| Commitments and Contingencies | 6. Commitments and Contingencies
Operating Leases
Prior to December 31, 2012, the Company entered into an
operating lease in New York, NY, consisting of 6,251 square feet of
office space. In accordance with this agreement, the Company
entered into a letter of credit in the amount of $388 thousand,
naming the Company’s landlord as beneficiary. In January
2012, the Company amended the lease agreement, adding 1,008 square
feet of office space. As of December 31, 2012, the Company
occupied 7,259 square feet of space in New York, NY, and maintained
a $388 thousand letter of credit. The collateral for the letter of
credit is restricted cash and recorded in other non-current assets
on the balance sheet as of June 30, 2015. The lease for office
space in New York, NY expires in October 2018.
On October 17, 2013, the Company entered into a sublease
agreement to lease all of its New York office to a subtenant. The
Company remains primarily liable to pay rent on the original lease.
The Company recorded a loss on the sublease in the amount of $729
thousand for the year ended December 31, 2013, representing
the remaining contractual obligation of $2.3 million, less $1.6
million in payments from its subtenant. The Company retired assets
as a result of this sublease with a net book value of $392
thousand, and recorded a loss on disposal of fixed assets for the
same amount for the year ended December 31, 2013. The Company
continues to maintain the $388 thousand letter of credit in respect
of the New York office space.
Prior to December 31, 2012, the Company entered into separate
operating lease agreements for various spaces in a building in
Boston, MA. That space consisted of 5,249 square feet on the first
floor, 8,538 square feet on the second floor, and 6,959 square feet
on the third floor. In June 2012, the Company re-negotiated a
master lease for the entire Boston office space, whereby it added
9,800 square feet of office space on the fourth floor, surrendered
4,113 square feet from the second floor, and incorporated all three
lease agreements under the same master agreement expiring in August
2016. The Company provided an additional $41 thousand security
deposit for the additional space on the fourth floor. As of
June 30, 2015, a total security deposit of $127 thousand is
included in deposits on the balance sheet.
On August 30, 2013, the Company entered into a sublease
agreement to lease 5,249 square feet in its Boston office to a
subtenant. The Company remains liable to pay rent on the original
lease. The Company recorded a loss on the sublease in the amount of
$42 thousand for the year ended December 31, 2013,
representing the remaining contractual obligation of $367 thousand,
less $325 thousand in payments from its subtenant. This sublease
tenant vacated the leased premises in October 2014. At
December 31, 2014, the Company applied the $20 thousand
deposit received from the sublease tenant against its outstanding
rent obligation. On March 31, 2015, the company recorded a
loss of on the first floor sublease of $167 thousand. On
May 22, 2015, the Company again subleased the vacant office
space for approximately $105 thousand through August 2016 in which
the tenant provided a security deposit of $17 thousand. Since the
prior lease obligation has been fully expensed, rent received from
the tenant will reduce current rent expense. At June 30, 2015,
the Company occupies 21,184 square feet of space in its Boston, MA
office.
Total rent expense was approximately $477 thousand and $305
thousand for the six months ended June 30, 2015 and 2014,
respectively.
The Company records rent expense on a straight-line basis over the
term of the lease. Accordingly, the Company has recorded a
liability for deferred rent at June 30, 2015 and
December 31, 2014 of $869 thousand ($399 thousand current and
$470 thousand long-term) and $850 thousand ($280 thousand current
and $570 thousand long-term), respectively, which is recorded in
deferred rent on the balance sheet.
License Agreements
Exclusive Channel Partner Agreement with Intrexon
Corporation
On January 6, 2011, the Company entered into an Exclusive
Channel Partner Agreement, or the Channel Agreement, with Intrexon
Corporation, or Intrexon that governs a “channel
partnering” arrangement in which the Company uses
Intrexon’s technology directed towards in vivo
The Channel Agreement grants the Company a worldwide license to use
patents and other intellectual property of Intrexon in connection
with the research, development, use, importing, manufacture, sale,
and offer for sale of products involving DNA administered to humans
for expression of anti-cancer effectors for the purpose of
treatment or prophylaxis of cancer, which is collectively referred
to as the ZIOPHARM Products. Such license is exclusive with respect
to any clinical development, selling, offering for sale or other
commercialization of ZIOPHARM Products, and otherwise is
non-exclusive. Subject to limited exceptions, the Company may not
sublicense these rights without Intrexon’s written
consent.
