SUBSEQUENT EVENTS | 12 Months Ended |
31-May-14 |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 – SUBSEQUENT EVENTS |
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License Agreement with Northwestern University |
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On January 26, 2015, the Company entered a license agreement with Northwestern University ("Northwestern"). Northwestern is the owner of certain patents and grants for cancer treatments of which the Company has obtained an exclusive license under a Patent Rights agreement and a non-exclusive license under a Know-How agreement (together the "Licensed Product"). |
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According to the agreement, the Company must reach the following milestones to maintain the licenses: |
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| a) | Raise funds of at least $3 million within the first 12 months of the closing date; |
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| b) | Initiate Good Laboratory Practices in preclinical studies with a Licensed Product within 18 months of the closing date; |
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| c) | File an Investigational New Drug application within 4 years of the closing date; |
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| d) | First dosing of a patient in a Phase I clinical trial for a Licensed Product within 5 years of the closing date; |
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| e) | First dosing of a patient in a Phase II clinical trial for a Licensed Product within 6 years of the closing date; |
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| f) | First dosing of a patient in a Phase III clinical trial for a Licensed Product within eight years of the closing date; |
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| g) | Submit a New Drug Application for a Licensed Product within 10 years of the closing date; |
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| h) | Complete and submit to Northwestern a business plan for commercialization of a Licensed Product within 1 year of submission of a New Drug Application ("NDA") for such Licensed Product. |
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In consideration of the license granted by Northwestern, the Company shall pay to Northwestern the following: |
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| a) | A non-creditable, non-refundable licensing fee of $24,000 within 30 days of the closing date (which was previously paid); |
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| b) | The Company will issue to Northwestern a number of shares of its common stock that will represent 2% of the total outstanding shares of the Company and, in consideration of her role as co-founder and in anticipation of entering into a research agreement with Northwestern to support research in her laboratory, the Company will issue to Dr. Sui Huang a number of shares of common stock that will represent 2% of the total outstanding shares of the Company; |
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| c) | The Company shall pay to Northwestern a non-creditable, non-refundable annual maintenance fee on each anniversary of the closing date according to the following schedule until the Company receives regulatory approval from the Federal Drug Administration (or foreign equivalent) ("Regulatory Approval") of the first Licensed Product(s): |
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Time Periods | Amount | |
1st anniversary | 0 | |
2nd-4th anniversaries | $7,000 | |
5th and 6th anniversaries | $25,000 | |
7th anniversary and each year thereafter | $50,000 | |
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In the first full calendar year following Regulatory Approval, Northwestern shall credit 1/12 of the annual maintenance fee paid by the Company against the minimal royalty payments (see item (e) below) due for each full month remaining between January 1 of that year and the anniversary of the closing date. |
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| d) | The following non-creditable and non-refundable milestone payments upon the achievement of particular milestones in the development of Licensed Products (none of which have occurred): |
| -1 | $25,000 upon filing of Investigational New Drug application for a Licensed Product |
| -2 | $50,000 upon dosing first patient in Phase I trial (or foreign equivalent) for a Licensed Product |
| -3 | $100,000 upon dosing first patient in Phase II trial (or foreign equivalent) for a Licensed Product |
| -4 | $250,000 upon dosing first patient in Phase III trial (or foreign equivalent) for a Licensed Product |
| -5 | $1,500,000 upon Regulatory Approval of a Licensed Product |
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| e) | Beginning the first full calendar year after Regulatory Approval of a Licensed Product in the United States, Canada, Japan, France, Germany, United Kingdom, Australia, or Italy, or the year 2025, whichever comes first, the Company shall pay to Northwestern minimum royalty payments of $200,000 per year, on a quarterly basis. |
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| f) | The Company will reimburse Northwestern's out of pocket patent expenses totaling approximately $25,000 as of November 18, 2014. All future patent costs for the preparation, filing, prosecution, and maintenance of the Patent Rights, shall be borne by the Company. Payment will be deferred until the earlier of a) the date the Company closes on its first round of financing after the closing date or b) 1 year from the closing date; |
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| g) | A running royalty of (a) 5% of net sales of Licensed Products if such Licensed Product is covered by Patent Rights in the country where such Licensed Product is manufactured or sold and (b) 2% of net sales of Licensed Products in all other countries. In the event that Licensee enters into other license agreements) with third parties with respect to intellectual property which in the Company's opinion is legally required for the manufacture, use or sale of Licensed Product(s), the Company may offset amounts paid to such third parties against earned royalties due Northwestern hereunder, by reducing Licensee's obligation to Northwestern by 0.25% for each 1% of royalty rate payable to third parties; provided, however, that in no event will the royalty rate otherwise due to Northwestern be less than 2.5%; |
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| h) | In addition to the running royalties described above, 15% of any payments, including, but not limited to, sublicense issue fees or milestones received from sub licensees as consideration for Patent Rights or Licensed Products prior to filing of an NDA; 5% after filing an NDA; |
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| i) | In the event of a corporate partnership for the development and/or commercialization of a Licensed Product, 10% of any payments received from such corporate partner as consideration for Patent Rights or Licensed Products. Payments received by the Company for equity and payments allocated solely for research are excluded; |
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| j) | The Company subject to certain payments if the Company issues sublicenses, permit assignments on the agreement, or in the event of a corporate partnership for the development and /or commercialization of a licensed product. |
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| k) | In the event of a permitted assignment of the agreement, 10% of any payments received from such assignee as consideration for Patent Rights or Licensed Products. |
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The agreement will continue in effect, on a country-by country basis, until the expiration of the last to expire of Patent Rights. |
