x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
California
|
|
94-3127919
|
(State or other jurisdiction of incorporation or organization)
|
|
(IRS Employer Identification No.)
|
Large accelerated filer
|
o
|
|
Accelerated filer
|
x
|
Non-accelerated filer
|
o
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
o
|
Item 1.
|
Financial Statements
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
September 30,
2012
|
|
|
September 30,
2011
|
|
|
September 30,
2012
|
|
|
September 30,
2011
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
License fees
|
|
$
|
337,633
|
|
|
$
|
54,900
|
|
|
$
|
549,521
|
|
|
$
|
201,589
|
|
Royalties from product sales
|
|
|
133,946
|
|
|
|
176,027
|
|
|
|
407,803
|
|
|
|
569,257
|
|
Grant income
|
|
|
441,630
|
|
|
|
746,426
|
|
|
|
1,518,086
|
|
|
|
1,605,612
|
|
Sale of research products
|
|
|
90,342
|
|
|
|
184,217
|
|
|
|
217,380
|
|
|
|
405,981
|
|
Total revenues
|
|
|
1,003,551
|
|
|
|
1,161,570
|
|
|
|
2,692,790
|
|
|
|
2,782,439
|
|
Cost of sales
|
|
|
(169,734
|
)
|
|
|
(18,516
|
)
|
|
|
(273,916
|
)
|
|
|
(58,808
|
)
|
Total revenues, net
|
|
|
833,817
|
|
|
|
1,143,054
|
|
|
|
2,418,874
|
|
|
|
2,723,631
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development
|
|
|
(4,545,470
|
)
|
|
|
(3,488,121
|
)
|
|
|
(13,323,410
|
)
|
|
|
(9,756,443
|
)
|
General and administrative
|
|
|
(2,234,905
|
)
|
|
|
(1,887,298
|
)
|
|
|
(7,037,807
|
)
|
|
|
(6,193,383
|
)
|
Total expenses
|
|
|
(6,780,375
|
)
|
|
|
(5,375,419
|
)
|
|
|
(20,361,217
|
)
|
|
|
(15,949,826
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Loss from operations
|
|
|
(5,946,558
|
)
|
|
|
(4,232,365
|
)
|
|
|
(17,942,343
|
)
|
|
|
(13,226,195
|
)
|
OTHER INCOME/(EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest income/(expense), net
|
|
|
5,624
|
|
|
|
2,911
|
|
|
17,321
|
|
|
|
19,705
|
||
Gain/(loss) on sale of fixed assets
|
|
|
(1,451
|
)
|
|
|
(6,246
|
)
|
|
|
(4,997
|
)
|
|
|
(6,246)
|
|
Other income/(expense), net
|
|
|
18,766
|
|
|
(919
|
)
|
|
|
(223,899
|
)
|
|
|
223,944
|
||
Total other income/(expenses), net
|
|
$
|
22,939
|
|
$
|
(4,254
|
)
|
|
$
|
(211,575
|
)
|
|
$
|
237,403
|
||
NET LOSS
|
|
|
(5,923,619
|
)
|
|
|
(4,236,619
|
)
|
|
|
(18,153,918
|
)
|
|
|
(12,988,792
|
)
|
Less: Net loss attributable to the noncontrolling interest
|
|
|
965,605
|
|
|
|
498,993
|
|
|
|
2,763,169
|
|
|
|
1,833,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
NET LOSS ATTRIBUTABLE TO BIOTIME, INC.
|
|
$
|
(4,958,014
|
)
|
|
$
|
(3,737,626
|
)
|
|
$
|
(15,390,749
|
)
|
|
$
|
(11,154,849
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation gain/(loss)
|
|
|
(15,777
|
)
|
|
|
696,661
|
|
|
|
(74,635
|
)
|
|
|
(901,881
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
COMPREHENSIVE NET LOSS
|
|
$
|
(4,973,791
|
)
|
|
$
|
(3,040,965
|
)
|
|
$
|
(15,465,384
|
)
|
|
$
|
(12,056,730
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
BASIC AND DILUTED LOSS PER COMMON SHARE
|
|
$
|
(0.10
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED
|
|
|
49,291,177
|
|
|
|
48,896,973
|
|
|
|
49,196,804
|
|
|
|
48,681,879
|
|
Nine Months Ended
|
||||||||
September 30,
2012
|
September 30,
2011
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss attributable to BioTime, Inc.
|
$
|
(15,390,749
|
)
|
$
|
(11,154,849
|
)
|
||
Adjustments to reconcile net loss attributable to BioTime, Inc. to net cash used in operating activities:
|
||||||||
Depreciation expense
|
283,637
|
260,646
|
||||||
Amortization of intangible asset
|
1,764,382
|
1,626,476
|
||||||
Amortization of deferred license, royalty and subscription revenues
|
(220,764
|
)
|
(186,035
|
)
|
||||
Amortization of deferred grant income
|
(261,777
|
)
|
(261,777
|
)
|
||||
Amortization of deferred consulting fees
|
582,186
|
582,186
|
||||||
Amortization of deferred license and royalty fees
|
82,129
|
82,125
|
||||||
Amortization of deferred rent
|
(8,143
|
)
|
32,403
|
|||||
Stock-based compensation
|
986,769
|
828,395
|
||||||
Options issued as independent director compensation
|
454,366
|
427,516
|
||||||
Reduction in receivables from the reversal of revenues
|
205,926
|
—
|
||||||
Write-off of security deposit
|
(3,634
|
)
|
—
|
|||||
Write off of expired inventory
|
—
|
1,510
|
||||||
Loss on sale/write-off of fixed assets
|
4,997
|
6,502
|
||||||
Net loss allocable to noncontrolling interest
|
(2,763,169
|
)
|
(1,833,943
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable, net
|
(459,555
|
)
|
(25,272
|
)
|
||||
Grant receivable
|
584,744
|
256,714
|
||||||
Inventory
|
(5,794
|
)
|
21,154
|
|||||
Prepaid expenses and other current assets
|
140,220
|
(320,893)
|
||||||
Accounts payable and accrued liabilities
|
(699,155
|
)
|
(331,072
|
)
|
||||
Other long term liabilities
|
(16,686
|
)
|
(31,741
|
)
|
||||
Deferred grant income
|
56,630
|
271,655
|
||||||
Net cash used in operating activities
|
(14,683,440
|
)
|
(9,748,300
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of equipment
|
(205,135
|
)
|
(780,524
|
)
|
||||
Payment of license fee
|
—
|
(1,500
|
)
|
|||||
Cash paid, net of cash acquired for assets
|
—
|
(246,850
|
)
|
|||||
Cash acquired in connection with merger
|
292,387
|
5,908
|
||||||
Proceeds from the sale of fixed assets
|
4,500
|
—
|
||||||
Security deposit (paid)/received
|
(529
|
)
|
250
|
|||||
Net cash provided by/(used) in investing activities
|
91,223
|
(1,022,716
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from the exercise of stock options from employees
|
286,552
|
106,153
|
||||||
Proceeds from the exercise of stock options from directors
|
—
|
112,328
|
||||||
Proceeds from the exercise of stock options from outside consultant
|
—
|
4,700
|
||||||
Proceeds from the exercise of warrants
|
—
|
425,000
|
||||||
Proceeds from the sale of common shares of subsidiary
|
—
|
3,213,500
|
||||||
Net cash provided by financing activities
|
286,552
|
3,861,681
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(75,885
|
)
|
(185,291
|
)
|
||||
NET CHANGE IN CASH AND CASH EQUIVALENTS:
|
(14,381,550
|
)
|
(7,094,626
|
)
|
||||
Cash and cash equivalents at beginning of period
|
22,211,897
|
33,324,924
|
||||||
Cash and cash equivalents at end of period
|
$
|
7,830,347
|
$
|
26,230,298
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid during the period for interest
|
$
|
315
|
$
|
1,073
|
||||
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
|
||||||||
Common shares acquired in connection with investment in subsidiary as part of Share Exchange and Contribution Agreement
|
$
|
2,001,762
|
$
|
—
|
||||
Common shares issued in connection with investment in subsidiary
|
$
|
—
|
$
|
6,000,000
|
||||
Common shares issued in connection with the purchase of assets
|
$
|
—
|
$
|
2,300,000
|
||||
Common shares issued as part of merger
|
$
|
1,802,684
|
$
|
2,600,000
|
||||
Warrants issued as part of merger
|
$
|
—
|
$
|
954,879
|
Subsidiary
|
|
BioTime Ownership
|
|
Country
|
ReCyte Therapeutics, Inc. (formerly Embryome Sciences, Inc.)
|
|
95.15%
|
|
USA
|
OncoCyte Corporation
|
|
75.3%
|
|
USA
|
OrthoCyte Corporation
|
|
100%
|
|
USA
|
ES Cell International Pte. Ltd.
|
|
100%
|
|
Singapore
|
BioTime Asia, Limited
|
|
81%
|
|
Hong Kong
|
Cell Cure Neurosciences Ltd.
|
|
53.6% (1)
|
|
Israel
|
LifeMap Sciences, Inc.
|
|
77.1% (2)
|
|
USA
|
LifeMap Sciences, Ltd.
|
|
(3)
|
|
Israel
|
BioTime Acquisition Corporation
|
|
96.7%
|
|
USA
|
(1)
|
Cell Cure Neurosciences has agreed to issue additional ordinary shares to BioTime in exchange for BioTime common shares which will increase BioTime’s ownership, directly and through ESI, to approximately 62.6%. See Note 11.
|
(2)
|
LifeMap Sciences, Inc. has agreed to issue additional shares of its common stock to certain investors which will reduce BioTime’s ownership 73.2%. See Note 9.
|
(3)
|
LifeMap Sciences, Ltd. is a wholly-owned subsidiary of LifeMap Sciences, Inc.
|
|
|
September 30, 2012
(unaudited)
|
|
|
December 31,
2011
|
|
||
Equipment, furniture and fixtures
|
|
$
|
2,062,655
|
|
|
$
|
1,900,090
|
|
Accumulated depreciation
|
|
|
(811,572
|
)
|
|
|
(552,311
|
)
|
Equipment, net
|
|
$
|
1,251,083
|
|
|
$
|
1,347,779
|
|
|
|
September 30, 2012
(unaudited)
|
|
|
December 31,
2011
|
|
||
Intangible assets
|
|
$
|
25,664,015
|
|
|
$
|
21,429,488
|
|
Accumulated amortization
|
|
|
(4,574,354
|
)
|
|
|
(2,809,972
|
)
|
Intangible assets, net
|
|
$
|
21,089,661
|
|
|
$
|
18,619,516
|
|
|
|
September 30, 2012
(unaudited)
|
|
|
December 31,
2011
|
|
||
Accounts payable
|
|
$
|
708,961
|
|
|
$
|
1,118,112
|
|
Accrued bonuses
|
|
|
—
|
|
|
|
583,620
|
|
Other accrued liabilities
|
|
|
1,453,429
|
|
|
|
979,379
|
|
|
|
$
|
2,162,390
|
|
|
$
|
2,681,111
|
|
|
|
Nine Months Ended
September 30
,
|
|
|||||
|
|
2012
|
|
|
2011
|
|
||
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
||
Revenues, net
|
|
$
|
2,984,436
|
|
|
$
|
3,285,531
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common shareholders
|
|
$
|
(15,288,233
|
)
|
|
$
|
(11,031,976
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share – basic and diluted
|
|
$
|
(0.31
|
)
|
|
$
|
(0.23
|
)
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
Subsidiary
|
Field of Business
|
BioTime
Ownership
|
Country
|
ES Cell International Pte. Ltd.
|
Stem cell products for research, including clinical grade cell lines produced under cGMP
|
100%
|
Singapore
|
OncoCyte Corporation
|
Diagnosis and treatment of cancer
|
75.3%
|
USA
|
OrthoCyte Corporation
|
Orthopedic diseases, including osteoarthritis
|
100%
|
USA
|
Cell Cure Neurosciences Ltd.
|
Age-related macular degeneration
Multiple sclerosis
Parkinson’s disease
|
53.6% (1)
|
Israel
|
ReCyte Therapeutics, Inc.
