| COLLABORATIONS, LICENSE AGREEMENTS AND COMMITMENTS | NOTE
6 – COLLABORATIONS, LICENSE AGREEMENTS AND COMMITMENTS Image
Securities Ltd. (a related party) As
described in Note 12 to the financial statements of December 31, 2019, on July 11, 2018, the Company and Image Securities Ltd.,
a corporation with its registered office in Grand Cayman, Grand Cayman Islands (“India Partner”), entered into a Joint
Venture Agreement (the “India JVA”) pursuant to which the parties will collaborate in the development, marketing,
clinical development and/or commercialization of cell therapy products in India (the “Cell Therapy Products”). The
India Partner will collaborate with a network of healthcare facilities and a healthcare infrastructure as well as financial partners
to advance the development and commercialization of the cell therapy products in India. As of June 30, 2020, the Company had advanced
$ 3
million, of which $ 500
thousand was transferred in the first
quarter of 2020, as part of its financing obligations under the India JVA to the India Partner, who is holding the loan in escrow
on behalf of the Company. The loan is reflected on the balance sheet as a loan to a related party. As
part of the agreement, the India joint venture will procure consulting services from the Company. During January 2020, the Company
entered into a new statement of work pursuant to the master services agreement signed in 2019 for the provision of certain services
during 2020 and 2021. The Company, subject to mutually agreed timing and definition of the scope of services, will provide regulatory
services, pre-clinical studies, intellectual property services, point-of-care services and co-development services to the India
Partner. The Company received $ 500
thousand as payments for such services
during the six months ended June 30, 2020. $ 772
thousand for these services was recognized during the six months ended June 30, 2020 as income under ASC 606. Apart
from the above, there was no activity in the India joint venture during the six months ended June 30, 2020. Hemogenyx
Pharmaceuticals PLC. As
described in Note 12 to the financial statements of December 31, 2019, on October 18, 2018, the Company and Hemogenyx Pharmaceuticals
PLC., a corporation with its registered office in the United Kingdom, and Hemogenyx-Cell, a corporation with its registered office
in Belgium, and which is engaged in the development of cell replacement bone marrow therapy technology (“H-Cell” and,
collectively with the Company, “Hemo”), entered into a Collaboration Agreement (the “Hemo Agreement”)
pursuant to which the parties will collaborate in the funding of the continued development of and commercialization of, the Hemo
technology via the Hemo group companies. Pursuant to the Hemo Agreement, the Company and Hemogenyx LLC, a wholly owned USA subsidiary
of Hemo (“Hemo-LLC”), entered into a loan agreement. During the six months ended June 30, 2020, the Company advanced
$ 250
thousand under the loan agreement, which
was charged to expenses under ASC 730-10-50 and 20-50 and presented as research and development costs. Immugenyx
LLC As
described in Note 12 to the financial statements as of December 31, 2019, on October 16, 2018, the Company and Immugenyx LLC,
(“Immu”), which is engaged in the development of technology related to the production and use of humanized mice, entered
into a Collaboration Agreement (the “Immu Agreement”) pursuant to which the parties will collaborate in the funding
of the continued development of, and commercialization of, the Immu technology. The Company received the worldwide rights to market
the products under the Immu Agreement in consideration for the payment of a 12 %
royalty, subject to the terms of the agreement. Pursuant to the Immu Agreement, the Company and Immu also entered into a loan
agreement. During the six months ended June 30, 2020, the Company advanced $ 250
thousand under the loan agreement, which
was charged to expenses under ASC 730-10-50 and ASC 20-50 and presented as research and development costs. Theracell
Advanced Biotechnology As
described in Note 12 to the financial statements as of December 31, 2019, on February 14, 2019, the Company and Theracell Advanced
Biotechnology, a corporation organized under the laws of Greece (“Theracell”), entered into a Joint Venture Agreement
(the “Greek JVA”) pursuant to which the parties will collaborate in the clinical development and commercialization
of the Company’s products (hereinafter, the “Company Products”) in Greece, Turkey, Cyprus and Balkan countries
(the “Territory”) and the clinical development and commercialization of Theracell’s products (hereinafter, the
“Theracell Products”) worldwide (the “Theracell Project”). The parties intend to pursue the Theracell
Project through a joint venture (“JV”) by forming a JV entity (the “Greek JV Entity”). Until the Greek
JV Entity is formed, all JV activities are being carried out by Theracell. The Company by itself, or together with a designee,
will hold a 50 %
participating interest in the Greek JV Entity, with the remaining 50 %
participating interest being held by Theracell or its affiliate following the parties’ contributions to the Greek JV Entity
as set forth under the Greek JVA. Each of the parties committed to contribute $ 10
million to the JV Entity, of which $ 5
million will be provided as in-kind contributions.