Under the Channel Agreement, and subject to certain exceptions, the
Company is responsible for, among other things, the performance of
the Cancer Program, including the development, commercialization
and certain aspects of manufacturing of ZIOPHARM Products. Intrexon
is responsible for the costs of establishing manufacturing
capabilities and facilities for the bulk manufacture of products
developed under the Cancer Program, certain other aspects of
manufacturing and costs of discovery-stage research with respect to
platform improvements and costs of filing, prosecution and
maintenance of Intrexon’s patents.
Subject to certain expense allocations and other offsets provided
in the Channel Agreement, the Company will pay Intrexon on a
quarterly basis 50% of net profits derived in that quarter from the
sale of ZIOPHARM Products, calculated on a ZIOPHARM Product-by-
ZIOPHARM Product basis. The Company has likewise agreed to pay
Intrexon on a quarterly basis 50% of revenue obtained in that
quarter from a sublicensor in the event of a sublicensing
arrangement. In addition, in partial consideration for each
party’s execution and delivery of the Channel Agreement, the
Company entered into a stock purchase agreement with Intrexon.
Upon termination of the Channel Agreement, the Company may continue
to develop and commercialize any ZIOPHARM Product that, at the time
of termination:
• Is being commercialized by the
Company;
• Has received regulatory
approval;
• Is a subject of an application for
regulatory approval that is pending before the applicable
regulatory authority; or
• Is the subject of at least an ongoing
Phase 2 clinical trial (in the case of a termination by Intrexon
due to an uncured breach or a voluntary termination by the
Company), or an ongoing Phase 1 clinical trial in the field (in the
case of a termination by the Company due to an uncured breach or a
termination by Intrexon following an unconsented assignment by the
Company or its election not to pursue development of a Superior
Therapy (as defined in the Channel Agreement)).
The Company’s obligation to pay 50% of net profits or revenue
described above with respect to these “retained”
products will survive termination of the Channel Agreement.
On March 27, 2015, the Company and Intrexon entered into the
Exclusive Channel Partner Amendment, or ECP Amendment, amending the
Channel Agreement. The ECP Amendment modifies the scope of the
parties’ collaboration under the Channel Agreement in
connection with the Ares Trading Agreement discussed below.
Pursuant to the ECP Amendment, the chimeric antigen receptor T-Cell
products to be developed and commercialized pursuant to the Ares
Trading Agreement shall be included within the Intrexon/ZIOPHARM
collaboration under the Channel Agreement. The ECP Amendment
provides that Intrexon will pay to the Company fifty percent of all
payments Intrexon receives for upfronts, milestones and royalties
under the Ares Trading Agreement.
License Agreement—The University of Texas M. D. Anderson
Cancer Center
On January 13, 2015, the Company, together with Intrexon,
entered into a License Agreement, or the MD Anderson License, with
The University of Texas M.D. Anderson Cancer Center, or MD
Anderson. Pursuant to the MD Anderson License, the Company and
Intrexon hold an exclusive, worldwide license to certain
technologies owned and licensed by MD Anderson including
technologies relating to novel chimeric antigen receptor (CAR)
T-cell therapies, non-viral gene transfer systems, genetic
modification and/or propagation of immune cells and other cellular
therapy approaches Natural Killer, or NK Cells and T cell
receptors, or TCR’s arising from the laboratory of Laurence
Cooper, M.D., Ph.D., who became the Chief Executive Officer of the
Company on May 7, 2015 and was formerly a professor of
pediatrics at MD Anderson and now currently a visiting scientist
under that institution’s policies, as well as either
co-exclusive or non-exclusive licenses under certain related
technologies.