(formerly Embryome Sciences, Inc.)
|
Blood and vascular diseases including coronary artery disease
Endothelial progenitor cells and iPS cell banking
|
95.15%
|
USA
|
BioTime Asia, Limited
|
Ophthalmologic, skin, musculo-skeletal system, and hematologic diseases for Asian markets.
Stem cell products for research
|
81%
|
Hong Kong
|
LifeMap Sciences, Inc.
|
Searchable online databases for research in the fields of biotechnology, pharmaceutical development, and life sciences
|
77.1% (2)
|
USA
|
LifeMap Sciences, Ltd.
|
Development of the LifeMap database and therapeutics discovery activities
|
(3)
|
Israel
|
BioTime Acquisition Corporation
|
Explore opportunities to acquire assets and businesses in the field of stem cells and regenerative medicine
|
96.7%
|
USA
|
(1)
|
Cell Cure Neurosciences has agreed to issue additional ordinary shares to BioTime in exchange for BioTime common shares which will increase BioTime’s ownership, directly and through ESI, to approximately 62.6%. See Note 11 to the Condensed Consolidated Interim Financial Statements.
|
(2)
|
LifeMap Sciences, Inc. has agreed to issue additional shares of its common stock to certain investors which will reduce BioTime’s ownership 73.2%. See Note 9 to the Condensed Consolidated Interim Financial Statements.
|
(3)
|
LifeMap Sciences, Ltd. is a wholly-owned subsidiary of LifeMap Sciences, Inc.
|
Company
|
Program
|
Status
|
OrthoCyte (4)
|
Cartilage repair using embryonic progenitor cells
|
Identified several cell lines that displayed molecular markers consistent with the production of definitive human cartilage.
Confirmed chondrogenic potential in joint defects in rat models of osteoarthritis.
|
ReCyte Therapeutics
|
Therapeutic products for cardiovascular and blood diseases utilizing its proprietary
ReCyte™
iPS technology.
|
Evaluating effects of telomere length on growth potential of iPS cells and iPS-derived progenitor lines.
Through BioTime, formed a collaboration with researchers at Cornell Weill Medical College to derive clinical vascular endothelium for the treatment of age-related vascular disease.
Demonstrated the feasibility of producing highly purified product using
ACTCellerate™
technology.
|
BioTime
|
Hextend
®
– Blood plasma volume expanders
|
Hextend
®
is currently marketed to hospitals and physicians in the USA and Korea. Activities include complying with all regulatory requirements and promotional activities.
|
BioTime Asia
|
Distributing
ACTCellerate™
hEPC lines growth media and reagents
|
Initial sales of cell lines, growth media, and differentiation kits, to customers in Asia.
|
Cell Cure
Neurosciences (5)
|
OpRegen™
and
OpRegen-Plus™
for treatment of age related macular degeneration
|
Conducted animal model studies to establish proof of concept.
Developed directed differentiation as efficient method for short culture period to produce a supply of retinal pigment epithelial cells.
Granted Teva Pharmaceutical Industries, Ltd. an option to complete clinical development of, and to manufacture, distribute, and sell,
OpRegen™
and
OpRegen-Plus™.
|
LifeMap (6)
|
Online, searchable databases
|
Marketing searchable, integrated, database products, including:
·
GeneCards
®
, a database of human genes that provides concise genomic, transcriptomic, genetic, proteomic, functional and disease related information, on all known and predicted human genes;
·
MalaCards
, a database of human diseases that is based on the
GeneCards
®
platform and contains computerized “cards” classifying information relating to a wide array of human diseases; and
·
PanDaTox
, an innovative, recently developed, searchable database that can aid in the discovery of new antibiotics and biotechnologically beneficial products.
Plans to also market
·
LifeMap Discovery™
, a database of embryonic development, stem cell research and regenerative medicine; and
·
BioTime research products.
|
|
|
|
Amount
|
|
Percent
|
||||||||||
Company
|
Program
|
|
2012
|
|
|
2011
|
|
2012
|
|
|
2011
|
||||
BioTime, ReCyte Therapeutics,
and ESI
|
ACTCellerate
hEPCs, GMP hES cell lines, and related research products
|
|
$
|
2,057,859
|
|
|
$
|
2,458,649
|
|
15.4
|
%
|
|
25.2
|
%
|
|
BioTime
|
CIRM sponsored ACTCellerate technology
|
|
$
|
794,632
|
|
|
$
|
1,363,363
|
|
6.0
|
%
|
|
14.0
|
%
|
|
BioTime and OrthoCyte(1)
|
Hydrogel products and
HyStem
®
research
|
|
$
|
2,560,964
|
|
|
$
|
400,030
|
|
19.2
|
%
|
|
4.1
|
%
|
|
OncoCyte
|
Cancer therapy and diagnostics
|
|
$
|
2,252,071
|
|
|
$
|
1,663,869
|
|
16.9
|
%
|
|
17.0
|
%
|
|
OrthoCyte
|
Orthopedic therapy
|
|
$
|
679,166
|
|
|
$
|
650,393
|
|
5.1
|
%
|
|
6.7
|
%
|
|
ReCyte Therapeutics
|
IPS and vascular therapy
|
|
$
|
971,572
|
|
|
$
|
265,350
|
|
7.3
|
%
|
|
2.7
|
%
|
|
BioTime
|
HyStem
®
|
|
$
|
266,652
|
|
|
$
|
247,571
|
|
2.0
|
%
|
|
2.5
|
%
|
|
BioTime Asia
|
Stem cell products for research
|
|
$
|
109,807
|
|
|
$
|
145,149
|
|
0.8
|
%
|
|
1.5
|
%
|
|
Cell Cure Neurosciences
|
OpRegen™
,
OpRegen-Plus™
, and neurological disease therapies
|
|
$
|
2,409,095
|
|
|
$
|
2,283,475
|
|
18.1
|
%
|
|
23.4
|
%
|
|
LifeMap
|
Database development
|
|
$
|
1,221,592
|
|
|
$
|
278,594
|
|
9.2
|
%
|
|
2.9
|
%
|
(1)
|
OrthoCyte transferred its
HyStem
®
product line and related research to BioTime during January 2012.
|
|
|
Amount
|
|
Percent
|
|||||||||||
Company
|
|
2012
|
|
|
2011
|
|
2012
|
|
|
2011
|
|||||
BioTime
|
|
$
|
3,264,699
|
|
|
$
|
2,719,755
|
|
46.4
|
% |
|
|
43.9
|
%
|
|
BAC
|
$
|
32,308
|
$
|
—
|
0.5
|
% |
0.0
|
||||||||
BioTime Asia
|
|
$
|
799,098
|
|
|
$
|
802,951
|
|
11.3
|
% |
|
|
13.0
|
%
|
|
Cell Cure Neurosciences*
|
|
$
|
525,450
|
|
|
$
|
436,790
|
|
7.5
|
% |
|
|
7.0
|
%
|
|
ESI*
|
|
$
|
392,411
|
|
|
$
|
363,670
|
|
5.6
|
% |
|
|
5.9
|
%
|
|
LifeMap
|
|
$
|
909,518
|
|
|
$
|
236,713
|
|
12.9
|
% |
|
|
3.8
|
%
|
|
OncoCyte
|
|
$
|
511,614
|
|
|
$
|
505,308
|
|
7.3
|
% |
|
|
8.2
|
%
|
|
OrthoCyte
|
|
$
|
304,867
|
|
|
$
|
769,650
|
|
4.3
|
% |
|
|
12.4
|
%
|
|
ReCyte Therapeutics
|
|
$
|
297,842
|
|
|
$
|
358,546
|
|
4.2
|
% |
|
|
5.8
|
%
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Controls and Procedures
|
Item 1A.
|
Risk Factors
|
|
●
|
We are attempting to develop new medical products and technologies.
|
|
●
|
Many of our experimental products and technologies have not been applied in human medicine and have only been used in laboratory studies
in vitro
or in animals. These new products and technologies might not prove to be safe and efficacious in the human medical applications for which they were developed.
|
|
●
|
The experimentation we are doing is costly, time consuming, and uncertain as to its results. We incurred research and development expenses amounting to $13,323,410 during the nine months ended September 30, 2012, and $13,699,691, $8,191,314, and $3,181,729 during the fiscal years ended December 31, 2011, 2010, and 2009, respectively.
|
|
●
|
If we are successful in developing a new technology or product, refinement of the new technology or product and definition of the practical applications and limitations of the technology or product may take years and require the expenditure of large sums of money.
|
|
●
|
Future clinical trials of new therapeutic products, particularly those products that are regulated as drugs or biological, will be very expensive and will take years to complete. We may not have the financial resources to fund clinical trials on our own and we may have to enter into licensing or collaborative arrangements with larger, well-capitalized pharmaceutical companies in order to bear the cost. Any such arrangements may be dilutive to our ownership or economic interest in the products we develop, and we might have to accept a royalty payment on the sale of the product rather than receiving the gross revenues from product sales.
|
|
●
|
The success of our business of selling products for use in stem cell research depends on the growth of stem cell research, without which there may be no market or only a very small market for our products and technology. The likelihood that stem cell research will grow depends upon the successful development of stem cell products that can be used to treat disease or injuries in people or that can be used to facilitate the development of other pharmaceutical products. The growth in stem cell research also depends upon the availability of funding through private investment and government research grants.
|
|
●
|
There can be no assurance that any safe and efficacious human medical applications will be developed using stem cells or related technology.
|
|
●
|
Government-imposed bans, restrictions and religious, moral, and ethical concerns with respect to use of embryos or human embryonic stem cells in research and development could have a material adverse effect on the growth of the stem cell industry, even if research proves that useful medical products can be developed using human embryonic stem cells.
|
|
●
|
Hextend
®
is presently the only plasma expander product that we have on the market, and it is being sold only in the United States and South Korea. The royalty revenues that we have received from sales of
Hextend
®
have not been sufficient to pay our operating expenses. This means that we need to successfully develop and market or license additional products and earn additional revenues in sufficient amounts to meet our operating expenses.
|
|
●
|
We will receive additional license fees and royalties if our licensees are successful in marketing
Hextend
®
and
PentaLyte
®
in Japan, Taiwan, and China, but they have not yet obtained the regulatory approvals required to begin selling those products.
|
|
●
|
We are also beginning to bring our first stem cell research products to the market, but there is no assurance that we will succeed in generating significant revenues from the sale of those products.
|
|
●
|
Sales of
Hextend
®
have already been adversely impacted by the availability of other products that are commonly used in surgery and trauma care and sell at low prices.
|
|
●
|
In order to compete with other products, particularly those that sell at lower prices, our products will have to provide medically significant advantages.
|
|
●
|
Physicians and hospitals may be reluctant to try a new product due to the high degree of risk associated with the application of new technologies and products in the field of human medicine.
|
|
●
|
Competing products are being manufactured and marketed by established pharmaceutical companies. For example, B. Braun/McGaw presently markets
Hespan
®
, an artificial plasma volume expander, and Hospira and Baxter International, Inc. manufacture and sell a generic equivalent of
Hespan
®
.