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License Agreement with University of Rochester |
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On April 16, 2015, the Company entered into an exclusive patent license agreement with University of Rochester ("Rochester") effective as of the 31st day of March, 2015. Rochester grants to the Company a worldwide exclusive, royalty-bearing license, with the right to sublicense, for patents and technology related to the treatment of diabetes (the "Patent Products"). According to the agreement, the Company will reimburse Rochester for all mutually agreed fees and costs relating to the filing, prosecution, and maintenance of patent applications, including without limitation, interferences, oppositions, and reexaminations, and the maintenance and defense of patents in patent rights, including fees and cost incurred on, and after the closing date of the agreement. |
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As partial consideration for the rights conveyed by Rochester under this agreement, the Company agreed to issue 32,310 shares of the Company's common stock to Rochester as a one-time, non-refundable, non-creditable license issue fee valued at $200,000 based upon the average price per share in the week preceding the closing date. The transaction was completed on April 30, 2015. Rochester may not transfer the shares before August 30, 2016. |
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In addition to the above license fee, for the term of the agreement on an annual basis measured from the closing date of the agreement, the Company will pay at the beginning of the year a non-refundable minimum annual maintenance fee of $15,000 in cash or Company stock each year prior to the onset of clinical trials. Rochester will waive the pre-clinical trial annual maintenance fee if the Company spends at least $200,000 annually on the drug development that would impinge the patent rights conveyed. After onset of clinical trials, the Company will pay a non-refundable minimum annual maintenance fee of $25,000 in cash or Company stock each year or part of year until the first product is commercialized and sales royalty payments begin. Annual maintenance fees paid in cash will be credited against the costs of maintaining the Patent Rights for that year. |
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During the term of this Agreement, the Company agrees to pay to Rochester an earned royalty of 5% of the first $10,000,000, 4% of the second $10,000,000, 3% of the third $10,000,000, 2% of the fourth $10,000,000 in net sales revenue produced from Patent Products, and l % of all remaining net sales revenue produced from Patent Products. Earned royalty payments are due and payable within 30 days of the end of each calendar quarter. |
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The Company agrees to pay to Rochester 50% of all cash and non-cash consideration derived from sublicenses granted by the Company in Patent Products, excluding earned royalties, loans, equity investments, and research and development support. |
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The Company agrees to pay Rochester the milestone payments per product as set forth below: |
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| a) | If the Company sponsors Phase I, II and III clinical trials, the Company will pay $500,000 within 30 days of approval of any Patent Product; |
| b) | If the Company sells a controlling interest in or sublicenses substantially all of the Patent Products before the initiation of Phase II clinical trial, the Company will pay: |
| 1) | $200,000 within 30 days of initiation of Phase II clinical trial; |
| 2) | $200,000 within 30 days of initiation of Phase III clinical trial; and |
| 3) | $300,000 within 30 days of approval of a Patent Product |
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The term of this Agreement will commence on the closing date and will end upon the latest of (i) expiration of the last-to-expire valid claim of the Patent Products; and (ii) the 10 year anniversary of commercial launch of any Patent Product. |
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Asset Purchase Agreement |
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On April 6, 2015, the Company entered into an asset acquisition agreement with Faulk Pharmaceuticals, Inc. ("Faulk"). The assets include 23 granted patents owned by Faulk, related to treatment of cancer, virus infections, and treatment of parasitic infections. |
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The Company agreed to issue 50,000 shares of common stock of the Company at the closing, which is anticipated to be in June 2015. The shares may be sold by Faulk, assigned or transfer in the open market subject to compliance with securities laws and the following schedule: |
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| 1) | 33% of the shares beginning 6 months after the closing date |
| 2) | an additional 33% of the shares beginning 9 months after the closing date |
| 3) | the remaining 34% of the shares beginning 12 months after the closing date |
For each calendar year continuing until the date that is 10 years after the expiration of the last of the patents conveyed to the Company, a royalty on net revenue received by the Company in that year from the sales or licenses of any products commercialized by the Company, its successors or assignees as a direct result of the assets acquired or the technology or processes related to the assets acquired, in the following amount: |
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| 1) | 5% of the first $10,000,000 in such net revenue; |
| 2) | 4% of the second $10,000,000 in such net revenue |
| 3) | 3% of the third $10,000,000 in such net revenue |
| 4) | 2% of the forth $10,000,000 in such net revenue and |
| 5) | 1 % of such net revenue in excess of $40,000,000 |
Capital stock issuances |
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On February 4, 2015, the Board of Directors approved the issuance of 1,345,000 shares of restricted common stock to the directors for their service. The shares will be earned as follows: |
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| 1) | 33% of the restriction will be removed on February 4, 2016, |
| 2) | an additional 33% of the restriction will be removed on February 4, 2017, |
| 3) | and the final 34% of the restriction will be removed on February 4, 2018. |
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The closing price on February 4, 2015 was $2.60, the date of the grant. As of the date of this filing, the shares have not been issued. |
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On April 2, 2015, the Board of Directors approved the issuance of 50,000 (as described above) shares to purchase the assets of Faulk. The shares will be valued on the date of closing of the purchase of the assets. As of the date of this filing, the shares have not been issued. |
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On April 2, 2015, the Board of Directors approved the issuance of 260,000 shares of restricted common stock to two directors and officers of the Company for services. The shares will be earned as follows: |
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| 1) | 33% of the restriction will be removed on April 2, 2016, |
| 2) | an additional 33% of the restriction will be removed on April 2, 2017, |
| 3) | and the final 34% of the restriction will be removed on April 2, 2018. |
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The closing share price on April 2, 2015 was $6.95, the date of the grant. As of the date of this filing, the shares have not been issued. |