The Greek JV Entity will have a steering committee that will act as the board of directors of the Greek JV Entity and shall be
composed of a total of five members, with two members appointed by each party and one industry expert to be appointed by both
parties. The Company shall have the option, at its sole discretion and subject to all rules and regulations to which it is then
subject, to require Theracell to transfer to the Company the entirety of Theracell’s equity interest in the JV Entity for
a consideration of shares of Common Stock according to an agreed-upon formula. During
January 2020, the Company entered into a new statement of work pursuant to the master services agreement signed in 2019 with
Theracell for the provision of certain services by the Company during 2020 and 2021. During the six months ended June 30,
2020, the Company recognized point of care service revenue in the amount of $ 733 thousand. During
the six months ended June 30, 2020, the Company recorded expenses related to activities in the territory in the amount of $ 896
thousand. As
of June 30, 2020, the Greek JV had not yet been incorporated. Broaden
Bioscience and Technology Corp As
described in Note 12 to the financial statements as of December 31, 2019, on November 10, 2019, the U.S. Subsidiary and Broaden
Bioscience and Technology Corp, a Delaware corporation (“Broaden”), entered into a Joint Venture Agreement (the “Broaden
JVA”) pursuant to which the parties will collaborate in the development and/or marketing, clinical development and commercialization
of cell therapy products and the setting up of point-of-care processing facilities in China and the Middle East (the “Broaden
Project”). The parties intend to pursue the Broaden Project through a joint venture by forming a joint venture entity (the
“Broaden JV Entity”). During
January 2020, the Company entered into a master service agreement with Broaden whereby the Company, subject to mutually agreed
timing and definition of the scope of services, will provide regulatory services, pre-clinical studies, intellectual property
services, GMP process translation services and co-development services to Broaden during 2020 and 2021. During the six months
ended June 30, 2020, the Company recognized point of care services revenue in the amount of $ 806
thousand. During
January 2020, the U.S. Subsidiary and Broaden Bioscience and Technology Corp entered into a convertible loan agreement pursuant
to which the Company agreed to lend Broaden Bioscience and Technology Corp an amount of up to $ 5
million as a convertible loan as part
of Company’s investment in the Broaden JV. As of the date of this report, the Company has not lent Broaden Bioscience and
Technology Corp any funds as part of this loan. During
the six months ended June 30, 2020, the Company recorded research and development expenses related to activities in the Broaden
JVA in the amount of $ 830
thousand. Apart
from the above, as of June 30, 2020, the Broaden JV Entity had not been incorporated. Cure
Therapeutics During
2019, the Company entered into a master service agreement with Cure Therapeutics whereby the Company, subject to mutually agreed
timing and definition of the scope of services, will provide point-of-care services to Cure Therapeutics during 2020 and 2021.