Hospira also markets
Voluven
®
,
a plasma volume expander containing a 6% low molecular weight hydroxyethyl starch in saline solution.
|
|
●
|
There also is a risk that our competitors may succeed at developing safer or more effective products that could render our products and technologies obsolete or noncompetitive.
|
|
●
|
We plan to continue to incur substantial research and product development expenses, largely through our subsidiaries, and we and our subsidiaries will need to raise additional capital to pay operating expenses until we are able to generate sufficient revenues from product sales, royalties, and license fees.
|
|
●
|
It is likely that additional sales of equity or debt securities will be required to meet our short-term capital needs, unless we receive substantial revenues from the sale of our new products or we are successful at licensing or sublicensing the technology that we develop or acquire from others and we receive substantial licensing fees and royalties.
|
|
●
|
Sales of additional equity securities by us or our subsidiaries could result in the dilution of the interests of present shareholders.
|
|
●
|
At September 30, 2012, we had
$
7,830,347 of cash and cash equivalents on hand. There can be no assurance that we or our subsidiaries will be able to raise additional funds on favorable terms or at all, or that any funds raised will be sufficient to permit us or our subsidiaries to develop and market our products and technology. Unless we and our subsidiaries are able to generate sufficient revenue or raise additional funds when needed, it is likely that we will be unable to continue our planned activities, even if we make progress in our research and development projects.
|
|
●
|
We may have to postpone some laboratory research and development work unless our cash resources increase through a growth in revenues or additional equity investment or borrowing.
|
|
●
|
We will have to conduct expensive and time-consuming clinical trials of new products. The full cost of conducting and completing clinical trials necessary to obtain FDA and foreign regulatory approval of a new product cannot be presently determined, but could exceed our current financial resources.
|
|
●
|
Clinical trials and the regulatory approval process for a pharmaceutical product can take several years to complete. As a result, we will incur the expense and delay inherent in seeking FDA and foreign regulatory approval of new products, even if the results of clinical trials are favorable.
|
|
●
|
Data obtained from preclinical and clinical studies is susceptible to varying interpretations that could delay, limit, or prevent regulatory agency approvals. Delays in the regulatory approval process or rejections of an application for approval of a new drug may be encountered as a result of changes in regulatory agency policy.
|
|
●
|
Because the therapeutic products we are developing with hES and iPS technology involve the application of new technologies and approaches to medicine, the FDA or foreign regulatory agencies may subject those products to additional or more stringent review than drugs or biologicals derived from other technologies.
|
|
●
|
A product that is approved may be subject to restrictions on use.
|
|
●
|
The FDA can recall or withdraw approval of a product if problems arise.
|
|
●
|
We will face similar regulatory issues in foreign countries.
|
|
●
|
Government-imposed restrictions with respect to the use of embryos or human embryonic stem cells in research and development could limit our ability to conduct research and develop new products.
|
|
●
|
Government-imposed bans, restrictions on the use of embryos or hES cells in the United States and abroad could generally constrain stem cell research, thereby limiting the market and demand for our products. During March 2009, President Obama lifted certain restrictions on federal funding of research involving the use of hES cells, and in accordance with President Obama’s Executive Order, the National Institutes of Health (“NIH”) has adopted new guidelines for determining the eligibility of hES cell lines for use in federally funded research. The central focus of the proposed guidelines is to assure that hES cells used in federally funded research were derived from human embryos that were created for reproductive purposes, were no longer needed for this purpose, and were voluntarily donated for research purposes with the informed written consent of the donors. The hES cells that were derived from embryos created for research purposes rather than reproductive purposes, and other hES cells that were not derived in compliance with the guidelines, are not eligible for use in federally funded research.
|
|
●
|
California law requires that stem cell research be conducted under the oversight of a stem cell research oversight committee (“SCRO”). Many kinds of stem cell research, including the derivation of new hES cell lines, may only be conducted in California with the prior written approval of the SCRO. A SCRO could prohibit or impose restrictions on the research that we plan to do.
|
|
●
|
The use of hES cells gives rise to religious, moral, and ethical issues regarding the appropriate means of obtaining the cells and the appropriate use and disposal of the cells. These considerations could lead to more restrictive government regulations or could generally constrain stem cell research, thereby limiting the market and demand for our products.
|
|
●
|
Our success will depend in part on our ability to obtain and enforce patents and maintain trade secrets in the United States and in other countries. If we are unsuccessful at obtaining and enforcing patents, our competitors could use our technology and create products that compete with our products, without paying license fees or royalties to us.
|
|
●
|
The preparation, filing, and prosecution of patent applications can be costly and time consuming. Our limited financial resources may not permit us to pursue patent protection of all of our technology and products throughout the world.
|
|
●
|
Even if we are able to obtain issued patents covering our technology or products, we may have to incur substantial legal fees and other expenses to enforce our patent rights in order to protect our technology and products from infringing uses. We may not have the financial resources to finance the litigation required to preserve our patent and trade secret rights.
|
|
●
|
We have filed patent applications for technology that we have developed, and we have obtained licenses for a number of patent applications covering technology developed by others, that we believe will be useful in producing new products, and which we believe may be of commercial interest to other companies that may be willing to sublicense the technology for fees or royalty payments. In the future, we may also file additional new patent applications seeking patent protection for new technology or products that we develop ourselves or jointly with others. However, there is no assurance that any of our licensed patent applications, or any patent applications that we have filed or that we may file in the future covering our own technology, either in the United States or abroad, will result in the issuance of patents.
|
|
●
|
In Europe, the European Patent Convention prohibits the granting of European patents for inventions that concern “uses of human embryos for industrial or commercial purposes.” The European Patent Office is presently interpreting this prohibition broadly, and is applying it to reject patent claims that pertain to human embryonic stem cells. However, this broad interpretation is being challenged through the European Patent Office appeals system. As a result, we do not yet know whether or to what extent we will be able to obtain patent protection for our human embryonic stem cell technologies in Europe.
|
|
●
|
The recent Supreme Court decision in
Mayo Collaborative Services v. Prometheus Laboratories, Inc.
, will need to be considered in determining whether certain diagnostic methods can be patented, since the Court denied patent protection for the use of a mathematical correlation of the presence of a well-known naturally occurring metabolite as a means of determining proper drug dosage. Our subsidiary OncoCyte is developing
PanC-Dx™
as a cancer diagnostic test, based on the presence of certain genetic markers for a variety of cancers. Because
PanC-Dx™
combines an innovative methodology with newly discovered compositions of matter, we are hopeful that this Supreme Court decision will not preclude the availability of patent protection for OncoCyte’s new product. However, like other developers of diagnostic products, we are evaluating this new Supreme Court decision and are waiting to see if the United States Patent and Trademark Office will issue any new guidelines for the patenting of products that test for biological substances.
|
|
●
|
The preparation and filing of patent applications, and the maintenance of patents that are issued, may require substantial time and money.
|
|
●
|
A patent interference proceeding may be instituted with the United States Patent and Trademark Office (“U.S. PTO”) when more than one person files a patent application covering the same technology, or if someone wishes to challenge the validity of an issued patent. At the completion of the interference proceeding, the PTO will determine which competing applicant is entitled to the patent, or whether an issued patent is valid. Patent interference proceedings are complex, highly contested legal proceedings, and the PTO’s decision is subject to appeal. This means that if an interference proceeding arises with respect to any of our patent applications, we may experience significant expenses and delay in obtaining a patent, and if the outcome of the proceeding is unfavorable to us, the patent could be issued to a competitor rather than to us.
|
|
●
|
Oppositions to the issuance of patents may be filed under European patent law and the patent laws of certain other countries. As with the U.S. PTO interference proceedings, these foreign proceedings can be very expensive to contest and can result in significant delays in obtaining a patent or can result in a denial of a patent application.
|
|
●
|
We might not be able to obtain any additional patents, and any patents that we do obtain might not be comprehensive enough to provide us with meaningful patent protection.
|
|
●
|
There will always be a risk that our competitors might be able to successfully challenge the validity or enforceability of any patent issued to us.
|
|
●
|
In addition to interference proceedings, the U.S. PTO can re-examine issued patents at the request of a third party seeking to have the patent invalidated. This means that patents owned or licensed by us may be subject to re-examination and may be lost if the outcome of the re-examination is unfavorable to us.
|
|
●
|
The market price of our shares, like that of the shares of many biotechnology companies, has been highly volatile.
|
|
●
|
The price of our shares may rise rapidly in response to certain events, such as the commencement of clinical trials of an experimental new drug, even though the outcome of those trials and the likelihood of ultimate FDA approval remain uncertain.
|
|
●
|
Similarly, prices of our shares may fall rapidly in response to certain events such as unfavorable results of clinical trials or a delay or failure to obtain FDA approval.
|
|
●
|
The failure of our earnings to meet analysts’ expectations could result in a significant rapid decline in the market price of our common shares.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 3.
|
Default Upon Senior Securities.
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information.
|
|
BIOTIME, INC.
|
|
|
|
|
Date: November 9, 2012
|
/s/ Michael D. West
|
|
|
Michael D. West
|
|
|
Chief Executive Officer
|
|
Date: November 9, 2012
|
/s/ Peter S. Garcia
|
|
|
Peter S. Garcia
|
|
|
Chief Financial Officer
|
|
Section 1.6
|
“Field of Use”
shall mean exclusive use all of PATENT RIGHTS excluding human and animal therapeutics, animal health, medical devices and pharmaceutical uses and applications. Including but not limited to uses in cosmetics, uses in topical delivery of compounds which are not FDA-regulated therapeutic agents, reagents and platforms for in vitro cell and tissue culture, platforms and services for in vitro drug toxicology and efficacy testing, materials for preserving or extending the useful life of human organs and tissues, in vivo xenograft models using human tissues, and any other uses not specifically excluded.
“Field of Use”
shall also mean co-exclusive use of PATENT RIGHTS to products and methods in which living tissue or cells are incorporated outside the body into a polymer platform at a facility other than the point-of-care facility, and the resulting hybrid device is then subsequently implanted in humans for therapeutic use (“TISSUE ENGINEERED PRODUCTS”). These co-exclusive rights shall be shared with no more that one other licensee and include Sublicensing rights consistent with the AGREEMENT.
|
Section 5.2
|
Milestones and Fees.
|
|
(a)
|
Licensee shall pay a patent issue fee of five thousand dollars upon issuance of each U.S. patent COVERED BY this AGREEMENTgr. Such patent issue fee shall only be required for the first five (5) U.S. patents issued. If three (3) or more licensees have rights for distinct and separate fields of use for the same issued patent, at the time the patent issues, the patent issue fee shall be two thousand five hundred dollars ($2,500). Each required payment will be paid to Licensor within thirty (30) days of completion of each milestone listed above.
|
|
(b)
|
Licensee shall pay a milestone fee of $225,000 for the first sale of TISSUE ENGINEERED PRODUCTS for Human use. This payment will be paid to Licensor within six (6) months of completion of this milestone.
|
Glycosan BioSystems
|
University of Utah Research Foundation | ||||
By:
|
/s/ William P. Tew
|
By:
|
/s/ Ray F. Gesteland
|
||
Name:
|
William P. Tew, Ph.D
|
Name:
|
Ray F. Gesteland
|
||
Title:
|
President & CEO
|
Title:
|
President
|
||
Date:
|
May 9, 2006
|
|
Date:
|
May 9, 2006
|
1.
|
Article
6
of the Agreement is hereby deleted in its entirety and replaced with the following;
|
|
2.
|
Ratification
of
Agreement.
Except as provided herein or as may be required to effectuate the intent of the parties with respect to the amendments described in paragraph 1 hereof, the parties hereby reaffirm and ratify the terms of the Agreement in their entirety.
|
3.
|
Further
Assurances.
Each of Licensee and Licensor hereby agrees to execute, deliver, verify, acknowledge, and file any and all documents, instruments, or agreements as shall be necessary or appropriate to reflect the intent of the parties with respect to the amendments of the Agreement described herein.
|
|
4.
|
Entire
Understanding.