Pursuant to the terms of the MD Anderson License, MD Anderson
received consideration consisting of $50 million in shares of the
Company’s common stock (or 10,124,561 shares), and $50
million in shares of Intrexon’s common stock, in each case
based on a trailing 20 day volume weighted average of the closing
price of the Company’s and Intrexon’s common stock
ending on the date prior to the announcement of the entry into the
MD Anderson License, collectively referred to as the License
Shares, pursuant to the terms of the License Shares Securities
Issuance Agreement described below. The License Shares were issued
to MD Anderson on March 11, 2015 pursuant to the terms of the
MD Anderson License.
In addition, pursuant to the MD Anderson License, MD Anderson has
agreed to transfer to the Company certain existing research
programs described in the MD Anderson License and to grant to
Intrexon and the Company certain additional technology rights
related thereto. In connection with such transfer, the terms of the
MD Anderson License also require the Company and Intrexon to enter
into a research and development agreement with MD Anderson pursuant
to which the Company will provide funding for certain research
development, preclinical and clinical activities of MD Anderson for
a period of three years, in an amount between $15 and $20 million
per year. The first quarterly payment of $3.75 million due under
this arrangement was paid on April 13, 2015 and is included in
other current assets at June 30, 2015. The Company also made
the second quarterly payment of $3.75 million on July 13,
2015.
The term of the MD Anderson License expires on the last to occur of
(a) the expiration of all patents licensed thereunder, or
(b) the twentieth anniversary of the date of the License;
provided, however, that following the expiration of the term of the
MD Anderson License, the Company and Intrexon shall then have a
fully-paid up, royalty free, perpetual, irrevocable and
sublicensable license to use the licensed intellectual property
thereunder. After ten years from the date of the MD Anderson
License and subject to a 90-day cure period, MD Anderson will have
the right to convert the MD Anderson License into a non-exclusive
license if the Company and Intrexon are not using commercially
reasonable efforts to commercialize the licensed intellectual
property on a case-by-case basis. After five years from the date of
the MD Anderson License and subject to a 180-day cure period, MD
Anderson will have the right to terminate the MD Anderson License
with respect to specific technology(ies) funded by the government
or subject to a third party contract if the Company and Intrexon
are not meeting the diligence requirements in such funding
agreement or contract, as applicable. MD Anderson may also
terminate the agreement with written notice upon material breach by
the Company and Intrexon, if such breach has not been cured within
60 days of receiving such notice. In addition, the MD Anderson
License will terminate upon the occurrence of certain insolvency
events for both the Company and Intrexon and may be terminated by
the mutual written agreement of the Company, Intrexon and MD
Anderson.
On January 9, 2015, in order to induce MD Anderson to enter
into the MD Anderson License on an accelerated schedule, the
Company and Intrexon entered into a letter agreement, or the Letter
Agreement, pursuant to which MD Anderson received consideration of
$7.5 million in shares of common stock (or 1,597,602 shares), and
$7.5 million in shares of Intrexon’s common stock, in each
case based on a trailing 20 day volume weighted average of the
closing price of the Company’s and Intrexon’s common
stock ending on the date prior to the execution of the Letter
Agreement, collectively referred to as the Incentive Shares, in the
event that the MD Anderson License was entered into on or prior to
8:00 am Pacific Time on January 14, 2015, referred to as the
Accelerated Closing Deadline. The Incentive Shares were issued to
MD Anderson on March 11, 2015 pursuant to the terms of the
Incentive Shares Securities Issuance Agreement described below.
In connection with the License and the issuance of the License
Shares and the Incentive Shares, on January 13, 2015, the
Company and MD Anderson entered into a Registration Rights
Agreement, or the Registration Rights Agreement, pursuant to which
the Company agreed to file a “resale” registration
statement, or the Registration Statement, registering the resale of
the License Shares, the Incentive Shares and any other shares of
the Company’s common stock held by MD Anderson on the date
that the Registration Statement is filed Under the Registration
Rights Agreement, the Company is obligated to maintain the
effectiveness of the Registration Statement until all securities
therein are sold or are otherwise can be sold pursuant to Rule 144,
without any restrictions. A prospectus supplement under the
Company’s already effective registration statement on Form
S-3 (File No. 333-201826), was filed on April 1, 2015 in
satisfaction of the Company’s obligations under the
Registration Rights Agreement.
