plant-derived complex carbohydrates, or polysaccharides, which consist mainly of polymers of the sugar mannose. Some of the plants from which mannans are derived are guar, locust bean, fenugreek, barley and konjac. Published studies on mannans have shown that they possess significant biological activity ranging from inhibition of cholesterol absorption to promoting wound healing and inhibiting tumor growth. Studies have also shown that consuming mannans before a meal may lessen the rise in blood glucose after the meal. Therefore, supplementation with mannans may be beneficial in the management of diabetes by supporting healthy blood sugar levels. We seek to strengthen our patent portfolio and increase market exclusivity as we progress in our clinical development process. During the clinical development and commercial scale up of our products, we anticipate additional intellectual property may be realized from the creation of novel therapeutic formulations, methods of manufacture, methods of use and novel quality control assays for each of our products. Our intellectual property estate directed to our technology and products consists of four international patent applications and their related national stage applications entitled: Composition of Purified Soluble Mannans for Dietary Supplements and Methods of Use Thereof (W02012/061675); Hemoglobin Compositions and Methods of Use (WO2012/78850); Encapsulation of Pharmaceuticals for Taste Masking in Chewable Tablets (PCT/US14/27243); and Compositions for Inhibiting Amylase Mediated Hydrolysis of Alpha (1-4) Linked Glucose Polymers (WO PCT/US16/31120). The international patent application entitled Hemoglobin Compositions and Methods of Use and its related national stage filings, which were assigned to us by Dr. Platt, are directed to our IPOXYN and OXYFEX technologies. National patent applications related to Hemoglobin Compositions have been recently allowed in the jurisdictions of Europe and China. Additional Hemoglobin Composition applications are pending in the United States and Hong Kong. The international patent application entitled Composition of Purified Soluble Mannans for Dietary Supplements and Methods of Use Thereof and its related national stage filings, which were assigned to us by Dr. Platt, are directed to our BTI-320 and SUGARDOWN ® technologies. National patent applications related to the Purified Soluble Mannans have been recently allowed in China and Hong Kong. Additional Purified Soluble Mannans applications are pending in the United States, Korea and Europe. The international application entitled: Compositions for Inhibiting Amylase Mediated Hydrolysis of Alpha (1-4) Linked Glucose Polymers will enter its national phase in November of 2017. Dr. Platt also has assigned the trademarks IPOXYN (U.S. Trademark Application No. 77754473) and Avanyx Therapeutics™ (U.S. Trademark Application No. 77806120) to us. Dr. Platt and our former President Mr. Tassey have assigned the trademark SUGARDOWN® (U.S. Trademark Reg. No. 3,955,414, registered May 3, 2011) to us.

BTI-410 is protected under the following Issued Patents:

Methods and Pharmaceutical Compositions for Treating Type I Diabetes Mellitus and Other Conditions (11/367,682

8,211,430 U.S.); Peptides, Derivatives and Analogs Thereof, and Methods of Using Same (7,393,919

(11/441,491 U.S.) Peptides, Derivatives and Analogs Thereof, and Methods of Using Same (7,714,103

(12/121,123) and 7,989,415 (12/635,053) and 8,383,578 (13/168,461) and 8,829,158 (13/745706) and 2609667

Canada, and 2295066 Europe, 2295066 France, 60 2006 048 912.9 Germany, 2295066 Great Britain, 2295066

Ireland, 252532 India. Methods and Therapies Relating to Islet Cell Neogenesis (8,785,400

11/943,991 U.S. Compositions and Methods of Using ProIslet Peptides and Analogs Thereof 8816047

(12/674,573) U.S. and 2698100 Canada and 2008292913 Australia, 200880114452.5

(08798997.6) Europe, 2193142 China, France, Germany, Great Britain, Ireland, Italy, Netherlands, Spain, Switzerland, HK1144823 (10111411.6) Hong Kong, and 5960661 Japan

The following patents are also pending or granted for BTI-410:

Compositions and Methods of Using ProIslet Peptides and Analogs Thereof, 204183 Israel, 233024

Israel Div, PI2010000893 Malaysia, 308103 Mexico, 337147 Mexico, 159273 Singapore, 200880114452.5

China; Peptides, Derivatives and Analogs Thereof, and Methods of Using Same, 1926/MUMNP/2012 India

It is not economically practicable to determine in advance whether our products, product components, manufacturing processes or the intended uses for our products infringe the patent rights of others. It is likely that, from time to time, we will receive notices from others of claims or potential claims of intellectual property infringement or we may be called upon to defend a customer, vendee or licensee against such third party claims. Responding to these kinds of claims, regardless of merit, could consume valuable time, result in costly litigation or cause delays, all of which could harm our business.

Responding to these claims could also require us to enter into royalty or licensing agreements with third parties claiming infringement. Such royalty or licensing agreements, if available, may not be available on terms acceptable to us.

Government Regulation

New drug approval for clinical use requires extensive research, manufacturing, pre-clinical and clinical studies, packaging, labeling, advertising, promotion, export and marketing, among other things. BTI-320, BTI-410 and IPOXYN will be subject to extensive regulation by governmental authorities in the United States and other countries. As a therapeutic drug administered by subcutaneous injection, BTI-410 will be regulated as a drug and will require extensive safety and efficacy studies for regulatory approval before it may be commercialized As a therapeutic product administered by intravenous infusion IPOXYN will be regulated as a drug and will require extensive safety and efficacy studies for regulatory approval before it may be commercialized.