This Amendment constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and any modification of this Amendment shall be in writing and shall be signed by a duly authorized representative of each party.
|
“LICENSEE” | “LICENSOR” | ||||
GLYCOSAN BIOSYSTEMS, INC. | UNIVERSITY OF UTAH RESEARCH FOUNDATION | ||||
By: |
/s/ William P. Tew
|
By: |
/s/ John K. Morris
|
||
(Signature) | (Signature) | ||||
Name: |
William P. Tew, Ph.D.
|
Name: |
John K. Morris Esq.
|
||
(Please Print) | (Please Print) | ||||
Title: |
President & CEO
|
Title: |
Secretary
|
||
Date: |
February 4, 2008
|
Date: |
February 4, 2008
|
1.
|
WITNESSETH
section of the Agreement is hereby deleted in its entirety and replaced with the following:
|
2.
|
EXHIBIT “A”
of the Agreement is hereby deleted in its entirety and replaced with the following:
|
U No.
|
Matter
|
Application No.
Date of Filing
|
Title
|
Inventor(s)
|
U-3405
|
21101.0036U1
Provisional
|
60/390,504
6/21/2002
|
Disulfide Crosslinked
Hyaluronan Hydrogels
|
Glenn Preswich,
Xiao Shu, Yi Luo,
Kelly Kirker
|
U-3405
|
21101.0036P1
PCT
|
PCT/US03/15519
5/15/03
|
Crosslinked
Compounds and
Methods of Making
and Using Thereof
|
Glenn Preswich,
Xiao Shu, Yi Luo,
Kelly Kirker
|
U-3405
|
21101.0036U2
Nationalized, United States
|
10/519,173
12/20/04
|
Crosslinked
Compounds and
Methods of Making
and Using Thereof
|
Glenn Preswich, X
iao Shu, Yi Luo,
Kelly Kirker
|
U-3405
|
21101.0036CA1
Nationalized, Canada
|
2,489,712
5/15/03
|
Crosslinked
Compounds and
Methods of Making
and Using Thereof
|
Glenn Preswich,
Xiao Shu, Yi Luo,
Kelly Kirker
|
U-3405
|
21101.0036EP1
Nationalized, Europe
|
03799796.2
5/15/03
|
Crosslinked
Compounds and
Methods of Making and
Using Thereof
|
Glenn Preswich,
Xiao Shu, Yi Luo,
Kelly Kirker
|
U-3656
|
21101.0051P1
Provisional
|
60/526,797
12/4/2003
|
Modified
Macromolecules and
Methods of Making and
Using Thereof
|
Glenn Prestwich,
Xiao Shu
|
U-3656
|
21101.0051U1
PCT
|
PCT/US04/040726
12/6/2004
|
Modified Macromolecules
and Methods of Making
and Using Thereof
|
Glenn Prestwich,
Xiao Shu
|
U-4406
|
24U03.1-140
Provisional
|
61/051,698
05/09/2008
|
Fall-Apart Composites
and Methods of Use
Thereof
|
Glenn Prestwich,
Jianxing Zhang,
Aleksander Skardal
|
3.
|
Fees
. Licensee shall pay to Licensor a non-refundable amendment/license fee of three thousand dollars ($3,000) and back patent costs of three thousand dollars ($3,000), for a total of six thousand dollars ($6,000), three thousand dollars ($3,000) of which is deemed earned and immediately payable upon execution of this Amendment and the remaining three thousand dollars ($3,000) is due six months following the final signature and execution of this Amendment.
|
4.
|
Ratification of Agreement.
Except as provided herein or as may be required to effectuate the intent of the parties with respect to the amendments described in paragraph 1 hereof, the parties hereby reaffirm and ratify the terms of the Agreement in their entirety.
|
5.
|
Further Assurances.
Each of Licensee and Licensor hereby agrees to execute, deliver, verify, acknowledge, and file any and all documents, instruments, or agreements as shall be necessary or appropriate to reflect the intent of the parties with respect to the amendments of the Agreement described herein.
|
6.
|
Entire Understanding.
This Amendment constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and any modification of this Amendment shall be in writing and shall be signed by a duly authorized representative of each party.
|
“LICENSEE”
|
“LICENSOR”
|
|||
GLYCOSAN BIOSYSTEMS, INC.
|
UNIVERSITY OF UTAH RESEARCH FOUNDATION
|
|||
By:
|
/s/ William P. Tew
|
By:
|
/s/ John K. Morris
|
|
(Signature)
|
(Signature)
|
|||
Name:
|
William P. Tew, Ph.D.
|
Name:
|
John K. Morris Esq.
|
|
(Please Print)
|
(Please Print)
|
|||
Title:
|
President & CEO
|
Title:
|
Secretary
|
|
Date:
|
June 25, 2008
|
Date:
|
July 3, 2008
|
1.
|
Section 4.4 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
YEAR 2
|
$ | 7,500 | ||
YEAR 3
|
$ | 0 | ||
YEAR 4
|
$ | 0 | ||
YEAR 5
|
$ | 15,000 | ||
YEAR 6
|
$ | 22,500 | ||
YEAR 7 | $ |
30,000
(and Beyond)
|
2.
|
Issue Fee
. Licensee shall pay to Licensor a non-refundable amendment/license fee of seven thousand five hundred ($7,500) and payable as;
|
|
$2,500 deemed earned and payable upon execution of this Amendment, $2,500 due January 31, 2010, and $2,500 due January 31, 2011.
|
3.
|
Ratification of Agreement.
Except as provided herein or as may be required to effectuate the intent of the parties with respect to the amendments described in paragraph 1 hereof, the parties hereby reaffirm and ratify the terms of the Agreement in their entirety.
|
4.
|
Further Assurances.
Each of Licensee and Licensor hereby agrees to execute, deliver, verify, acknowledge, and file any and all documents, instruments, or agreements as shall be necessary or appropriate to reflect the intent of the parties with respect to the amendments of the Agreement described herein.
|
5.
|
Entire Understanding.
This Amendment constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and any modification of this Amendment shall be in writing and shall be signed by a duly authorized representative of each party.
|
“LICENSEE”
|
“LICENSOR”
|
|||
GLYCOSAN BIOSYSTEMS
|
UNIVERSITY OF UTAH RESEARCH FOUNDATION
|
|||
By:
|
/s/ William P. Tew
|
By:
|
/s/ Thomas N. Parks
|
|
(Signature)
|
(Signature)
|
|||
Name:
|
William P. Tew, PhD
|
Name:
|
Thomas N. Parks
|
|
Title:
|
President & CEO
|
Title:
|
President
|
|
Date:
|
March 19, 2009
|
Date:
|
March 4, 2009
|
1.
|
I
ssu
e
Fee
. Licensee shall pay to Licensor a non-refundable amendment/license fee of Ten Thousand Dollars ($10,000) deemed payable in two payments of five thousand dollars ($5,000), six (6) months and twelve (12) months following execution of this Amendment.
|
2. |
D
u
e
D
ili
gence
. Licensee shall perform the following due diligence:
|
a.
|
Licensee shall secure additional funding which shall be no less than two million dollars ($2,000,000) on or before the first anniversary of this Amendment.
|
b.
|
Licensee shall initiate safety and toxicology studies of a Licensed Product on or before the first anniversary of this Amendment.
|
|
c.
|
Licensee shall engage a Notified Body for a CE Mark in the European Union or submit an IND to the FDA on or before the second anniversary of this Amendment.
|
d.
|
Licensee shall initiate a clinical trial utilizing a Licensed Product on or before the third anniversary of this Amendment.
|
3.
|
Sec
ti
o
n
1
.
6
of the Agreement is hereby deleted in its entirety and replaced with the following:
|
4. |
Exhibit A of the Agreement is hereby deleted in its entirety and replaced with the new Exhibit
|
5.
|
R
a
tifi
ca
ti
o
n
o
f
A
g
r
ee
m
en
t
.
Except as provided herein or as may be required to effectuate the intent of the parties with respect to the amendments described in paragraph 1 hereof, the parties hereby reaffirm and ratify the terms of the Agreement in their entirety.
|
6.
|
Fu
rt
he
r
A
ssu
r
ances
.
Each of Licensee and Licensor hereby agrees to execute, deliver, verify, acknowledge, and file any and all documents, instruments, or agreements as shall be necessary or appropriate to reflect the intent of the parties with respect to the amendments of the Agreement described herein.
|
7.
|
Entire Understanding.
This Amendment constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and any modification of this Amendment shall be in writing and shall be signed by a duly authorized representative of each party.
|
“LICENSEE”
|
“LICENSOR”
|
|||
GLYCOSAN BIOSYSTEMS, INC.
|
UNIVERSITY OF UTAH RESEARCH FOUNDATION
|
|||
By:
|
/s/ William P. Tew
|
By:
|
/s/ Thomas N. Parks
|
|
(Signature)
|
(Signature)
|
|||
Name:
|
William P. Tew, PhD
|
Name:
|
Thomas N. Parks
|
|
Title:
|
President & CEO
|
Title:
|
President
|
|
Date:
|
December 22, 2009
|
Date:
|
December 18, 2009
|
University No.
|
Country/Territory
|
Application No.
|
Title
|
Inventor(s)
|
Crosslinked
|
Glenn Preswich,
|
|||
U-3405
|
United States
|
12/234,445
|
Compounds and
|
Xiao Shu, Yi
|
12/244,135
|
Methods of Making
|
Luo, Kelly
|
||
and Using Thereof
|
Kirker
|
|||
Crosslinked
|
Glenn Preswich,
|
|||
U-3405
|
European Union
|
3799796.2
|
Compounds and
|
Xiao Shu, Yi
|
Methods of Making
|
Luo, Kelly
|
|||
and Using Thereof
|
Kirker
|
|||
Crosslinked
|
Glenn Preswich,
|
|||
U-3405
|
Canada
|
2,489,712
|
Compounds and
|
Xiao Shu, Yi
|
Methods of Making
|
Luo, Kelly
|
|||
and Using Thereof
|
Kirker
|
|||
Modified
|
Glenn Preswich,
|
|||
U-3656
|
United States
|
10/581,571
|
Macromolecules and
|
Xiao Shu,
|
Methods of Making
|
||||
and Using Thereof
|
||||
Modified
|
Glenn Preswich,
|
|||
U-3656
|
European Union
|
4813101.5
|
Macromolecules and
|
Xiao Shu,
|
Methods of Making
|
||||
and Using Thereof
|
||||
Modified
|
Glenn Prestwich,
|
|||
U-3656
|
Canada
|
2,549,295
|
Macromolecules and
|
Xiao Shu
|
Methods of Making
|
||||
and Using Thereof
|
||||
Modified
|
Glenn Prestwich,
|
|||
U-3656
|
Australia
|
2004297231
|
Macromolecules and
|
Xiao Shu
|
Methods of Making
|
||||
and Using Thereof
|
||||
U-3656 | Japan | 2006542843 |
Modified
Macromolecules and
Methods of Making
and Using Thereof
|
Glenn Prestwich,
Xiao Shu
|
1.
|
Due Diligence
. Due Diligence section in amendment 5 is hereby deleted in its entirety and replaced with the following:
|
a.
|
Licensee shall secure funding consisting of investment and grants which shall be no less than two million dollars ($2,000,000) on or before January 1, 2011.
|
b.
|
Licensee shall initiate safety and toxicology studies of a Licensed Product on or before
the first anniversary of this Amendment.
|
c.
|
Licensee shall engage a Notified Body for a CE Mark in the European Union or submit
an IND to the FDA on or before the second anniversary of this Amendment.
|
d.
|
Licensee shall initiate a clinical trial utilizing Licensed Product or obtain regulatory
approval for commercial sale on or before January 1, 2014.
|
2. |
Section 1.6
of the Agreement is hereby deleted in its entirety and replaced with the following:
|
|
Field of Use”
shall mean exclusive use all of PATENT RIGHTS, excluding animal therapeutics and animal health, in all countries and territories identified in Exhibit A except that:
|
|
within the United States only,
“Field of Use”
shall mean exclusive of use all of Patent Rights, excluding human and animal therapeutics, animal health, in vivo medical devices and pharmaceutical uses and applications. Including but not limited to in vitro medical devices, uses in cosmetics, uses in topical delivery of compounds which are not FDA-regulated therapeutic agents, reagents and platforms for in vitro cell and tissue culture, including such reagents and platforms that are medical devices, excluding in vivo medical devices, platforms and services for in vitro drug toxicology and efficacy testing, materials for preserving or extending the useful life of human organs and tissues, including such materials that are medical devices, excluding in vivo medical devices, in vivo xenograft models using human tissues, and any other uses not specifically excluded and,
|
|
within the United States only,
“Field of Use”
shall also mean co-exclusive use of PATENT RIGHTS to products and methods in which living tissue or cells are incorporated outside the body into a polymer platform at a facility other than the point-of-care facility, and the resulting hybrid device is then subsequently implanted in humans for therapeutic use (“TISSUE ENGINEERED PRODUCTS”). These co-exclusive rights shall be shared with no more that one other licensee and include Sublicensing rights consistent with the AGREEMENT.
|
3.
|
Ratification of Agreement.