The Company has determined that the rights acquired in the MD
Anderson License represent in process research and development with
no alternative future use. Accordingly, the Company recorded a
charge of $67.3 million to research and development expense
representing the fair value of the 11,722,163 shares of its common
stock on the date the MD Anderson License was executed.
Ares Trading License and Collaboration Agreement
On March 27, 2015, the Company and Intrexon entered into the
Ares Trading Agreement with Ares Trading, a company within the
pharmaceutical business of Merck KGaA, Darmstadt, Germany, through
which the parties established a collaboration for the research and
development and commercialization of Products (as defined below)
for the prophylactic, therapeutic, palliative or diagnostic use for
cancer in humans, which is referred to as the Field.
The Ares Trading Agreement provides for the establishment of
committees composed of Ares Trading and Intrexon representatives
that will govern activities in, among others, the areas of project
establishment, research plans and intellectual property.
The Ares Trading Agreement grants Ares Trading an exclusive,
worldwide, royalty-bearing, sub-licensable license under the
Company’s and Intrexon’s patents, know-how and
proprietary platform of research tools and technology necessary for
the Company and Intrexon to perform their tasks directed towards
the design, identification, culturing, and/or production of
genetically modified cells to (a) generate and test Chimeric
Antigen Receptor T-Cell Products (as defined in the Ares Trading
Agreement) solely for the development, regulatory approval and
commercialization of Products containing such Chimeric Antigen
Receptor T-Cell Products pursuant to the licenses granted in
clauses (b) and (c) of this paragraph; (b) develop
and commercialize Products in the Field, worldwide, provided that
such Products are not Out-of-Scope Products (as defined below)
where Ares Trading has not exercised its Option (as defined below);
and (c) commercialize the chimeric antigen receptor for
Products.
Exclusivity
During the term of the Ares Trading Agreement, subject to the
change in control provisions described below, neither the Company
nor Intrexon may, directly or indirectly, clinically develop or
commercialize any chimeric antigen receptor or Chimeric Antigen
Receptor T-Cell Products in the Field other than pursuant to the
Ares Trading Agreement, or grant any third party the right to
research, develop or commercialize any chimeric antigen receptor or
Chimeric Antigen Receptor T-Cell Products in the Field, other than
pursuant to the Ares Trading Agreement, or, in the case of
Intrexon, pursuant to its rights of independent development as
described below. In addition, neither the Company nor Intrexon may,
directly or indirectly, clinically develop or commercialize any
chimeric antigen receptor or Chimeric Antigen Receptor T-Cell
Products in the Field against a Target in animal health.
If Ares Trading fails to exercise its Option with respect to an
Out-of-Scope Target as described below, Ares Trading may not
directly or indirectly, clinically develop or commercialize any
Chimeric Antigen Receptor T-Cell Product against such Out-of-Scope
Target under the Ares Trading Agreement.
Consideration and Royalties
Ares Trading paid an upfront fee of $115.0 million to Intrexon as
consideration for entry into the Ares Trading Agreement. Intrexon
will pay 50% of the fee to the Company in accordance with the ECP
Amendment, discussed above. Ares Trading will, pursuant to the
terms of the Ares Trading Agreement, pay Intrexon certain fees for
the research and development activities related to the
Products.
Subject to certain expense allocations, Ares Trading will pay
Intrexon royalties ranging from the lower-single digits to the
lower-double digits of the net sales derived from the sale of
Products developed under the Ares Trading Agreement, on a
Product-by-Product and a country-by-country basis, which royalties
are subject to increase under the Option, as described below.
Royalty amounts are subject to adjustment, and the royalty term
will terminate, based upon certain conditions as further described
in the Ares Trading Agreement. In accordance with the ECP
Amendment, Intrexon will pay to the Company 50% of all royalties
that it receives under the Ares Trading Agreement.