Drug Approval Process

In the United States, IPOXYN is a new chemical entity and will require FDA approval. BTI-320, as a drug candidate, will also require FDA approval. Before final approval for marketing for either IPOXYN or BTI-320 could occur, the following steps must be completed: preclinical safety animal studies, GMP manufacturing, submission of Investigational New Drug, or IND application for extensive clinical trials to show proof of concept to significant health benefit. BTI-410 has achieved Investigational New Drug status and based on the phase 1a and Phase Ib safety profile, will proceed to Phase II study in type 2 diabetes, and Phase II study in type 1 diabetes patients with kidney transplants pending the establishment of protocols and FDA regulatory submission criteria.

After approval and during clinical studies the FDA can put the drug on “clinical hold.” In such case, the IND sponsor and the FDA must resolve any outstanding concerns before the use of the drug can proceed. The FDA may stop marketing, or clinical trials, or particular types of trials, by imposing a clinical hold because of safety concerns and potential risk to patients.

Clinical trials involve the administration of the investigational products to healthy volunteers or patients under the supervision of a qualified principal investigator consistent with an informed consent. Each clinical protocol is submitted, reviewed and approved by an independent Institutional Review Board, or IRB, or Ethical Committee (EC) at a participating hospital or clinical site, at which the study will be conducted. The IRB/EC will consider, among other things; ethical factors, safety to human subjects and the possible liability of the institution.

Clinical trials required for FDA approval typically are conducted in three sequential phases, but the phases may overlap. In Phase I, the initial introduction of the drug into human subjects, the drug is usually tested for safety or adverse effects, dosage tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.

Phase II clinical trials usually involve studies in a limited patient population to evaluate the efficacy of the drug for specific, targeted indications, determine dosage tolerance and optimal dosage and identify possible adverse effects and safety risks.

Phase III clinical trials generally further evaluate clinical efficacy and test further for safety within an expanded patient population and at multiple clinical sites.

After FDA approval, Phase IV clinical trials may be conducted to gain additional experience from the treatment of patients in the intended therapeutic indication. If the FDA approves a product while a company has ongoing clinical trials that were not necessary for approval, a company may be able to use the data from these clinical trials to meet all or part of any Phase IV clinical trial requirement. These clinical trials are often referred to as Phase III/IV post-approval clinical trials.

The results of the pre-clinical studies and clinical trials, together with detailed information on the manufacture and composition of the product, are submitted to the FDA in the application requesting approval to market the product. The FDA may delay approval of any product submitted by the Company. The FDA may limit the indicated uses for which an approval is given.

New Drug Approval for Veterinary Use

The use of new drugs for companion animals requires the filing of a New Animal Drug Application, or NADA, with and approval by the FDA. The requirements for approval are similar to those for new human drugs, exclusive of human trials. Obtaining NADA approval often requires safety and efficacy clinical field trials in the applicable species and disease, after submission of an Investigational New Animal Drug Application, or INADA, which for non-food animals becomes effective upon acceptance for filing.

Dietary Supplements

We currently offer SUGARDOWN ® as a dietary supplement. We are not required to obtain FDA approval in order to offer SUGARDOWN ® in this manner. We are required to either comply with certain FDA guidelines with respect to certain marketing claims for SUGARDOWN ® , or to file those claims with the FDA. We believe that we comply with those guidelines and have voluntarily filed structural and functional claims with the FDA.

Pervasive and Continuing Regulation

Any FDA approvals that may be granted will be subject to continual review, and newly discovered or developed safety or efficacy data may result in withdrawal of products from marketing. Moreover, if and when such approval is obtained, the manufacture and marketing of our products remain subject to extensive regulatory requirements administered by the regulatory bodies, including compliance with current Good Manufacturing Practices, serious adverse event reporting requirements and the FDA’s general prohibitions against promoting products for unapproved or “off-label” uses.

We are subject to inspection and market surveillance by the FDA for compliance with these regulatory requirements. Failure to comply with the requirements can, among other things, result in warning letters, product seizures, recalls, fines, injunctions, suspensions or withdrawals of regulatory approvals and termination of marketing. Any such enforcement action could have a material adverse effect on us. Unanticipated changes in existing regulatory requirements, state and local work and environmental laws or the adoption of new requirements could also have a material adverse effect on us.

Foreign Regulation

We will be subject to a variety of regulations governing clinical trials and sales of our products in the United States and outside the United States. Whether or not FDA approval has been obtained, approval of a product by the comparable non-U.S. regulatory authorities must be obtained prior to the commencement of marketing of the product in any country.

The approval process varies from country to country and can be complicated and time consuming; the time needed to secure approval may be longer or shorter than that required for FDA approval. For example, the European Union requires approval of a Marketing Authorization Application by the European Medicines Evaluation Agency. These applications require the completion of extensive preclinical studies, clinical studies and manufacturing and controls information.

Reimbursement

Our ability to successfully commercialize our human products also may depend on the extent to which reimbursement of the cost of such products and related treatment will be approved by the government health administration authorities, private health insurers and other health providers’ organizations. Significant uncertainty exists as to the reimbursement status of newly approved health care products. As third-party payors are increasingly challenging the price of medical products, there can be no assurance that adequate reimbursement of the cost will be available to enable us to maintain price levels sufficient for realization of an appropriate return on its investment.

Recently the public and the federal government have focused significant attention on reforming the health care system in the United States. A number of health care reform measures have been suggested, including price controls on therapeutics. Public discussion of such measures is likely to continue, and concerns about the potential effects of different possible proposals have been reflected in the volatility of the stock prices of companies in the health care and related industries.