Except as provided herein or as may be required to effectuate the intent of the parties with respect to the amendments described in paragraph 1 hereof, the parties hereby reaffirm and ratify the terms of the Agreement in their entirety.
|
4.
|
Further Assurances.
Each of Licensee and Licensor hereby agrees to execute, deliver, verify, acknowledge, and file any and all documents, instruments, or agreements as shall be necessary or appropriate to reflect the intent of the parties with respect to the amendments of the Agreement described herein.
|
5.
|
Entire Understanding.
This Amendment constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and any modification of this Amendment shall be in writing and shall be signed by a duly authorized representative of each party.
|
“LICENSEE”
|
“LICENSOR”
|
|||
GLYCOSAN BIOSYSTEMS, INC.
|
UNIVERSITY OF UTAH RESEARCH FOUNDATION
|
|||
By:
|
/s/ William P. Tew
|
By: |
/s/ Thomas N. Parks
|
|
(Signature)
|
(Signature)
|
|||
Name:
|
William P. Tew, PhD
|
Name: |
Thomas N. Parks
|
|
Title:
|
President & CEO
|
Title: |
President
|
|
Date:
|
September 23, 2010
|
Date: |
September 22, 2010
|
1.
|
Due Diligence
. Due diligence section in the 6
th
Amendment dated September 22, 2010 is hereby deleted in its entirety and replaced with the following:
|
a.
|
Within 90 days of completing the merger between Glycosan and Orthocyte, Licensee shall submit to the University’s Technology Commercialization Office a licensed product development plan and shall use commercially reasonable efforts to execute such plan.
|
2.
|
Section 1 of the 4
th
Amendment dated March 6, 2009 is hereby deleted in its entirety and replaced with the following:
|
YEAR 2
|
$ | 7,500 | ||
YEAR 3
|
$ | 0 | ||
YEAR 4
|
$ | 0 | ||
YEAR 5
|
$ | 0 | ||
YEAR 6
|
$ | 0 | ||
YEAR 7
|
$ | 15,000 | ||
YEAR 8
|
$ | 22,500 | ||
YEAR 9 | $ | 30,000 (and Beyond) |
3.
|
Assignability.
For the merger between Glycosan and Orthocyte only, the Licensor hereby waives the payment of a non-refundable assignment fee as set forth in Article 19, Assignability of the License Agreement, and assigns the License Agreement to BioTime. Further, Article 19 or the License Agreement is replaced in its entirety with the following:
|
4.
|
Fees.
Within 90 days of the closing of the merger between Glycosan and Orthocyte, the Licensee shall deliver to Licensor a non-refundable amendment/assignment fee consisting of $30,000 in the merger consideration received by Glycosan (BioTime shares and warrants) as se t forth in the Merger Agreement between Glycosan and OrthoCyte. Pursuant to the terms of the Merger Agreement, the value of the BioTime stock will be the 10 day trailing average of the BioTime stock price as listed on Nasdaq on the day preceding the execution of the Merger Agreement and the value of the BioTime warrants will be determined by Black-Scholes calculation of the warrant value on the day preceding execution of the Merger Agreement. Licensee shall also submit, with the assignment fee, a certified capitalization table for Glycosan at the time of the merger indicating BioTime shares and warrants received for Glycosan shares.
|
5.
|
Ratification of Agreement.
Except as provided herein or as may be required to effectuate the intent of the parties with respect to the amendments described in paragraphs 1, 2, and 3 hereof, the parties hereby reaffirm and ratify the terms of the Agreement in their entirety.
|
6.
|
Further Assurances.
Each of Licensee and Licensor hereby agrees to execute, deliver, verify, acknowledge, and file any and all documents, instruments, or agreements as shall be necessary or appropriate to reflect the intent of the parties with respect to the amendments of the Agreement described herein.
|
7.
|
Entire Understanding.
This Amendment constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and any modification of this Amendment shall be in writing and shall be signed by a duly authorized representative of each party.
|
“LICENSEE”
|
“LICENSOR”
|
|||
GLYCOSAN BIOSYSTEMS, INC.
|
UNIVERSITY OF UTAH RESEARCH FOUNDATION
|
|||
By:
|
/s/ William P. Tew
|
By:
|
/s/ Thomas N. Parks
|
|
(Signature)
|
(Signature)
|
|||
Name:
|
William P. Tew, PhD
|
Name:
|
Thomas N. Parks
|
|
Title:
|
President & CEO
|
Title:
|
President
|
|
Date:
|
February 10, 2011
|
Date:
|
February 8, 2011
|
1.
|
Issue Fee
. Licensee shall pay to Licensor a non-refundable, non-creditable amendment/license fee of One Hundred Twenty Thousand Dollars ($120,000) deemed payable in 4 quarterly payments of Thirty Thousand Dollars ($30,000). The first payment is due within ten days of the execution date of this Amendment and the 3 remaining payments of Thirty Thousand Dollars ($30,000) each are due within 10 days of the 3 calendar quarters following the Execution Date. For purposes of this Paragraph 1, “execution date” shall mean the date under Licensor’s signature below.
|
2.
|
Section 2 of the 7
th
Amendment dated February 7, 2011 (control number 1038.G/1535) is deleted in its entirety and replaced with the following:
|
YEAR 2 (2008)
|
$ | 7,500 | ||
YEAR 3 (2009)
|
$ | 0 | ||
YEAR 4 (2010)
|
$ | 0 | ||
YEAR 5 (2011)
|
$ | 0 | ||
YEAR 6 (2012)
|
$ | 0 | ||
YEAR 7 (2013)
|
$ | 0 | ||
YEAR 8 (2014)
|
$ | 22,500 | ||
YEAR 9 (2015 and beyond)
|
$ | 30,000 |
3.
|
Section 2 of the 6th Amendment dated September 23, 2010 (control number 1038.F/1495) is hereby deleted in its entirety and replaced with the following:
|
4.
|
“Future Patent Expenses”
. Section 10.1 of the License Agreement is hereby deleted in its entirety and replaced with the following:
|
5.
|
License to Prospective Licensee for Proposed Product.
From and after the fifth anniversary of the Effective Date of this amendment, Licensor shall provide written notice to Licensee of any request Licensor receives for an exclusive or non-exclusive license relating to any method or process, composition, product or component part thereof for which rights to the Technology Rights are necessary for manufacture, sale, use, distribution, or as applicable the reproduction, preparation of derivatives of, public performance of, public display of, or other practice of a proposed product or service (a “
Proposed Product
”) from any third party that desires to make, use, and sell such Proposed Product (a “
Prospective Licensee
”) within fifteen (15) business days of receiving such request. If Licensor fails to provide Licensee with written notice within 15 business days of receipt of a request from a third party the provisions provided below will not apply.
|
|
I.
|
In the event neither Licensee nor any Affiliate or Sublicensee is then developing or commercializing or has plans to develop or commercialize a Licensed Product or Licensed Service for use or sale in the same general industry as proposed by the Prospective Licensee for the Proposed Product, as identified in a report provided to Licensor hereunder, then within sixty (60) days of receipt of the notice by Licensee from Licensor that it desires Licensee to negotiate with the Prospective Licensee for the purpose of granting a sublicense under the Technology Rights to develop and commercialize the Proposed Product within the relevant portion of the Field of Use, Licensee shall elect one of the following options:
|
|
a.
|
Provide Licensor with documentation demonstrating to Licensor’s reasonable satisfaction that Licensee, an Affiliate or Sublicensee has initiated commercially reasonable efforts to develop, make, use, sell, distribute, and as applicable reproduce, prepare derivatives of, publicly perform, or publicly display a Licensed Product for use or sale that would commercially compete with the Proposed Product in the same general industry; or
|
|
b.
|
Provide Licensor with written notice that Licensee, an Affiliate or Sublicensee has plans to or will develop plans to initiate commercially reasonable efforts to develop or commercialize a Licensed Product or Licensed Service for use or sale in the same general industry that would commercially compete with the Proposed Product; or
|
|
c.
|
Begin good faith negotiations with the Prospective Licensee to sublicense Licensee’s rights in the Technology Rights to the extent necessary for such Prospective Licensee to develop, make, use, sell, distribute, use, and as applicable reproduce, prepare derivatives of, publicly perform, or publicly display such Proposed Product or other Licensed Product in the relevant portion of the Field of Use; or
|
|
d.
|
Grant back to Licensor limited rights in the Technology Rights for the sole purpose of allowing Licensor to license the Technology Rights to the extent necessary for such Prospective Licensee to develop, make, use, sell, distribute, and as applicable reproduce, prepare derivatives of, publicly perform, or publicly display such Proposed Product in the relevant portion of the Field of Use; or
|
|
e.
|
Provide Licensor with written notice demonstrating to Licensor’s reasonable satisfaction that the development or commercialization of such Proposed Product would have a reasonable likelihood of materially and adversely affecting the development or commercialization of any Licensed Product or Licensed Service then being developed or commercialized by Licensee, an Affiliate or Sublicensee.
|
|
II.
|
If Licensee elects to negotiate with a Prospective Licensee for a sublicense to develop, make, use, sell, distribute, and as applicable reproduce, prepare derivatives of, publicly perform, or publicly display a Proposed Product (or other Licensed Product) as provided for in Section I.(c)., Licensee shall make a good faith effort to complete negotiations with the Prospective Licensee within six (6) months from the date on which it begins negotiations. Upon Licensor’s written approval, this six (6) month period shall be extended to the extent Licensee reasonably demonstrates that such extension is reasonable in view of the circumstances. For the purpose of this Section II, Licensee shall have made a good faith effort to complete negotiations if it has offered a sublicense to the Prospective Licensee the terms of which include:
|
|
a.
|
Reasonable financial terms taking into account the field in which the sublicense is being offered and Licensee’s obligations to Licensor pursuant to this Agreement;
|
|
b.
|
Commercially reasonable minimum performance requirements;
|
|
c.
|
Non-financial terms which are commercially reasonable;
|
|
d.
|
The Licensor and Licensee agree that commercially reasonable terms offered to the Prospective Licensee means terms that cannot be more favorable to the Prospective Licensee than those obtained by Licensee from Licensor.
|
|
III.
|
Within thirty (30) days of the end of the six (6) month negotiation period (or as it may be extended under this Section 1 (the “Negotiation Period”), Licensee shall:
|
|
a.
|
Provide Licensor a copy of the fully executed sublicense with such Prospective Licensee; or
|
|
b.
|
Meet with Licensor representatives and provide documentation of reasons that (A) Licensee and or the Prospective Licensee chose not to proceed with good faith negotiations, or (B) negotiations between Licensee and such Prospective Licensee failed.
|
|
IV.
|
In the event that (a) Licensee elects to pursue the option set forth in Section I.(c), and Licensee fails to demonstrate to Licensor’s reasonable satisfaction that Licensee has made a good faith effort as required by Section II, or (2) Licensee fails to submit to Licensor a plan to develop a product or service that is essentially equivalent to the product or service of the Prospective Licensee and (b) the Prospective Licensee notifies the Licensor, following the end of the negotiation period, that the Prospective Licensee is willing to license the Technology Rights directly from the Licensor on substantially the same terms previously offered to the Licensee, at the Licensor’s election, then this Agreement shall be deemed automatically amended to the extent reasonably necessary to enable the Licensor, and Licensor shall have the right, to negotiate a co-exclusive license to the Technology Rights for the Prospective Licensee, provided however, that the Field of Use for the Technology Rights will not extend beyond that which is necessary for the Prospective Licensee to make, sell, offer to sell, or use its product or services which are not commercially competing with any Licensed Product or Licensed Service of the Licensee.
|
|
V.
|
The Licensor and Licensee agree that the dispute resolution terms in the original license agreement will apply to this amendment.
|
6.
|
Exhibit A in Amendment 6 dated December 10, 2009 (control number 1038.E/1405) is hereby deleted in its entirety and replaced with the new Exhibit A attached hereto.
|
7.
|
Ratification of Agreement.
