Item 1.01.
Entry into a Material Definitive
Agreement.
On January 22, 2017, the Company entered
into a license agreement with Shandong Yaohua Medical Instrument Corporation (“SMI”) pursuant to which the Company
granted SMI an exclusive global license to manufacture the Company’s LuViva Advanced Cervical Cancer device and related disposables
(subject to a carve-out for manufacture in Turkey) and exclusive distribution rights in the Peoples Republic of China, Macau, Hong
Kong and Taiwan. In exchange for the license, SMI will pay a $1.0 million licensing fee, payable in five installments through October
2017, as well as a royalty on each disposable sold in the territories. SMI will also underwrite the cost of securing approval of
LuViva with the Chinese Food and Drug Administration.
Pursuant to the SMI agreement, SMI must
become capable of manufacturing LuViva in accordance with ISO 13485 for medical devices by the second anniversary of the SMI agreement.
During 2017, SMI must purchase no fewer than ten devices (with up to two devices pushed to 2018 if there is a delay in obtaining
Chinese FDA approval). In the three years following Chinese FDA approval, SMI must purchase a minimum of 3,500 devices (500 in
the first year, 1,000 in the second, and 2,000 in the third). As manufacturer of the devices and disposables, SMI will be obligated
to sell each to the Company at costs no higher than the Company’s current costs.
As partial consideration for, and as
a condition to, the license, and to further align the strategic interests of the parties, the Company agreed to issue $1.0 million
in shares of its common stock to SMI, in five installments through October 2017, at a price per share equal to the lesser of the
average closing price for the five days prior to issuance and $1.25.
In order to facilitate the SMI agreement,
immediately prior to its execution the Company entered into an agreement with Shenghuo Medical, LLC, regarding the Company’s
previous license to Shenghuo, originally granted in June 2016, to manufacture, sell and distribute the LuViva in Asia. Under the
terms of the new agreement, Shenghuo agreed to relinquish its manufacturing license and its distribution rights in SMI’s
territories, and to waive its rights under the original Shenghuo agreement, all for as long as SMI performs under the SMI agreement.
As consideration, the Company has agreed to split with Shenghuo the licensing fees and net royalties from SMI that the Company
will receive under the SMI agreement. Should the SMI agreement be terminated, the Company has agreed to re-issue the original license
to Shenghuo under the original terms. Two of the Company’s directors, Mark Faupel and Richard Blumberg, are managing members
of Shenghuo.
The above descriptions are qualified
in their entirety by reference to the SMI agreement and the Shenghuo agreement, attached as Exhibits 10.1 and 10.2, respectively,
to this current report and incorporated herein by reference. A press release further describing the agreements is attached at Exhibit
99.1 and is incorporated herein by reference.
This current report on Form 8-K is neither
an offer to sell nor the solicitation of an offer to buy any securities. The securities described above have not been registered
under the Securities Act and may not be offered or sold in the United States absent registration or an exemption from registration
under the Securities Act.