Item
1.01 Entry into a Material Definitive Agreement.
On
April 20, 2020, QSAM Therapeutics Inc. (“QSAM”), a wholly-owned subsidiary of Q2Earth, Inc. (the “Company”), executed a Patent and Technology License Agreement and Trademark Assignment (the “License Agreement”) with IGL Pharma,
Inc. (“IGL”).
The License Agreement provides
QSAM with exclusive, worldwide and sub-licensable rights to all of IGL’s patents, product data and knowhow with respect
to Samaium-153 DOTMP (the “Technology”), a clinical stage novel radiopharmaceutical meant to treat different
types of bone cancer and related diseases. The Technology was developed by ISO Therapeutics Group, LLC (“ISO”)
and previously transferred to IGL, a company majority owned by the founders of ISO. The License Agreement also transfers to QSAM
the rights to the product name CycloSam for the Technology, and provides QSAM a first right of refusal to license other IGL/ISO
technologies in the future.
Initial indications
for Samarium-153 DOTMP include bone marrow ablation, a procedure used to treat various diseases including cancer, immune system
disorders, blood diseases, and sickle cell disease. Other important indications for the Technology include pediatric osteosarcoma,
a form of bone cancer afflicting children, as well as a broader market in metastasized bone cancers. IGL is an affiliated entity
of ISO, whose founders created Quadramet® (Samarium-153-EDTMP) one of the first commercial radiopharmaceuticals.
The
License Agreement is for 20 years or until the expiration of the multiple patents covered under the license, and requires multiple
milestone based payments including: $60,000 and other expense reimbursements within 60 days of signing, up to $150,000 as the
Technology advances through multiple stages of clinical trials, and $1.5 million upon commercialization. IGL will also receive
equity in QSAM equal to 5% of the company to be issued within 60 days of signing. Upon commercialization, IGL will receive an
on-going royalty equal to 4.5% of Net Sales, as defined in the License Agreement, and up to 50% of any Sublicense Consideration
received by QSAM, as defined in the License Agreement. QSAM will also pay for ongoing patent filing and maintenance fees, and
has certain requirements to defend the patents against infringement claims. The parties have agreed to mutual indemnification.
Either
party may terminate the License Agreement 30 days after notice in the event of an uncured breach, or immediately in the case of
bankruptcy or insolvency of the other party. QSAM may terminate for any reason upon 30 days’ notice. In the case IGL terminates
due to an uncured QSAM breach, IGL will repay to QSAM 25% of its direct clinical costs to assume ownership of data and other information
gained in that process.
In
connection with the License Agreement, QSAM signed a two-year Consulting and Confidentiality Agreement (the “Consulting
Agreement”) with IGL, which provides IGL with payments of $8,500 per month starting 60 days after signing. The Consulting
Agreement is to provide QSAM with additional consulting and advisory services from the Technology’s founders to assist in
the clinical development of the Technology.
Douglas Baum, a Director of the
Company, has been named President and CEO of the subsidiary QSAM, with authority to start building a team to oversee clinical
trials and other operations for the development and commercialization of the Technology.
The
above represents a summary of the License Agreement and Consulting Agreement and are qualified in their entirety by reference
to the License Agreement and Consulting Agreement which are filed as Exhibits 10.1 and 10.2, respectively, to this Report
on Form 8-K.