Except as provided herein or as may be required to effectuate the intent of the parties with respect to the amendments described in paragraph 1 hereof, the parties hereby reaffirm and ratify the terms of the Agreement in their entirety.
|
8.
|
Further Assurances.
Each of Licensee and Licensor hereby agrees to execute, deliver, verify, acknowledge, and file any and all documents, instruments, or agreements as shall be necessary or appropriate to reflect the intent of the parties with respect to the amendments of the Agreement described herein.
|
9.
|
Entire Understanding.
This Amendment constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and any modification of this Amendment shall be in writing and shall be signed by a duly authorized representative of each party.
|
“LICENSEE”
|
“LICENSOR”
|
|||
BioTime, Inc.
|
University of Utah Research Foundation
|
|||
By:
|
/s/ William P. Tew
|
By:
|
/s/ Thomas N. Parks
|
|
(Signature)
|
(Signature)
|
|||
Name:
|
William P. Tew, PhD
|
Name:
|
Thomas N. Parks
|
|
(Please Print)
|
(Please Print)
|
|||
Title:
|
Chief Commercial Officer
|
Title:
|
President
|
|
Date:
|
August 13, 2012
|
Date:
|
August 20, 2012
|
ARTICLE l. DEFINITIONS
|
1
|
ARTICLE 2. LICENSE GRANT
|
3
|
ARTICLE 3. TERM OF AGREEMENT
|
4
|
ARTICLE 4. FEES & ROYALTIES
|
4
|
ARTICLE 5. COMMERCIAL DILIGENCE & MILESTONES
|
5
|
ARTICLE 6. EQUITY OWNERSHIP
|
6
|
ARTICLE 7. CONFIDENTIALITY
|
6
|
ARTICLE 8. QUARTERLY & ANNUAL REPORTS
|
6
|
ARTICLE 9. PAYMENTS, RECORDS AND AUDITS
|
8
|
ARTICLE 10. PATENT PROSECUTION AND MAINTENANCE
|
8
|
ARTICLE 11. PATENT MARKING
|
9
|
ARTICLE 12. TERMINATION BY LICENSOR
|
9
|
ARTICLE 13. TERMINATION BY LICENSEE
|
10
|
ARTICLE 14. DISPOSITION OF LICENSED PRODUCTS ON HAND
|
10
|
ARTICLE 15. WARRANTY BY LICENSOR
|
10
|
ARTICLE 16. INFRINGEMENT
|
11
|
ARTICLE 17. INSURANCE
|
11
|
ARTICLE 18. WAIVER
|
12
|
ARTICLE 19. ASSIGNABILITY
|
12
|
ARTICLE 20. INDEMNIFICATION BY LICENSEE
|
12
|
ARTICLE 21. INDEMNIFICATION BY LICENSOR
|
12
|
ARTICLE 22. NOTICES
|
13
|
ARTICLE 23. REGULATORY COMPLIANCE
|
13
|
ARTICLE 24. GOVERNING LAW
|
14
|
ARTICLE 25. RELATIONSHIP OF PARTIES
|
14
|
ARTICLE 26. USE OF NAMES
|
14
|
ARTICLE 27. DISPUTE RESOLUTION
|
14
|
ARTICLE 28. GENERAL PROVISIONS
|
15
|
EXHIBIT “A”
|
17
|
Patent Rights
|
17
|
EXHIBIT “B”
|
18
|
LICENSE TO THE UNITED STATES GOVERNMENT
|
18
|
EXHIBIT “C”
|
19
|
Quarterly Report
|
19
|
EXHIBIT “D
|
20
|
Due Diligence
|
20
|
|
a.
|
publish the general scientific findings from research conducted in whole or in part at the University related to Patent Rights; and
|
|
b.
|
manufacture, have manufactured, use, or transfer Patent Rights for research, teaching and other educationally-related purposes
|
|
a.
|
Any sublicense granted by Licensee to a Sublicensee shall incorporate all of the terms and conditions of this Agreement, which shall be binding upon each Sublicensee as if such Sublicensee were a party to this Agreement. Licensee shall collect and guarantee all payments due Licensor from Sublicensees. In each such sublicense, the Sublicensee will be prohibited from granting further sublicenses.
|
|
b.
|
If Licensee becomes Insolvent, Licensor’s proportionate share of all payments then or thereafter due and owing to Licensee from its Sublicensees for the sublicense of the Patent Rights will, upon notice from Licensor to any such Sublicensee, become payable directly to Licensor; provided however, that Licensor will remit to Licensee the amount by which such payments exceed the amounts owed by Licensee to Licensor.
|
|
c.
|
Licensee shall within thirty (30) days of: (a) execution, provide Licensor with a copy of each sublicense granted by Licensee hereunder and any amendments thereto or terminations thereof; and (b) upon receipt, summarize and deliver copies of all reports due to Licensee from Sublicensees.
|
|
d.
|
Upon any termination of this Agreement, Sublicensees rights shall at Licensor’s option, be (i) assigned to and assumed by Sublicensee, or (ii) terminated.
|
|
a.
|
If any patent or any claim thereof included within Licensor’s Patent Rights shall be found invalid by a court of competent jurisdiction and last resort, from which decision no appeal may be taken, Licensee’s obligation to pay Licensor royalties based on such patent or claim or any claim patentably indistinct therefrom shall cease as of the date of such decision. Licensee shall not, however, be relieved from paying Licensor any royalties, fees, expenses, or other liabilities that accrued prior to the date of such decision or that are based on any of Licensor’s Patent Rights not the subject of such decision.
|
YEAR 2
|
$ | 7,500 | ||
YEAR 3
|
$ | 15,000 | ||
YEAR 4
|
$ | 22,500 | ||
YEAR 5 | $ | 30,000 (and Beyond) |
|
(a)
|
Licensee shall deliver to Licensor within six (6) months from Effective Date, a complete and accurate commercialization plan detailing each phase of development, the target markets and time frames toward first sale of the Licensed Products and Licensed Methods.
|
|
(b)
|
Licensee shall submit within eight (8) months from Effective Date, at least one grant application regarding development of technology licensed in this Agreement.
|
|
(c)
|
Licensee shall secure within one year from Effective Date office and laboratory space to conduct its business.
|
|
(d)
|
Licensee shall spend at least three hundred thousand dollars ($300,000) on research, development and commercialization of Licensed Products and/or Licensed Methods during the two-year period following the date of this Agreement. Included in such expense shall be normal corporate start-up costs including, but not limited to, corporate overhead such as rent, salaries and benefits, insurance, legal, and laboratory and equipment acquisition
|
|
(e)
|
Net Sales shall have occurred on or before the second anniversary of the Effective Date.
|
|
a.
|
number of Licensed Products manufactured, leased and sold by and/or for Licensee, Affiliates and all Sublicensees;
|
|
b.
|
accounting for all Licensed Methods used or sold by and/or for Licensee, Affiliates and all Sublicensees;
|
|
c.
|
accounting for Net Sales, noting the deductions applicable as provided in Section 1.10;
|
|
d.
|
royalties due under Section 4.4;
|
|
e.
|
running royalties due under Section 4.3 and 4.6;
|
|
f.
|
royalties due on other payments from Sublicensees and assignees under Section 4.5;
|
|
g.
|
total royalties due;
|
|
h.
|
names and addresses of all Sublicensees of Licensee;
|
|
i.
|
the amount spent on product development; and
|
|
j.
|
the number of full-time equivalent employees working on the Licensed Products and/or Licensed Methods.
|
|
a.
|
a warranty or representation by Licensor as to the validity or scope of any Patent Rights.
|
|
b.
|
a warranty or representation by Licensor that anything made, used, sold or otherwise disposed of pursuant to any license granted under this Agreement is or will be free from infringement of intellectual property rights of third parties.
|
|
c.
|
an obligation by Licensor to bring or prosecute actions or suits against third parties for patent infringement, except as expressly provided in Article 16 hereof.
|
|
d.
|
conferring by implication, estoppel or otherwise any license or rights under any patents of Licensor other than Patent Rights.
|
U No.
|
Matter
|
Application No.
Date of Filing
|
Title
|
Inventor(s)
|
U-3405
|
21101.0036U1
Provisional
|
60/390,504
6/21/2002
|
Disulfide Crosslinked
Hyaluronan Hydrogels
|
Glenn Preswich, Xiao
Shu, Yi Luo, Kelly
Kirker
|
U-3405
|
21101.0036P1
PCT
|
PCT/US03/15519
5/15/03
|
Crosslinked
Compounds and
Methods of Making and
Using Thereof
|
Glenn Preswich, Xiao
Shu, Yi Luo, Kelly
Kirker
|
U-3405
|
21101.0036U2
Nationalized, United States
|
10/519,173
12/20/04
|
Crosslinked
Compounds and
Methods of Making and
Using Thereof
|
Glenn Preswich, Xiao
Shu, Yi Luo, Kelly
Kirker
|
U-3405
|
21101.0036CA1
Nationalized, Canada
|
2,489,712
5/15/03
|
Crosslinked
Compounds and
Methods of Making and
Using Thereof
|
Glenn Preswich, Xiao
Shu, Yi Luo, Kelly
Kirker
|
U-3405
|
21101.0036EP1
Nationalized, Europe
|
03799796.2
5/15/03
|
Crosslinked
Compounds and
Methods of Making and
Using Thereof
|
Glenn Preswich, Xiao
Shu, Yi Luo, Kelly
Kirker
|
U-3656
|
21101.0051P1
Provisional
|
60/526,797
12/4/2003
|
Modified
Macromolecules and
Methods of Making and
Using Thereof
|
Glenn Prestwich,
Xiao Shu
|
U-3656
|
21101.0051U1
PCT
|
PCT/US04/040726
12/6/2004
|
Modified
Macromolecules and
Methods of Making and
Using Thereof
|
Glenn Prestwich,
Xiao Shu
|
Signed:
|
|
Date:
|
|||
Name:
|
Raymond F. Gesteland
|
Title:
|
President
|
(title) | , | U- |
(title) | , | U- |
___Yes ___No
|
In the designated reporting period, did your company or any Sublicensee of the above referenced technology have 500 or more mployees? This information is required to determine and report large or small entity status in the United States.
|
___Yes ___No
|
In the designated reporting period, did your company or any Sublicensee of the above referenced technology have more than 50 mployees? This information is required to determine and report large or small entity status in Canada.
|
LIFEMAP SCIENCES, INC.
