TPTX » Topics » NOTE D - DEVELOPMENT AND LICENSING AGREEMENTS
This excerpt taken from the TPTX 10-K filed Mar 16, 2006.
NOTE D - DEVELOPMENT AND LICENSING AGREEMENTS
Agreement with New York University
1997, the Company entered into a research and license agreement with NYU, as
subsequently amended, to provide funding and to sponsor research relating to
the diagnosis and treatment of AD and other amyloidosis disorders, in
exchange for a payment by Axonyx of $25,000 upon signing of the agreement,
sixteen consecutive quarterly payments of $75,000 beginning on April 1,
1997, and 600,000 shares of common stock with a fair value at time of
issuance of $240,000 (issued to NYU and its scientists, collectively NYU
stockholders). The agreement also provides for payments to NYU aggregating
to $525,000, with an aggregate of $175,000 payable upon achieving two
clinical and regulatory milestones for each of the three types of licensed
products. In addition, the Company has agreed to pay NYU royalties of up to
4% of the first $100 million annual net sales related to products for human
use covered and 2% thereafter under the agreement with minimum annual royalty
payments of $150,000 beginning in 2004 through the expiration or termination
of the agreement upon the later of the eighth anniversary of first commercial
sale of a product covered by the license, on a country-by-country basis, and
the date of the last to expire patent covered by the license (2015). In 2005, the Company paid NYU its minimum
royalty payment of $150,000 for 2005 and reimbursed NYU for $2,000 relating
to patent costs. In 2004, the Company paid NYU its minimum royalty payment of
$150,000 for 2004 and reimbursed NYU for $9,000 relating to patent costs.
During 2003, the Company reimbursed NYU for $36,000 relating to patent costs.
Through December 31, 2005, the Company has paid $1,572,000 to NYU under
the agreement. In addition, in connection with the agreement entered into
with NYU and its scientists, the Companys granted additional shares of its
common stock pursuant to certain anti-dilution provisions at a purchase price
of $.001 per share. The agreements provided for the purchase of additional
shares based on a formula of the Companys capital raising activities. During
1999, the Company recorded a charge of approximately $1,965,000 representing
the 305,074 shares deemed issuable (which were issued in 2000) for nominal
consideration under the agreement. In 2000, the Company issued an additional
12,295 shares to NYU as final consideration under the anti-dilution
provisions and recorded a charge of $138,000.
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
the agreement, as amended, the Company or its sub-licensees must achieve
certain development milestones, including approval to market in the United
States and Europe by December 2009. If these milestones are not achieved, the
rights may revert back to NYU. The October 2002 amendment contained
releases and waivers of default by NYU and the Company. The technology
covered by the NYU Agreement had been sublicensed to Serono (see Note D-3).
Agreement with Cure, L.L.C.
1997, the Company entered into a sub-license agreement (CURE Agreement)
with CURE pursuant to which the Company received the rights covering the
patents that CURE obtained through the PHS Patent License
Agreement-Exclusive it entered into with the Public Health Service. Such
licensed rights cover the Companys acetylcholinesterase inhibitor,
Phenserine and its analogs, and certain butyrylcholinesterase inhibitor
compounds. The CURE Agreement provided for a payment by the Company of
$15,000 upon signing of the agreement and a payment of $10,000 six months
after the signing of the agreement. The CURE Agreement also provides for
payments to CURE aggregating $600,000 when certain clinical and regulatory
milestones are achieved. In addition, the Company has agreed to pay CURE
royalties, of up to 3% of the first $100 million and 1% thereafter, of net
product sales and sub-license royalties, as defined under the agreement, with
minimum annual royalty payments of $10,000 beginning on January 31,
2000, increasing to $25,000 per annum on commencement of sales of the product
until the expiration or termination of the agreement. Any royalty payments
made to CURE shall be credited against the minimum payments. Through
December 31, 2005, the Company has paid $110,000 under the CURE
Agreement. The agreement, as amended, sets certain deadlines by which the
Company must achieve development milestones. If these milestones are not
achieved, the rights may revert back to CURE.
Agreement with Applied Research Systems ARS Holding
of May 17, 1999, Axonyx Inc. entered into a Development Agreement and
Right to License (the Development Agreement) with Applied Research Systems
ARS Holding N.V., a wholly owned subsidiary of Serono International, SA (Serono).
Under the Development Agreement, the Company granted to Serono an exclusive
right to license its patent rights and know-how regarding its amyloid
inhibitory peptide (AIP) and prion inhibitory peptide (PIP) technology.
In 2000, the
Company and Serono finalized a definitive Licensing Agreement, pursuant to
which the exclusive worldwide patent rights to the Axonyxs AIP and PIP
technology were granted to Serono. The Company received a nonrefundable,
noncreditable license fee of $1.5 million, which was recognized as revenue
since the Company is not responsible for any ongoing research and development
activities or any other services with respect to this arrangement and it
represented the culmination of a separate earnings process.
2003, Axonyx received a milestone payment of $1,000,000 from Serono under the
terms of the License Agreement, which was triggered when Serono initiated a
Phase I clinical trial with a patented product.
is negotiating a re-acquisition of these rights from Serono and an option to
license on a non-exclusive basis, certain Serono patents, technology and
know-how related to AIPs and PIPs. If
the Company exercises this option and acquires the license, it would be
obligated to pay to Serono an up-front payment and under certain
circumstances, additional milestone payments and royalties would be due.
of whether definitive agreements are completed or whether future milestone
payments are received, the Company is obligated to pay to NYU its minimum
annual royalty of $150,000.
Research and Development Contracts:
For the year
ended December 31, 2005, the Company incurred significant research and development
expenses primarily attributable to the Phenserine clinical trials. The
Company has a variety of contracts with various clinical research
organizations. The nature of these contracts is such that work may have to be
stopped with very short notice and then the Company will only be obligated to
pay costs incurred to date. The remaining payments for these research and
development contracts amounts to $4,662,000 in 2006.
Notes to Consolidated Financial Statements
December 31, 2005 and 2004
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