Item 1.01 Entry into a Material Definitive Agreement
The parties entered into the Second Amendment in order to add new definitions for and payment obligations related to Deferred Compensation Annual Net Sales Payments and Deferred Compensation Annual Minimum Payment(s) with an extension of the term of the License in consideration for modifying financial terms and timelines.
Summarizing the above: (i) the definition of Product now includes any product or
process that would have been enforceable under the Patent after the Patent
Rights have expired, (ii) Deferred Compensation Annual Net Sales Payments means
those payment obligations calculated on
The logic behind extending certain financial obligations is based in part on the filing by the Company of a new patent application that was considered for, but not incorporated into the License. In lieu of incorporating the new patent into the License, the parties agreed to the new definitions described in (ii) and (iii) above but limited to eight (8) years after the Patent Rights have expired. Therefore, the new patent is not part of the definition of Patent Rights but the amendment does provide the potential for a similar economic benefit to the Licensor as if the new patent were assigned to the Licensor and became part of the License.
A number of additional changes, deletions and additions were made to various sections of the License.
Selected portions of Schedule 2 that were amended are summarized below:
- Elimination of the$100,000 annual payments due by the Company to the Licensor fromDecember 31, 2021 and later. That means that the unpaid amount of$100,000 for the calendar year 2021 is no longer due and payable and that no payment for 2022 is due and payable - Addition of 4% royalty with respect toNet Sales by Licensee or Sublicensee as Deferred Compensation Annual Net Sales Payments - The$150,000 amount that would have been due upon application for regulatory approval has now been eliminated, and instead replaced with a$350,000 amount due the first year with a market approval from theUS FDA or a foreign equivalent and every year thereafter, until first commercial sale of a Product - The$250,000 annual minimum amount that would have been due the first year of commercial sale of a Product and every year thereafter is now$400,00 . The annual minimum amounts may be satisfied in part or in whole with royalty payments - The original$75,000 milestone payment that was originally due upon the dosing of a 1st patient with a Product in a Phase II study not sponsored by the Licensor or the dosing of a 1st patient in a Phase II study with a low dose reformulation of dronbaninol, has been amended to a$10,000 payment due after the dosing of the 1st patient with a Product in a Phase II study anywhere in the world - The$350,000 milestone payment that would have due upon dosing of the 1st patient with a Product in a Phase III study is now two payments totaling$500,000 ,$150,000 of which is due upon the dosing of a 1st patient in a Phase III study anywhere in the world and$350,000 due upon the earlier of enrolling 80% of the patients with a Product in the Phase III study or one year after the initiation of the Phase III study or the termination of the Phase III study - The$500,000 and$1,000,000 milestones due after the first NDA and within twelve months of commercial sale respectively remain unchanged - Royalty stacking provisions remain unchanged.
The above is a summary of what the Company believes are key the provisions of the Second Amendment. A copy of the entirety of the Second Amendment is filed as Exhibit 10.1 to this Current Report on Form 8-K. The above summary is qualified in its entirety by the Current Report of Form 8-K including the copy of the Second Amendment filed as Exhibit 10.1 to such report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
A list of exhibits that are furnished and filed as part of this report is set forth in the Exhibit Index, which follows, and is incorporated herein by reference.
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