License Agreements |
12 Months Ended |
|---|---|
Dec. 31, 2017 | |
| ASSET ACQUISITION AND LICENSE AGREEMENTS | |
| License Agreements |
License Agreements
Lilly CERC-611 License
On September 22, 2016, the Company entered into an exclusive license agreement with Eli Lilly and Company (“Lilly”) pursuant to which the Company received exclusive, global rights to develop and commercialize CERC-611, previously referred to as LY3130481, a potent and selective Transmembrane AMPA Receptor Regulatory Proteins (“TARP”) ã-8-dependent á-amino-3-hydroxy-5-methyl-4- isoxazolepropionic acid (“AMPA”) receptor antagonist. The terms of the license agreement provide for an upfront payment of $2.0 million, of which $750,000 was due within 30 days of the effective date of the license agreement, and the remaining balance of $1.25 million is due after the first subject is dosed with CERC-611 in a multiple ascending dose study and is recorded as license obligations on the balance sheet at December 31, 2017. Additional payments may be due upon achievement of development and commercialization milestones, including the first commercial sale. Upon commercialization, the Company is obligated to pay Lilly milestone payments and a royalty on net sales.
Merck CERC-301 License
In 2013, the Company entered into an exclusive license agreement with Merck & Co., Inc. (“Merck”) pursuant to which Merck granted the Company rights relating to certain small molecule compounds. In consideration of the license, the Company paid an initial payment of $750,000, and upon achievement of acceptance by the United States Food and Drug Administration, or FDA, of Merck pre-clinical data and FDA approval of a Phase 3 clinical trial the Company will pay an additional $750,000. Additional payments may be due upon achievement of development and regulatory milestones, including the first commercial sale. Upon commercialization, the Company is obligated to pay Merck milestone payments and royalties on net sales.
Merck CERC-406
In 2013, the Company entered into a separate exclusive license agreement with Merck pursuant to which Merck granted the Company certain rights in small molecule compounds which are known to inhibit the activity of COMT. In consideration of the license, the Company made a $200,000 upfront payment to Merck. Additional payments may be due upon the achievement of development and regulatory milestones. Upon commercialization of a COMT product, the Company is required to pay Merck royalties on net sales.
Poly-Vi-Flor and Tri-Vi-Flor Related Contracts
Supply and License Agreement, effective December 1, 2014, by and between TRx and Merck & Cie (“Merck”)
On December 1, 2014 TRx entered into a Supply and License Agreement with Merck. The initial term of the agreement expires on December 31, 2020, and the agreement will automatically continue for subsequent one year terms thereafter until terminated in accordance with its terms. Pursuant to the agreement, Merck agrees to supply a specific compound called Metafolin® to TRx for use in dietary supplements within a defined market, and TRx agrees to purchase 100% of its Metafolin requirements from Merck. Under the agreement, TRx has an exclusive license under a number of U.S. and international patents, as well as related trade secrets, know-how and trademark rights, to make and sell TRx products positioned in the pediatric market (i.e., targeted for children 0-3 years of age) in the U.S. Under the agreement, TRx also has a non-exclusive license under the same intellectual property rights to make and sell TRx dietary supplement products within the U.S. outside of certain specified fields, including products containing Metafolin in combination with folic acid or any other folate, products positioned for type II diabetes, pharmaceutical drugs, and medical, fortified, and special dietary foods. TRx must pay Merck a royalty of two-percent (2%) of net sales from TRx products in the pediatric field that contain Metafolin. The royalty payment does not apply to net sales of TRx products marketed as pre-or postnatal vitamins. The royalty payment will continue to apply throughout the initial term and any automatic renewal periods. The minimum annual order quantity for the compound is 1kg. Payments of royalties are made by TRx within 45 days following the end of each calendar quarter.
Settlement and License Agreement, dated February 28, 2011, by and between TRx and Mead Johnson and Company LLC, as amended
TRx entered into a Settlement and License Agreement with Mead Johnson and Company LLC, and the parties subsequently entered into an amendment to such agreement on October 6, 2011. Pursuant to the agreement, Mead Johnson granted TRx an exclusive license to the “Poly-Vi-Flor” and “Tri-ViFlor” trademarks and agreed not to oppose TRx’s seeking the marks Poly-Vi-Flor and Tri-ViFlor in the United States and in any other countries where Mead Johnson does not have an active rregistration for such marks. As consideration for such licenses, TRx agreed to pay a royalty to Mead Johnson in the amount of 10% of net revenues received by TRx with respect to products sold under the PolyVi-Flor and Tri-Vi-Flor trademarks during the term of the agreement. The term of the agreement is indefinite and will continue unless terminated pursuant to the provisions of the agreement. Payments are made by TRx in arrears on a quarterly basis within 45 days after the end of a given calendar quarter.
Redemption Agreement with Additional Poly-Vi-Flor Royalty Obligation
TRx and the Selling Members entered into an Agreement to Redeem Membership Interest on May 31, 2011 with a former Member, Presmar Associates, Inc. Pursuant to the agreement, TRx and the Selling Members agreed to pay to Presmar Associates a royalty payment of 5% of gross sales for Poly-Vi-Flor branded or authorized generic product and, upon the sale of the Poly-Vi-Flor trademark to a third party, to pay to Presmar Associates 5% of the cash proceeds from such sale transaction. Any future sale of the Poly-Vi-Flor trademark to a third party would require that 5% of the sale proceeds be paid to Presmar Associates. Payments are made by TRx in arrears on a quarterly basis within 45 days after the end of a given calendar quarter.