The Agreement initially covers two Targets (as defined below) for
which Ares Trading must pay a cash fee. Ares Trading may elect
additional Targets by paying Intrexon a cash fee.
Milestones
Ares Trading has to make certain payments to Intrexon upon Ares
Trading’s achievement of designated milestones. Intrexon will
pay 50% of all milestones that it receives under the Ares Trading
Agreement to the Company under the ECP Amendment. These payments
are payable in cash and are generally due within 30 days of the
achievement of the relevant milestone.
Development and commercial milestones
Technical milestones
Responsibilities
For each Target selected by Ares Trading, Intrexon is responsible
for conducting research and development and the manufacture and
supply of Products for use in each Phase 1 clinical trial. Ares
Trading is responsible for manufacturing and supplying Products for
development use after each Phase 1 clinical trial and for
commercialization in the Field.
“Product” means (a) any pharmaceutical product
containing a Chimeric Antigen Receptor T-Cell Product developed by
Intrexon under a research program for which the joint steering
committee established under the Ares Trading Agreement determines
to file an investigational new drug application or under a research
program for which Ares Trading has exercised the Option (as defined
below) or (b) any pharmaceutical product containing a Chimeric
Antigen Receptor T-Cell Product developed by or on behalf of Ares
Trading that is a derivative of or is otherwise developed from or
based upon a Chimeric Antigen Receptor T-Cell Product described in
clause (a).
“Target” means a unique molecular species or
combination thereof (or naturally occurring allelic variant,
glycosylation variant, or mutant thereof) that (a) is
chemically distinct from other molecules, (b) is a human
peptide, protein, polysaccharide or lipid, and (c) wherein a
binding entity derives recognized therapeutic value from binding
such molecular species.
Option
Intrexon may suggest a Target to Ares Trading, and if Ares Trading
decides not to include such Target in a research program, it would
be deemed to be an “Out-of-Scope Target” under the Ares
Trading Agreement, Intrexon may, subject to certain conditions,
independently exploit Products directed toward such Out-of-Scope
Target at its own cost. The Ares Trading Agreement refers to such
products as Out-of-Scope Products. Notwithstanding the foregoing,
Intrexon may not develop a cell targeting an Out-of-Scope Target in
the Field that according to the term defined in the Agreement would
qualify as a “Competitive Product.” At the stage of
finalization of the Phase 1 clinical trial enrollment of the first
Out-of-Scope Product related to the Out-of-Scope Target, Ares
Trading may exercise an option, or the Option, to make the
Out-of-Scope Product a Product under the Ares Trading Agreement by
notifying Intrexon it is doing so and by paying Intrexon a cash fee
and paying increased royalties to Intrexon on such Product covered
by the exercise of Ares Trading’s Option, subject to the
other terms and conditions relating to royalty payments.
If Ares Trading does not exercise the Option related to an
Out-of-Scope Target and Out-of-Scope Product, Intrexon may further
exploit such Out-of-Scope Target and Out-of-Scope Product
independently from Ares Trading (subject to the restrictions on
Intrexon contained in the Ares Trading Agreement, including
Intrexon’s obligation not to develop a Competitive Product),
in consideration for which (i) Intrexon must pay to Ares
Trading a lower double digit percentage of all financial and
non-financial consideration received by Intrexon for or in
connection with such Out-of-Scope Product, up to a capped amount,
which is referred to as the One-Time Intrexon Program Option Fee
and (ii) once the One-Time Intrexon Program Option Fee has
been paid by Intrexon, Intrexon must provide a credit to Ares
Trading under the Ares Trading Agreement, subject to certain
conditions, of a mid-single digit percentage of all financial and
non-financial consideration received by Intrexon for or in
connection with such Out-of-Scope Target or Out-of-Scope
Product.