|
||||
By: |
/s/ Kenneth S. Elsner
|
|||
Title: |
Chief Operating Officer
|
|||
/s/ Alfred D. Kinsgley
|
||||
Alfred D. Kingsley
|
||||
Greenway Partners, L.P.
|
||||
By: |
Greenhouse Partners, L.P.,
|
|||
its general partner
|
||||
By: |
/s/ Alfred D. Kinsgley
|
|||
Alfred D. Kingsley, General Partner
|
1.
|
INVESTMENT IN THE COMPANY; PURCHASE OF SHARES
|
|
1.1.
|
Subject to and in accordance with the terms and conditions of this Agreement, at the Closing (as defined below), the Company shall issue to BioTime, and BioTime shall purchase from the Company, 87,456 (Eighty Seven Thousand Four Hundred and Fifty Six) Ordinary Shares of the Company (the “
New Issue Shares
”). The purchase price for each New Issue Share is identical to the price per share pursuant to the 2010 SPA, i.e. US$40.02 (Forty US Dollars and Two cents). The total purchase price that is due to the Company hereunder is US$ 3,499,999.10 (Three Million, Four Hundred and Ninety Nine Thousand, Nine Hundred and Eighty Nine US Dollars and Ten Cents) (the "
Purchase Price
").
|
|
1.2.
|
The Purchase Price shall be paid by BioTime to the Company by delivery of that number of shares of freely tradable BioTime common stock which are listed on the NYSE MKT (the "
Traded Stock
") having an aggregate value equal to the Purchase Price, calculated by dividing the Purchase Price by the average closing sales price of a share of BioTime common stock on the NYSE MKT for the ten (10) actual trading days ending on the last actual trading day prior to the Effective Date (it is noted that the NYSE MKT was closed on October 29
th
and 30
th
due to adverse weather conditions) (the "
Average Price
"). It is understood and agreed that no fraction of a share of Traded Stock shall be issued to the Company. Rather, BioTime shall round any fraction down to the nearest whole number of shares of Traded Stock and in lieu of such fractional share interest, BioTime shall pay an amount in cash.
|
|
1.3.
|
The New Issue Shares issued to BioTime hereunder shall have the same rights and privileges as the Company's existing Ordinary Shares, as set forth in the Third Amended and Restated Articles of Association of the Company, as amended (the "
Amended Articles
") and shall be considered, in all respects and for all purposes, part of the same class of Ordinary Shares.
|
|
1.4.
|
The aggregate number of New Issue Shares issuable to BioTime by the Company under this Agreement is equal to 18.26% (Eighteen and Twenty-Six One Hundredths percent) of the share capital of the Company on a fully-diluted basis immediately following the Closing and the closing of the Zak Investment.
|
2.
|
THE CLOSING
|
|
2.1.
|
Consummation of the purchase and issuance of the New Issue Shares to BioTime (the “
Closing
”) shall take place at 10 am within 3 (three) business days following the date upon which all of the Closing Conditions, as defined below, have been completed (the “
Closing Date
”), at the offices of Baratz & Co. Attorneys-at-Law & Notaries, at 1 Azrieli Center, Round Tower, 18th Floor, Tel-Aviv 67021, Israel, or at such other time, date and place as the Parties shall mutually agree.
|
|
2.2.
|
The obligation of BioTime to purchase and pay for the New Issue Shares, and the obligation of the Company to issue the New Issue Shares, shall be conditioned upon (a) the completion of all of the transactions described in the subsections of this Section 2.2, (b) all of the representations and warranties made by each Party herein being true and correct when made and being true and correct in all material respects on and as of the Closing Date as though made on the Closing Date, (c) each Party having performed in all material respects all obligations required of such Party under this Agreement to be performed by it on or before the Closing; and (d) the conditions set out in Section 2.4 below being met (collectively, the “
Closing Conditions
”); provided, however, that the performance of a Party’s obligations, and the truthfulness and correctness of the representations and warranties made by a Party to this Agreement, shall not be a Closing Condition with respect to that Party. At the Closing, the following transactions shall take place, all of which shall be deemed to have occurred simultaneously, and none of such transactions shall be deemed to have been completed or any document delivered until all such transactions have been completed and all required documents delivered:
|
|
2.2.1.
|
The Company will issue and allot the New Issue Shares to BioTime, and deliver to BioTime a share certificate, evidencing the New Issue Shares duly executed and issued to BioTime by the Company, in the form attached hereto as
Schedule 2.2.1
;
|
|
2.2.2.
|
BioTime shall deliver to the Company a stock certificate representing the number of BioTime common shares required to be paid as Traded Stock pursuant to Section 1.2 above or a true copy of the registration of such shares in the name of the Company in the stockholder register of BioTime's stock transfer agent, American Stock Transfer & Trust Company.
|
|
2.2.3.
|
The Company shall deliver to BioTime a true and correct copy of a resolution of the Company’s shareholders (the "
Shareholders' Resolution
"), substantially in the form attached hereto as
Schedule 2.2.3
, approving,
inter alia
, the execution and performance of this Agreement;
|
|
2.2.4.
|
The Company shall deliver to BioTime, a true and correct copy of the resolution of the Board of Directors of the Company (the “
Board
”), substantially in the form attached hereto as
Schedule 2.2.4
, approving,
inter alia
, the execution of this Agreement, the issuance of the New Issue Shares and the transactions contemplated herein;
|
|
2.2.5.
|
The Company shall deliver to BioTime, validly executed waivers by or on behalf of all existing shareholders of the Company, substantially in the form attached hereto as
Schedule 2.2.5
with respect to any preemptive rights, first refusal rights, anti-dilution rights, or similar rights such shareholders hold in connection with the transactions contemplated herein, pursuant to the Amended Articles or any applicable law or agreement, unless such rights have lapsed or have been exercised;
|
|
2.2.6.
|
The Company shall deliver to BioTime, a compliance certificate, duly executed by the Chief Executive Officer of the Company ("
CEO
"), dated as of the date of the Closing, substantially in the form attached hereto as
Schedule 2.2.6
confirming that all of the representations and warranties made by the Company herein were true and correct when made and are true and correct in all material respects on and as of the Closing Date as though made on the Closing Date, and that the Company has performed in all material respects all obligations required under this Agreement to be performed by it on or before the Closing;
|
|
2.2.7.
|
The Company shall register the issuance and the allotment to BioTime of New Issue Shares, in the share register of the Company and shall deliver a copy of the register, in the form of
Schedule 2.2.7
, to BioTime; and
|
|
2.2.8.
|
The Company and ES Cell International Pte Ltd. ("
ESI
") shall have entered into the Fourth Amendment to the Exclusive License Agreement between the Company and ESI, dated March 22, 2006, as amended and supplemented (the "
ES
I
License Agreement
") in the form attached hereto as
Schedule
2.2.8
.
|
|
2.3.
|
Immediately following the Closing and in no event later than 14 (fourteen) days after the date of Closing the Company shall (i) make all filings and registrations as may be necessary to perfect the issuance of the New Issue Shares to BioTime upon the Closing and (ii) provide BioTime with a copy of the extract from the Israeli Registrar of Companies’ reflecting all of the above filings.
|
2.4.
|
A condition to Closing for both the Company and BioTime is that the NYSE MKT shall have approved the Traded Stock to be issued at Closing for listing on the exchange.
|
3.
|
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
|
3.1.
|
The Company was incorporated on November 20, 2005 as a private company, limited by shares, under Reg. No. 51-375239-4;
|
3.2.
|
The Company is a company duly organized and validly existing under the laws of Israel and has all requisite corporate power and authority to carry on its business as currently conducted or proposed to be conducted and to own or lease and to operate the properties that it now owns or leases;
|
3.3.
|
The Company has the legal and/or other right to enter into this Agreement, and this Agreement does not conflict with and/or violate the terms of any other agreement to which the Company is a party;
|
3.4.
|
The execution and delivery of this Agreement and the performance of Company’s obligations hereunder have been duly authorized by all necessary action on the part of the Company, and this Agreement has been duly executed and delivered by, and constitutes a valid and binding agreement of, the Company;
|
3.5.
|
Subject to the fulfillment of the Closing Conditions, the issuance of the New Issue Shares to BioTime will not be subject to any preemptive rights, rights of first refusal or other preferential or third-party rights that have not been waived;
|
3.6.
|
The Company is not under any obligation to register any of its shares or other securities;
|
3.7.
|
The Amended Articles in the form attached hereto as
Schedule 3.7
, are the Articles of Association of the Company in effect on the date hereof and shall not be amended prior to the Closing;
|
3.8.
|
Immediately prior to the Closing, the authorized share capital of the Company shall consist of NIS 100,000 divided into 10,000,000 (Ten Million) Ordinary Shares, par value NIS 0.01 each, of which 365,427 (Three Hundred Sixty-Five Thousand Four Hundred Twenty-Seven) Ordinary Shares are allotted and issued on the date hereof;
Schedule 3.8
sets forth a true, correct and complete list of the shareholders of the Company and the number of shares issued and outstanding on the date hereof and immediately prior to the Closing;
|
3.9.
|
The current directors of the Company are Mr. Michael David West, Mr. Alfred Dennis Kingsley, Mr. Robert Peabody, Mr. David Shlachet, Mr. Ophir Shahaf, Dr. Raphael Hofstein and Adv. Mirella Moshe. Other than as set forth in the Amended and Restated Shareholders Agreement (the "
SHA
") and the Amended Articles, the Company has no agreement, obligation or commitment with respect to the election of any individual or individuals to the Board of the Company and there is no voting agreement or other arrangement among the Company's shareholders. There are no agreements, commitments or understandings, whether written or oral, with respect to any compensation to be provided to the Company's directors (in their capacity as such);
|
3.10.
|
Schedule 3.10
sets forth a complete list of the shareholders and their shareholdings immediately after the Closing and after the Zak Investment. Except as set forth in
Schedule 3.10
, there are no options, warrants, calls or rights of any kind to purchase or acquire, and no securities convertible into, securities of the Company, and there are no other agreements of any kind or character obligating the Company to issue, transfer or sell any of its capital securities and there is no person or entity (including the Company’s shareholders) holding any right whatsoever to receive shares, or other securities or rights, in the Company, whether by virtue of options or by virtue of the holding of convertible securities or by virtue of any other rights whatsoever. As of the Closing, the New Issue Shares will be duly authorized and validly issued, and will be fully paid and non-assessable, and the New Issue Shares will be free and clear of any liens, encumbrances, options and restrictions created by the Company, its shareholders or any third party rights and interests, except as specified in said
Schedule 3.10
or the Amended Articles;
|
3.11.
|
Subject to the fulfillment of the Closing Conditions, the Company has the necessary power and authority to execute this Agreement, to issue the New Issue Shares and to carry out and perform its obligations hereunder and neither the execution nor the delivery of this Agreement nor the performance by the Company of the terms hereof nor the issuance of the New Issue Shares to BioTime will result in a violation of any provision of law, rule or regulation, or result in a breach of the terms or conditions of, or conflict with or constitute a default under, the Amended Articles of the Company or any agreement, governmental license, order, writ, decree, injunction, judgment or regulatory restriction or obligation to which the Company is party or by which it or its properties or assets are bound or affected, or result in the creation or imposition of a lien, charge, security interest or other encumbrance on the New Issue Shares or the assets or properties of the Company;
|
3.12.
|
The Company has adopted all resolutions necessary to enter into this Agreement and, subject to the fulfillment of the Closing Conditions, to fulfill its undertakings therein, and in accordance with such resolutions, Dr. Charles Irving has been authorized by the Board to sign this Agreement on behalf of the Company, and other than as set forth in this Agreement, the Company's execution and performance of this Agreement do not require the consent, approval or action of, or any filing with or notice to, any corporation, bank, person, any other third party, firm or any governmental or judicial authority in relation to the transactions contemplated herein;
|
3.13.