During the six months ended June 30, 2020, the Company recognized point of care services revenue in the amount of $ 714
thousand. As
described in Note 12 to the financial statements as of December 31, 2019, on May 7, 2018, the Company and Cure Therapeutics entered
into a collaboration agreement for the development of therapies based on liver and NK cells. An amount of $ 976
thousand was charged during the six months
ended June 30, 2020 . 567
thousand was recognized as revenues by
Orgenesis Korea during the six months ended June 30, 2020. Mircod
Limited As
described in Note 12 to the financial statements as of December 31, 2019, on June 19, 2018, the Company and Mircod Limited, a
company formed under the laws of Cyprus (“Mircod”), entered into a Collaboration and License Agreement (the “Mircod
Collaboration Agreement”) for the adaptation of Mircod’s background technologies related to biological sensing for
use for the Company’s clinical development and manufacturing projects (the “Development Project”). The Development
Project is to be carried out in accordance with an agreed development plan. During the six months ended June 30, 2020, the Company
recorded research and development expenses related to the development plan in the amount of $ 500
thousand. In
addition, during the first quarter of 2020, as per the Mircod Collaboration agreement, Mircod formed a wholly-owned US subsidiary
named Mircod Biotech (the “Mircod Subsidiary”). The Mircod Subsidiary shall perform the duties of Mircod under the
Collaboration Agreement, provided that Mircod shall remain responsible for the performance of the Mircod Subsidiary. At any time,
the Company shall have the option, at its sole discretion, to transfer and require Mircod or the Mircod Subsidiary to transfer
the Development Project and/or the rights and licenses granted by Mircod to a joint venture company (“JV Entity”)
which shall be established by the parties for the purposes of carrying out and commercializing the Development Project, and in
which the Company and Mircod will each hold 50 %.
The Company shall also have the option to, at its sole discretion and subject to all rules and regulations to which it is then
subject, require Mircod to transfer to the Company the entirety of Mircod’s equity interest in the JV Entity for a consideration
of shares of Common Stock according to an agreed formula. The parties agreed to amend the development plan to reflect the fact
that the parties shall collaborate with each other on: (i) point-of-care processing, regulatory and therapy development; (ii)
setting up one or more point–of-care processing facilities in institutions or hospitals the territory of Russia; (iii) the
supply of the Company’s products and services within Russia, and (iv) clinical, regulatory, development and commercialization
in Russia. The Company may, at its sole discretion, agree to provide Mircod with a convertible loan (which may be converted into
shares of Mircod then outstanding or into the JV Entity, upon a valuation to be agreed between the parties and validated by a
third party subject to terms to be agreed upon by the parties in a separate convertible loan agreement). The convertible loan
will be used to finance the modification of the processing facility or facilities including, planning, designing, testing, training
or supervising, as required for obtaining cGMP status approval(s) and/or relevant certification for any processing facility and
other activities. As at June 30, 2020, the loan agreement was not executed. Kidney
Cure Ltd During
April 2020, the Company entered into a joint venture agreement with Kidney Cure Ltd. (“Kidney Cure” and the “Kidney
Cure JVA,” respectively), pursuant to which the parties will collaborate in the (i) implementation of a point-of-care strategy;
(ii) assessment of the options for development and manufacture of various cell-based types (including kidney derived cells, MSC
cells, exosomes, gene therapies) development; and (iii) development of protocols and tests for kidney therapies (the “Project”).
The parties intend to pursue the joint venture through a newly established company (hereinafter, the “KC JV Entity”),
which the Company, directly or indirectly by itself, will hold a 49 %
participating interest therein, with the remaining 51 %
participating interest being held by Kidney Cure. The board of directors of the KC JV Entity will act as a steering committee
KC JV Entity and shall be composed of a total of three members, with one member appointed by each party and the third member appointed
by both parties. The
Company will procure services from the Kidney Cure JVA in the amount of $ 5
million, subject to and in accordance
with a development and manufacturing plan to be mutually agreed upon by the parties. Under the Kidney Cure JVA, the Company can
require Kidney Cure to sell to the Company its participating (including equity) interest in the KC JV Entity in consideration
for the issuance of Common Stock based on an agreed-upon formula for determining the KC JV Entity’s valuation, provided
that Company has contributed at least $ 5