Termination and Change in Control
Ares Trading may voluntarily terminate, on a Product-by-Product and
country-by-country basis or in its entirety, the Ares Trading
Agreement upon 90 days’ written notice to Intrexon. Intrexon
and Ares Trading may each terminate the Ares Trading Agreement if
the other party materially breaches the Ares Trading Agreement and
fails to cure the breach.
Upon termination of the Ares Trading Agreement, Ares Trading, upon
written notice to Intrexon, may continue to develop and
commercialize any Product (i) for which a Phase 3 clinical
trial has been initiated and of which development has not been
terminated by Ares Trading or (ii) that is then being
commercialized by Ares Trading. The Option and the payment
obligations due to Ares Trading each survive termination of the
Ares Trading Agreement with respect to research programs initiated
by Intrexon for Out-of-Scope Products started before the effective
date of termination.
If either the Company or Intrexon, which for purposes of this
paragraph, is referring to as the Acquiring Party, acquires a third
party that has a program competitive to that described under the
Ares Trading Agreement, the Acquiring Party may either divest such
competitive program within 12 months or include all products under
the acquired program as Out-of-Scope Products, which would then
become subject to the Option.
If any of the Company, Intrexon, or Ares Trading, which for
purposes of this paragraph, is referring to as the Acquired Party,
merges with or consolidates with or is acquired by a third party
the exclusivity obligations applicable to such person, as described
above, will not apply, so long as (i) the competitive program
does not use any intellectual property of the Acquired Party or
Ares Trading, and (ii) does not utilize services of the
personnel of the Acquired Party.
License Agreement with DEKK-Tec, Inc.
On October 15, 2004, the Company entered into a license
agreement with DEKK-Tec, Inc., or DEKK-Tec, pursuant to which it
was granted an exclusive, worldwide license for palifosfamide.
In consideration for the license rights, DEKK-Tec is entitled to
receive payments upon achieving certain milestones in varying
amounts which on a cumulative basis may total $4.0 million. Of the
aggregate milestone payments, most will be creditable against
future royalty payments as referenced below. Additionally, the
Company issued DEKK-Tec an option to purchase 27,616 shares of the
Company’s common stock for $0.02 per share, of which 13,808
options are still outstanding. DEKK-Tec is entitled to receive
single digit percentage royalty payments on the sales of
palifosfamide should it be approved for commercial sale. The
Company’s obligation to pay royalties will terminate on a
country-by-country basis upon the expiration of all valid claims of
patents in such country covering licensed product, subject to
earlier termination in the event of defaults by the parties under
the license agreement. No milestones under the license agreement
have been reached or expensed since 2010.
License Agreement with Southern Research Institute
On December 22, 2004, the Company entered into an Option
Agreement with the Southern Research Institute, or SRI, pursuant to
which the Company was granted an exclusive option to obtain an
exclusive license to SRI’s interest in certain intellectual
property, including exclusive rights related to certain
isophosphoramide mustard analogs. On February 5, 2007, the
Company exercised its option and entered into an exclusive license
agreement. Under the license agreement, the Company is required to
remit minimum annual royalty payments of $25 thousand until the
first commercial sale of a licensed product. These payments were
made for the years ended December 31, 2014, 2013, and 2012.
The Company may be required to make payments upon achievement of
certain milestones in varying amounts which on a cumulative basis
could total up to $775 thousand. In addition, SRI will be entitled
to receive single digit percentage royalty payments on the sales of
a licensed product in any country until all licensed patents rights
in that country which are utilized in the product have expired. No
milestones under the license agreement have been reached or
expensed since the agreement’s inception.
Patent and Technology License Agreement—The University of
Texas M. D. Anderson Cancer Center and the Texas A&M University
System.
On August 24, 2004, the Company entered into a patent and
technology license agreement with The Board of Regents of the
University of Texas System, acting on behalf of The University of
Texas M. D. Anderson Cancer Center and the Texas A&M University
System, which the Company refers to, collectively, as the
Licensors. Under this agreement, the Company was granted an
exclusive, worldwide license to rights (including rights to U.S.
and foreign patent and patent applications and related improvements
and know-how) for the manufacture and commercialization of two
classes of organic arsenicals (water- and lipid-based) for human
and animal use. The class of water-based organic arsenicals
includes darinaparsin.
