LICENSE AGREEMENTS |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2011 | |||
| LICENSE AGREEMENTS |
2003 License Agreement with the University of Michigan
In
September 2003, Cellectar entered into an exclusive license
agreement (the “U. Mich. Agreement”) with the Regents
of the University of Michigan, (“U. Mich.”) for the
development, manufacture and marketing of products under several
composition of matter patents in North America which expire at
varying dates in 2016. The U. Mich. Agreement expires upon
the expiration of the last covered patent. The Company is
responsible for an annual license fee of $10,000 and is required to
pay costs associated with the maintenance of the patents covered by
the U. Mich. Agreement. Additionally, the Company is required
to make milestone payments of $50,000 upon the filing of a New Drug
Application (“NDA”) for a licensed product intended for
use in a therapeutic or diagnostic application (such milestone fees
may be deferred and paid within 12 months of the first commercial
sale of such products) and make certain milestone payments within a
year following the first commercial sale of any licensed
products. The sales milestones range from $100,000 to
$200,000, dependent upon whether the drug is for use in a
therapeutic or diagnostic application, provided that if sales in
the first 12 months are less than the amount of the milestone, then
we are required to pay 50% of all sales until the milestone is
satisfied. The milestone payments may total up to
$400,000. The U. Mich. Agreement provides that the Company pay a
royalty equal to 3% of net sales of any licensed products sold by
the Company or its sublicensees for such licensed products,
provided however if the sublicense fee payable to the Company is
between 4%-5% of net sales, then the royalties payable to U. Mich.
shall be equal to 50% of the sublicense fee. Furthermore, the
U. Mich. Agreement provides for a reduction in the royalties owed
by up to 50% if the Company is required to pay royalties to any
third parties related to the sale of the licensed products.
If we receive any revenue in consideration for rights to the
licensed technology that is not based on net sales, excluding any
funded research and development, we are required to pay U. Mich.
10% of amounts received. U. Mich. may terminate the agreement
if the Company ceases operations, if the Company fails to make any
required payment under the agreement, or if the Company otherwise
materially breaches the agreement, subject to the applicable notice
and cure periods. To date, the Company has made all payments
as they have become due, there have been no defaults under the U.
Mich. Agreement, nor has the Company been notified of a default by
U. Mich. The Company may terminate the agreement with six months
notice to U. Mich. and the return of licensed product and related
data. The U. Mich. Agreement contained milestones that
required certain development activities to be completed by
specified dates. All such development milestones have either been
completed or have been removed by subsequent amendment to the
agreement. U. Mich. has provided no warranties as to validity
or otherwise with respect to the licensed technology.
Cellectar
paid approximately $600, $300 and $5,000 to U. Michigan for
the reimbursement of patent maintenance fees during the nine months
ended September 30, 2011 and the years ended December 31, 2010 and
2009, respectively. As of September 30, 2011 and December 31,
2010, all annual license fees have been paid in a timely
manner.
In
connection with the Michigan Agreement, during 2003 Cellectar paid
approximately $54,000 of back patent costs and issued 203,483
shares of common stock to U. Michigan as partial consideration for
the rights described above. The estimated fair-market value
of the issuance was $80,412 and was recorded as a license cost and
is included as a component of stockholders equity in the
accompanying balance sheets.
License Agreement with Wisconsin Alumni Research
Foundation
In
January 2006, Cellectar entered into a license agreement (the
“WARF Agreement”) with the Wisconsin Alumni Research
Foundation (“WARF”) under which Cellectar received a
license, with a right to grant sublicenses, to develop,
manufacture, and market products with respect to certain
patents. The WARF Agreement required an initial license fee
of $8,800 and provided that Cellectar pay royalties equal to 0.3%
of sales of any licensed products. Cellectar was also
required to reimburse WARF for patent filing fees and related
costs. During the years ended December 31, 2010 and 2009,
there were no costs related to the patents under the WARF
Agreement. During 2010, the WARF Agreement was
terminated.
Novelos License Agreements
During
2007, Novelos entered into a Collaboration Agreement with
Lee’s Pharmaceutical (HK) Ltd. (“Lee’s
Pharm”) whereby 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”). Under the terms of the agreement the Company 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 and to receive royalty payments of between 12-25%
of net sales of NOV-205 and NOV-002, as applicable, in the Chinese
Territory and receive royalty payments of 12-15% of net sales of
NOV-205 in the Chinese Territory. 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.
During
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),
including 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. The Company 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.
The
Company has suspended development of the products covered by the
collaboration agreements described above. The Company does not
anticipate that the collaboration agreements will have a material
effect on its results of operations, cash flows, and financial
position following the Acquisition.
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