Millipred and Veripred Related Contracts
Marketing Agreement between Pharmaceutical Associates, Inc. (“PAI”), and TRx and TRx Corp., effective April 1, 2017
TRx entered into a Marketing Agreement with PAI, effective April 1, 2017. Under the agreement, TRx will promote, market and sell PSP 10 and PSP 20 on behalf of PAI. TRx agrees to maintain the size of its current sales force, 16 salespersons, to perform the services under the agreement. Assuming a sales force of 16 salespeople, PAI will pay a monthly fee and a matching fee of $62,500 each to TRx. PAI and TRx also agree to share the net revenues from sales of the products, after reimbursing certain expenditures, in a manner designed to achieve a 50/50 split of net revenues above the “break even” point, calculated in accordance with the terms and inputs set forth in the agreement. The revenue sharing continues for a period of six months after termination of the agreement, unless the agreement is terminated due to a breach. The agreement has an initial six-month term, which automatically renews for additional six-month terms, unless terminated. Either party may terminate at any time with 90 days’ written notice. Amounts received under this agreement are included as Sales force revenue in the Company’s Consolidated Statements of Operations. The Company recorded revenues from revenue sharing payments of approximately $90,000 for the year-ended December 31, 2017 which are included in sales force revenue on the statement of operations.
.
License and Supply Agreement between TRx and Watson Laboratories, Inc.
TRx entered into a License and Supply Agreement with Watson Laboratories, Inc. on May 19, 2008, and the parties subsequently entered into amendments of the agreement on July 19, 2013 and April 1, 2016. Pursuant to the most recent amendment, the term of the agreement was extended for an additional five-year period expiring on April 1, 2021. However, TRx has the option to terminate the agreement following the first commercial sale of a generic product which occurred in April of 2017. If neither party terminates the agreement prior to April 1, 2021, then the agreement will automatically renew for successive one year periods. The amended agreement provides that the company make license payments of $75,000 in February and August of each year through April 2021.
Ulesfia Related Contracts
First Amended and Restated Exclusive Ulesfia Distribution Agreement, dated December 18, 2015, by and between Zylera and Lachlan Pharmaceuticals (“Lachlan”)
Zylera entered into the First Amended and Restated Distribution Agreement with Lachlan, effective December 18, 2015. The agreement amends, restates and supersedes all previous agreements between the parties with respect to the Ulesfia (benzyl alcohol) lotion 5%. Pursuant to the agreement, Lachlan named Zylera as its exclusive distributor of Ulesfia in the U.S. and agreed to supply Ulesfia to Zylera exclusively for marketing and sale in the U.S. The agreement provides that all trademark rights used in connection with Ulesfia will remain the intellectual property of Lachlan, and all goodwill associated with the use of the trademarks for the marketing and sale of Ulesfia in the territory will inure to the sole benefit of Lachlan. The agreement also requires that Zylera make a royalty payment to Lachlan in the amount of 15% of net sales so long as net sales remain below $50 million annually. For annual net sales above $50 million, Zylera will owe Lachlan a royalty payment of 20% of net sales, and for annual net sales over $100 million, Zylera will owe Lachlan a royalty payment of 25% of net sales. Additionally, in the event Zylera’s annual net sales of the product are less than $20 million, other than as a result of a “Market Change,” Zylera shall pay Lachlan an amount sufficient to make total product payments equal to the amount that would have been paid if the net sales had been equal to $20 million. The practical effect of this provision is that there is a minimum annual royalty payment of $3,000,000. Zylera has asserted that a “Market Change” has occurred pursuant to the terms of this agreement and litigation is pending with respect to that assertion. There are also certain milestone payments which become payable upon the achievement of certain cumulative net sales milestones. Upon the achievement of cumulative net sales amounting to $90,000,000; $180,000,000; $270,000,000; and $400,000,000, Zylera will owe Lachlan payments of $3,000,000; $3,500,000; $4,000,000; and $5,000,000, respectively. Zylera is obligated to purchase a minimum of 20,000 units per year, or approximately $1,117,700 worth of product; however, the minimum purchase requirements are void upon the earliest of: (i) Lachlan’s failure to fulfill Zylera’s purchase orders for two consecutive quarters or any three quarters in a 12-month period; (ii) the first commercial sale of a generic version of the product, or (iii) termination of the agreement. Lachlan entered into a First Amended and Restated Exclusive Distribution Agreement with Concordia on January 1, 2014, and the agreement is substantively similar to the First Amended and Restated Exclusive Distribution Agreement between Lachlan and Zylera discussed above (with the exception of the parties thereto, the agreements are substantially identical.
On December 10, 2016, Zylera informed Lachlan that a market change had occurred due to the introduction of Arbor Pharmaceutical’s lice product, Sklice®. According to the terms of the distribution agreement if there is a market change, the minimum purchase obligation is void. On June 5, 2017, Lachlan and Zylera entered into joint legal representation along with other unrelated third parties in negotiation and arbitration of dispute with Summers Laboratory, Inc regarding the an ongoing arbitration proceeding with the ultimate recipient of the royalties over whether a Market Change has occurred. The Company has not made any payments to Lachlan in 2017 under the Lachlan Agreement (from the acquisition date through year-end).
|