million. As of June 30, 2020, the
Company had advanced $ 200
thousand to Kidney Cure on account
of its obligations under the Kidney Cure JVA and a further $ 250
thousand was advanced during July
2020. Apart
from the above, as of June 30, 2020, no activity has begun in the said KC JV Entity, no contributions were made therein and the
KC JV Entity had not been incorporated. Sescom
Ltd During
April 2020, the Company entered into a joint venture agreement with Sescom Ltd (“Sescom”), pursuant to which the parties
will collaborate in (i) the assessment of relevant tools and technologies to be used in the Company’s information security
system (the “ISS”); (ii) the implementation of the ISS within the Company and in the Company’s point-of-care
network; and (iii) the operation and maintenance of the ISS. The parties intend to pursue the joint venture through a company
to be established (the “Sescom JV Entity”), which shall be 50 %
owned by the Company and 50 %
owned by Sescom. The Sescom JV Entity will have a steering committee that will act as the board of directors of the Sescom JV
Entity and shall be composed of a total of three members, with one member appointed by each party and one industry expert. Sescom
has agreed to provide Sescom JV Entity with: (a) a non-exclusive, transferable and sublicensable worldwide royalty-free license
to use its background IP, to the extent required for carrying out the development activities by the Sescom JV Entity; and (b)
to make available to the Sescom JV Entity all relevant know-how and royalty-free licenses to any proprietary technologies to be
implemented as part of the ISS. The
Company has agreed to procure services from Sescom or the Sescom JV Entity in an amount of up to $ 1
million, of which
$ 500
thousand was paid
to Sescom during April 2020. In addition, the Company has agreed to provide the Sescom JV Entity with: (a) a non-exclusive, not
transferable and non-sublicensable worldwide royalty-free license to use its background IP, to the extent required for carrying
out certain activities by the Sescom JV Entity; and (b) access to its point-of-care network and relevant data to be used for the
certain activities. The
parties agreed that at any time after the Company has contributed $ 1
million in Sescom or the Sescom JV Entity,
the Company shall have the right, in its sole discretion, to purchase from Sescom all of Sescom’s then-issued and outstanding
shares in the Sescom JV Entity based on a valuation of the Sescom JV Entity to be determined by an agreed-upon formula. Apart
from the above, as of June 30, 2020, no other activity had taken place in the Sescom JV Entity and the Sescom JV Entity had not
been incorporated. Tamir
Biotechnology, Inc. On
April 7, 2020, the Company entered into the Tamir Purchase Agreement with Tamir, pursuant to which the Company agreed to acquire
certain assets and liabilities of Tamir related to the discovery, development and testing of therapeutic products for the treatment
of diseases and conditions in humans, including all rights to Ranpirnase and use for antiviral therapy. The Tamir Transaction
closed on April 23, 2020. The
Tamir Transaction closed upon the occurrence of the closing conditions contained in the Tamir Purchase Agreement. As aggregate
consideration for the acquisition, the Company paid $ 2.46 2
million in cash and issued an aggregate of 3,400,000
shares (the “Shares”) of Common
Stock to Tamir resulting in a total consideration of $ 20.2
million. $ 59
thousand and 340,000
Shares will be held in an escrow account
for a period of 18 months from closing to secure indemnification obligations of Tamir pursuant to the terms of the Tamir Purchase
Agreement. $ 4.5
million of the consideration was attributable
to research and development related inventory and most of the remaining amount reflected the cost of intangible assets. Included
in the purchased assets and assumed liabilities was the assumption by the Company of a worldwide license to a private company
of certain Tamir technologies in the field of treatment, amelioration, mitigation or prevention of diseases or conditions of the
eye and its adnexa in return for certain development and sales milestone payments to be paid to Tamir. This license fee and the
right to receive future milestone payments (of up to $11 million assuming that certain milestones are reached) and royalties
(of up to $ 35
million based on net sales milestones),
were assumed by the Company in connection with the Tamir Purchase
Agreement together with a less than 10 %
share interest. To date, no milestones
have been reached. The
Company’s acquired right to Tamir’s intellectual property represents a single identifiable asset sourced from the
agreement. Therefore, all the fair value associated with the agreement is concentrated in one identifiable asset and is not considered
a business in accordance with ASC 805-10-55-5A. The Company therefore accounted for the right to Tamir’s intellectual property
and other assets acquired under the agreement as an acquisition of an asset and recognized $ 19.5
million as research and development expenses under ASC
730. |