The Company issued options to purchase 50,222 shares outside of the
Company’s stock option plans following the successful
completion of certain clinical milestones, of which 37,666 have
vested. The remaining 12,556 shares will vest upon enrollment of
the first patient in a multi-center pivotal clinical trial i.e. a
human clinical trial intended to provide the substantial evidence
of efficacy necessary to support the filing of an approvable New
Drug Application, or NDA. In addition, the Licensors are entitled
to receive certain milestone payments. The Company may be required
to make additional payments upon achievement of certain other
milestones in varying amounts which on a cumulative basis could
total up to an additional $4.5 million. In addition, the Licensors
are entitled to receive single digit percentage royalty payments on
sales from a licensed product and will also be entitled to receive
a portion of any fees that the Company may receive from a possible
sublicense under certain circumstances.
The license agreement also contains other provisions customary and
common in similar agreements within the industry, such as the right
to sublicense the Company’s rights under the agreement. On
July 31, 2014, the Company amended and restated the License
and Collaboration Agreement between the Company and Solasia Pharma
K.K. or Solasia (see below), granting Solasia an exclusive
worldwide license to develop and commercialize darinaparsin, and
related organoarsenic molecules, in both intravenous and oral forms
in all indications for human use. Solasia will be responsible for
all costs related to the development, manufacturing and
commercialization of darinaparsin. The Licensors will receive a
portion of all milestone and royalty payments made by Solasia to
the Company in accordance with the terms of the Company’s
license agreement with the Licensors.
Collaboration Agreement with Solasia Pharma K.K.
On March 7, 2011, the Company entered into a License and
Collaboration Agreement with Solasia Pharma K.K., or Solasia.
Pursuant to the License and Collaboration Agreement, the Company
granted Solasia an exclusive license to develop and commercialize
darinaparsin in both IV and oral forms and related organic arsenic
molecules, in all indications for human use in a pan- Asian/Pacific
territory comprised of Japan, China, Hong Kong, Macau, Republic of
Korea, Taiwan, Singapore, Australia, New Zealand, Malaysia,
Indonesia, Philippines and Thailand.
As consideration for the license, the Company received an upfront
payment of $5.0 million to be used exclusively for further clinical
development of darinaparsin outside of the pan-Asian/Pacific
territory, and will be entitled to receive additional payments of
up to $32.5 million in development-based milestones and up to $53.5
million in sales-based milestones. The Company will also be
entitled to receive double digit royalty payments from Solasia
based upon net sales of licensed products in the applicable
territories, once commercialized, and a percentage of sublicense
revenues generated by Solasia. Under the License and Collaboration
Agreement, the Company provided Solasia with drug product to
conduct clinical trials. These transfers were accounted for as a
reduction of research and development costs and an increase in
collaboration receivables. The agreement provides that Solasia will
be responsible for the development and commercialization of
darinaparsin in the pan-Asian/Pacific territory.
On July 31, 2014, the Company entered into an amendment and
restatement of the License and Collaboration Agreement granting
Solasia an exclusive worldwide license to develop and commercialize
darinaparsin, and related organoarsenic molecules, in both
intravenous and oral forms in all indications for human use. In
exchange, the Company will be eligible to receive from Solasia
development-and sales-based milestones, a royalty on net sales of
darinaparsin, once commercialized, and a percentage of any
sublicense revenues generated by Solasia. Solasia will be
responsible for all costs related to the development, manufacturing
and commercialization of darinaparsin. The Company’s
Licensors will receive a portion of all milestone and royalty
payments made by Solasia to the Company in accordance with the
terms of the Company’s license agreement with the
Licensors.
The $5.0 million upfront payment received in March 2011 is being
amortized over the period of the Company’s research and
development effort. The Company originally estimated this period to
be 75 months. In accordance with the amended and restated License
and Collaboration Agreement with Solasia, the Company is no longer
obligated to continue their research and development efforts in
connection with the |
