COLLABORATION AGREEMENTS |
3 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
Mar. 31, 2011 |
Dec. 31, 2010 |
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| COLLABORATION AGREEMENTS |
In
December 2007 the Company entered into a Collaboration Agreement
with Lee’s Pharmaceutical (HK) Ltd. (“Lee’s
Pharm”). Pursuant to this agreement, Lee’s Pharm
obtained an exclusive license to develop, manufacture and
commercialize NOV-002 and NOV-205 in China, Hong Kong, Taiwan and
Macau (the “Chinese Territory”). The Company has
suspended further development of NOV-205; however, this suspension
may not impact the development strategy of Lee’s
Pharm. Under the terms of the agreement the Company
received a license fee of $500,000 in March 2008 and is entitled to
receive up to $1,700,000 in future milestone payments upon the
completion of development and marketing milestones by Lee’s
Pharm. This initial $500,000 payment received is being amortized
over the estimated term of this agreement, 15 years. Accordingly,
$8,333 of license revenue was recognized in each of the three-month
periods ended March 31, 2011 and 2010.
The
Lee’s Pharm agreement provides that the Company receive
royalty payments of 20-25% of net sales of NOV-002 in the Chinese
Territory and receive royalty payments of 12-15% of net sales of
NOV-205 in the Chinese Territory. Lee’s Pharm is obligated to
reimburse the Company for the manufacturing cost of pharmaceutical
products provided to Lee’s Pharm in connection with the
agreement. Lee’s Pharm has committed to spend a minimum
amount on development in the first four years of the agreement. The
agreement expires upon the expiration of the last patent covering
any of the licensed products, or twelve years from the date of the
first commercial sale in China, whichever occurs
later.
On
February 11, 2009, Novelos entered into a collaboration agreement
(the “Collaboration Agreement”) with Mundipharma
International Corporation Limited (“Mundipharma”) to
develop, manufacture and commercialize, on an exclusive basis,
Licensed Products (as defined in the Collaboration Agreement),
which includes the Company’s compound, NOV-002, in Europe
(other than the Russian Territory), Asia (other than the Chinese
Territory) and Australia (collectively referred to as the
“Mundipharma Territory”). Mundipharma is an
independent associated company of Purdue Pharma, L.P.
(“Purdue”). The Collaboration Agreement
provides for Mundipharma to pay the Company royalties and fixed
milestone payments based on sales and commercial launches in the
licensed territories.
For
countries in which patents are held, the Collaboration Agreement
expires on a country-by-country basis within the Mundipharma
Territory on the earlier of (1) expiration of the last applicable
Novelos patent within the country or (2) the determination that any
patents within the country are invalid, obvious or otherwise
unenforceable. For countries in which no patents are
held, the Collaboration Agreement expires the earlier of 15 years
from its effective date or upon generic product competition in the
country resulting in a 20% drop in Mundipharma’s market
share. Novelos may terminate the Collaboration Agreement
upon breach or default by Mundipharma. Mundipharma may
terminate the Collaboration Agreement upon breach or default,
filing of voluntary or involuntary bankruptcy by Novelos, the
termination of certain agreements with companies associated with
the originators of the licensed technology, or 30-day notice for no
reason. If any regulatory approval within the
Mundipharma Territory is suspended as a result of issues related to
the safety of the Licensed Products, then Mundipharma’s
obligations under the Collaboration Agreement will be suspended
until the regulatory approval is reinstated. If that
reinstatement does not occur within 12 months of the suspension,
then Mundipharma may terminate the Collaboration
Agreement.
Concurrently
with the execution of the Collaboration Agreement, Novelos
completed a private placement of Series E preferred stock and
common stock purchase warrants to Purdue.
The
Company expects that the negative results of its Phase 3 Trial will
adversely affect development and commercialization of NOV-002 under
the collaboration agreements with Lee’s Pharm and
Mundipharma.
|
2007 Collaboration Agreement with Lee’s Pharmaceutical (HK)
Ltd.
In
December 2007 the Company entered into a Collaboration Agreement
with Lee’s Pharmaceutical (HK) Ltd. (“Lee’s
Pharm”). Pursuant to this agreement, Lee’s Pharm
obtained an exclusive license to develop, manufacture and
commercialize NOV-002 and NOV-205 in China, Hong Kong, Taiwan and
Macau (the “Chinese Territory”). The Company has
suspended further development of NOV-205; however, this suspension
may not impact the development strategy of Lee’s Pharm.
Under the terms of the agreement the Company received a license fee
of $500,000 in March 2008 and is entitled to receive up to
$1,700,000 in future milestone payments upon the completion of
development and marketing milestones by Lee’s Pharm. This
initial $500,000 payment received is being amortized over the
estimated term of this agreement, 15 years. Accordingly, $33,000 of
license revenue was recognized in each of the years ended December
31, 2010 and 2009.
The
Lee’s Pharm agreement provides that the Company receive
royalty payments of 20-25% of net sales of NOV-002 in the Chinese
Territory and receive royalty payments of 12-15% of net sales of
NOV-205 in the Chinese Territory. Lee’s Pharm is obligated to
reimburse the Company for the manufacturing cost of pharmaceutical
products provided to Lee’s Pharm in connection with the
agreement. Lee’s Pharm has committed to spend a minimum
amount on development in the first four years of the agreement. The
agreement expires upon the expiration of the last patent covering
any of the licensed products, or twelve years from the date of the
first commercial sale in China, whichever occurs
later.
2009 Collaboration Agreement with Mundipharma
On
February 11, 2009, Novelos entered into a collaboration agreement
(the “Collaboration Agreement”) with Mundipharma
International Corporation Limited (“Mundipharma”) to
develop, manufacture and commercialize, on an exclusive basis,
Licensed Products (as defined in the Collaboration Agreement),
which includes the Company’s lead compound, NOV-002, in
Europe (other than the Russian Territory), Asia (other than the
Chinese Territory) and Australia (collectively referred to as the
“Mundipharma Territory”). Mundipharma is an
independent associated company of Purdue Pharma, L.P.
(“Purdue”). The Collaboration Agreement provides
for Mundipharma to pay the Company royalties and fixed milestone
payments based on sales and commercial launches in the licensed
territories.
For
countries in which patents are held, the Collaboration Agreement
expires on a country-by-country basis within the Mundipharma
Territory on the earlier of (1) expiration of the last applicable
Novelos patent within the country or (2) the determination that any
patents within the country are invalid, obvious or otherwise
unenforceable. For countries in which no patents are held,
the Collaboration Agreement expires the earlier of 15 years from
its effective date or upon generic product competition in the
country resulting in a 20% drop in Mundipharma’s market
share. Novelos may terminate the Collaboration Agreement upon
breach or default by Mundipharma. Mundipharma may terminate
the Collaboration Agreement upon breach or default, filing of
voluntary or involuntary bankruptcy by Novelos, the termination of
certain agreements with companies associated with the originators
of the licensed technology, or 30-day notice for no reason.
If any regulatory approval within the Mundipharma Territory is
suspended as a result of issues related to the safety of the
Licensed Products, then Mundipharma’s obligations under the
Collaboration Agreement will be suspended until the regulatory
approval is reinstated. If that reinstatement does not occur
within 12 months of the suspension, then Mundipharma may terminate
the Collaboration Agreement.
Concurrently
with the execution of the Collaboration Agreement, Novelos
completed a private placement of Series E preferred stock and
common stock purchase warrants to Purdue.
The
Company expects that the negative results of its Phase 3 Trial will
adversely affect development and commercialization of NOV-002 under
the collaboration agreements with Lee’s Pharm and
Mundipharma.
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