Item 1.01 Entry into a Material Definitive Agreement
On September 6, 2016, we entered into an amendment to a Patent and Technology License and Purchase Option Agreement (“Exclusive License”) with Bio-Nucleonics Inc. (“BNI”) whereby we were granted a worldwide, exclusive, perpetual, license on, and option to, acquire certain BNI intellectual property (“BNI IP”) within the three-year term of the Exclusive License.
We will initially focus our efforts and resources on the material procurement, manufacturing, marketing approval, distribution and sale of a FDA approved generic drug for the treatment of pain associated with metastatic bone cancer. We expect to be revenue ready within a short time frame, and we aim to generate sales within the first year of closing. Additionally, we intend to use the BNI IP to expand the labeled indication for the drug into a larger therapeutic market.
Under the Exclusive License for the BNI IP we expect to make payments totaling $850,000 in cash and an aggregate of 110,000 shares of our common stock that are subject to restriction from trading until commercialization of the product (approximately 12 months) and subsequent leak-out conditions.
Depending upon reaching certain milestones, the aggregate cash payment shall be made to BNI or third-parties on BNI’s behalf for materials and services required to reach commercialization. Once we have paid the aggregate cash payment, we may exercise our option to acquire the BNI IP at no additional charge. In accordance with the terms of the Exclusive License, we are issuing 50,000 restricted shares contemporaneously with the closing, although we are holding such shares in escrow pending the reaching of certain milestones including but not limited to the amendment or assignment of the Abbreviated New Drug Application (ANDA) (
http://www.accessdata.fda.gov/scripts/cder/ob/results_product.cfm?Appl_Type=A&Appl_No=075941
) related to the BNI IP.
The remaining shares shall be issued in accordance with the terms of the Exclusive License which requires additional milestones to be met, such as the
first significant commercial sale of a BNI Product to an arms-length third party
.
In the event that: (i) we do not exercise the option to purchase the BNI IP; (ii) we fail to make the aggregate cash payment within three years from the date of the Exclusive License; or (iii) we fail to make a diligent, good faith and commercially reasonable effort to progress the BNI IP, all BNI IP shall revert to BNI and we shall be granted the right to collect twice the monies invested through that date of reversion by way of a royalty along with other consideration which may be perpetual.
To effect the transfer of title of the BNI IP, BNI must settle all of BNI’s outstanding obligations.