|
Subject to the fulfillment of the Closing Conditions, no person or entity whatsoever has any right of first refusal or other preemption rights of any kind, relating to the issuance of the New Issue Shares to BioTime (or has waived such right); and there exists no hindrance, whether by statute, contract, or otherwise, preventing the Company from entering into this Agreement, and fulfilling its undertakings in terms hereof;
|
3.14.
|
The Company has delivered to BioTime a copy of its audited annual financial statements as of December 31, 2011 and its unaudited financial statements as of June 30, 2012 (collectively, the "
Financial Statements
"), which Financial Statements are true, correct and complete in all material respects, and which Financial Statements have been prepared in accordance with IFRS consistently applied, and fairly and accurately present in all material respects the financial position of the Company as at such dates and the results of its operations for the periods then ended. Except as set forth in
Schedule
3.14
, as from July 1, 2012 there has not been: (i) any material change in the assets, liabilities, condition (financial or otherwise) or business of the Company; (ii) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the assets, properties, conditions (financial or otherwise), operating results or business of the Company; (iii) any waiver by the Company of a material right or a material debt owed to it; (iv) any satisfaction or discharge of any material lien, material claim or material encumbrance or payment of any material obligation by the Company, except in the ordinary course of business and that is not individually or in the aggregate adverse to the assets, properties, condition (financial or otherwise), operating results or business of the Company; (v) any material change or amendment to a material agreement by which the Company or any of its respective assets or properties is bound or subject; (vi) any material change in any compensation arrangement or agreement with any employee of the Company and payment or increase by the Company of any bonuses, salaries, or other compensation to any shareholder, director, officer, employee or consultant, or entry into any employment, severance, or similar agreement with any director, officer, employee or consultant; (vii) any loans made by the Company to its employees, officers, or directors other than travel advances made in the ordinary course of business; (viii) any sale, transfer or lease of, or mortgage or pledge of imposition of lien on, any of the Company’s assets; (ix) the Company has not incurred any material liabilities, debts or obligations in excess of $20,000 each, whether accrued, absolute or contingent and has no indebtedness for money borrowed in excess of $20,000; (x) any declaration or payment of any dividend or other distribution or payment in respect of shares of the Company; (xi) any change in the accounting methods used by the Company; (xii) any material adverse change in the liabilities, condition (financial or otherwise) or business of the Company from that reflected in the Financial Statements; (xiii) any other event or condition of any character that would materially adversely affect the assets, properties, condition (financial or otherwise), operating results or business of the Company (it being understood and agreed that BioTime is fully apprised of issues that have arisen and the risks inherent to the Company's research and development program, and acknowledges that there cannot be any certainty as to a successful outcome); (xiv) any agreement or commitment by the Company to do any of the things described in this Section 3.14;
|
3.15.
|
The Company has filed all tax returns and reports (including information returns and reports) as required by law and has paid all taxes and other assessments due, if any. Each such return or report was true and complete in all material respects when filed. None of such returns or reports has been audited by any taxing authority and the Company has not been advised that any of such returns or reports will be audited. Except as set forth in the Financial Statements, since the date of its incorporation, the Company has not incurred any taxes, assessments or governmental charges other than in the ordinary course of business and the Company has made adequate provisions on its books of account for all taxes, assessments and governmental charges with respect to its business, properties and operations for such period. In accordance with information received from employees, and service providers, the Company has withheld or collected from each payment made to each of its employees, or service providers the amount of all taxes required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories;
|
3.16.
|
The Company has no subsidiaries and does not own, directly or indirectly, any capital stock of, or have any direct or indirect equity or ownership interest in, the business of any corporation or entity;
|
3.17.
|
There is no action, proceeding, or to the best of the Company’s knowledge, investigation or inquiry pending or threatened affecting the Company or its assets;
|
3.18.
|
The Company is not involved in any litigation nor does the Company know of any claim or threat of such litigation before judicial or quasi-judicial instances. The Company has no knowledge of any litigation to which any of its shareholders are party which may have repercussions or any effect on the business of the Company. The Company is not a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or governmental agency or instrumentality;
|
3.19.
|
Schedule 3.19
hereto contains a complete and correct list and description of the patent rights and technology to which the Company was granted an exclusive license to exploit from ESI pursuant to the ESI License Agreement and the Amended and Restated Research and License Agreement between the Company and Hadasit dated October 7, 2010 (collectively, the "
Licensed IP
"). Save as set forth in
Schedule 3.19
, and to the best of the knowledge of the Company, the Licensed IP and the intellectual property licensed to the Company by Geron Corporation pursuant to the Cross License Agreement of November 24, 2006 contains all intellectual rights and proprietary rights, necessary to enable the Company to carry on its activities as currently conducted. To the best of the knowledge of the Company and without enquiry, the exploitation by Teva of the rights that may be granted to Teva under the Teva Option Agreement shall not infringe any third party intellectual property rights other than potentially those of Wisconsin Alumni Research Foundation ("
WARF
") and Advanced Cell Technology (“
ACT
”). To the best of the knowledge of the Company, licenses from WARF and ACT may be required in order to carry on business in the stem cell field in the USA in general, and in the field of retinal pigment epithelial cells in particular. Except as set forth in
Schedule 3.19
, the Company has not granted, and there are no outstanding licenses or agreements of any kind relating to the Licensed IP, nor is the Company bound by or a party to any option, license or agreement of any kind with respect to the Licensed IP. Except as set forth in
Schedule 3.19
, and to the best of the knowledge of the Company, the Company is not obligated to pay any royalties or other payments to third parties with respect to the use of the Licensed IP or in connection with the conduct of its activities as currently conducted. To the best of the knowledge of the Company, the use of the Licensed IP and the current and proposed conduct of the Company's activities and business do not infringe on any intellectual property rights of any person, and will not infringe on any intellectual property rights of any person other than WARF and/or ACT. To the best of the Company's knowledge, there is no unauthorized use, infringement or misappropriation of the Licensed IP by any third party;
|
3.20.
|
Save as may be otherwise stipulated in the Restated Hadasit License Agreement, the Product Development Agreement attached thereto and/or in the Additional Research Agreement
between the Company and Hadasit, dated October 7, 2010 as amended
, the Licensed IP and all intellectual property of any kind, which has been developed and is currently being developed by any employee or consultant of the Company in the framework of his/her employment or consultancy with the Company, is and shall be the sole property of the Company. To the best knowledge of the Company, no such agreements have been violated by any employee or consultant, or former employee or consultant, or other person;
|
3.21.
|
Schedule 3.21
hereto contains status reports on the Licensed IP, both dated August 16, 2012, prepared by the Company’s patent attorneys;
|
3.22.
|
Schedule 3.22
attached hereto contains a complete and correct list as of the date hereof of all material contracts to which the Company is a party or by which it or any of its properties is bound (the "
Material Agreements
"). Each Material Agreement is in full force and effect and neither the Company nor, to the best knowledge of the Company, any other party thereto is in breach thereof. Except as set forth in
Schedule 3.22
, the Company has no employment or consulting contracts, deferred compensation agreements or bonus, incentive, profit-sharing, or pension plans currently in force and effect, or any understanding with respect to any of the foregoing. To the Company’s best knowledge, no event has occurred or circumstance exists that (with or without notice or lapse of time) contravene, conflict with, or result in a material violation or breach of, or give the Company or any other person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Material Agreement. Except for the Material Agreements, the Company is not a party to, or bound by, any other agreements, understandings, instruments, contracts, proposed transactions that may involve or relate to (i) obligations (contingent or otherwise) of, or payments to, the Company, exceeding $20,000 each, or (ii) intellectual property rights of the Company and/or the intellectual property rights of any third party, or (iii) product distribution rights, or (iv) provisions restricting or affecting the development, manufacture or distribution of the Company’s products or services, or (v) restrictions or limitations on the Company’s right to do business or compete in any area or any field with any person, firm or company, or (vi) indemnification by the Company with respect to infringements of proprietary rights; (vii) the issuance of any securities of the Company or any rights in respect thereto or any commitment or understanding in respect of the foregoing, (viii) securities of the Company, including voting or consent agreements with respect to any security of the Company or the voting by any director of the Company, or (ix) loans or credits; or which is otherwise material to the Company;
|
3.23.
|
Except as set forth in
Schedule 3.23
attached hereto, no officer or director of the Company, or any Affiliate of any such person or the Company, has or has had, either directly or indirectly, (a) an interest in any person or entity which (i) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by the Company, or (ii) purchases from or sells or furnishes to the Company any goods or services, or (b) a beneficial interest in any contract or agreement to which the Company is a party or by which it may be bound or affected. Except as set forth in such schedule, there are no existing arrangements or proposed transactions between the Company and any officer, director, or holder of 5% or more of the share capital of the Company, or to the best knowledge of the Company, any Affiliate or associate of any such person. No employee, shareholder, officer, or director of the Company is indebted to the Company, nor is the Company indebted (or committed to make loans or extend or guarantee credit) to any of them other than advances for travel, salary and other expenses in the Company’s ordinary course of business. ("
Affiliate
" means, with respect to any specified person or entity, any other person or entity controlling, controlled by or under common control with such specified person or entity. “
Control
” means, with regard to any entity, the legal, beneficial or equitable ownership, direct or indirect, of fifty percent (50%) or more of the capital stock (or other ownership interest, if not a corporation) of such entity ordinarily having voting rights, or effective control of the activities of such entity regardless of the percentage of ownership);
|
3.24.
|
The Company has provided BioTime with accurate and complete copies of the minutes of every meeting of the Company’s shareholders and Board (and any committee thereof). No other resolutions have been passed, enacted, consented to or adopted by the directors (or any committee thereof) or shareholders of the Company. The corporate records of the Company have been maintained in accordance with all applicable statutory requirements and are complete and accurate in all material respects;
|
3.25.
|
Schedule 3.25
attached hereto contains a complete and accurate list of all officers, employees and consultants of the Company (each a “
Representative
”). To the Company’s knowledge, none of the Representatives is a party to, or otherwise bound by, any agreement or arrangement (including any confidentiality, non-competition, proprietary rights agreement, licenses, covenants or commitments of any nature), or subject to any Order (as defined below) or any other restriction that adversely affects or will affect the performance of his/her duties as an employee, officer or consultant of the Company or the ability of the Company to conduct its business as currently conducted or proposed to be conducted. To the knowledge of the Company, the carrying on of the Company's business by its Representatives as currently conducted or proposed to be conducted, and the conduct by the Company of its business as currently conducted or proposed to be conducted, will not conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such Representatives of the Company is now obligated. To the knowledge of the Company, no officer or other key employee of the Company intends to terminate its engagement with the Company;
|
3.26.
|
The Company has not provided any third party guarantees whatsoever, whether to secure the Company's commitments or guarantee the commitments of any other person or entity (including the Company's employees). No guarantees were given by third parties (including by the Company's founders) to secure the Company's commitments to any other or others, which are in force at the date hereof.
|
3.27.
|
Neither the Company nor, to the Company’s knowledge, any of its officers, directors or shareholders, has employed or made any agreement with any broker, finder or similar agent or any person or firm, which will result in the obligation of the Company or BioTime to pay any finder’s fee, brokerage fees or commission or similar payment in connection with the transactions contemplated hereby; and
|
3.28.
|
No representation or warranty by the Company in this Agreement or in any written statement or certificate furnished or to be furnished by the Company to BioTime pursuant to this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein in the light of the context in which they are made not misleading. The Company has provided BioTime with all information requested by BioTime.
|
4.
|
REPRESENTATIONS AND WARRANTIES OF BIOTIME
|
4.1.
|
All actions on the part of BioTime necessary for the authorization, execution, delivery, and performance by it of this Agreement and the transactions contemplated herein, have been duly taken to authorize the execution, delivery and performance by it of this Agreement and the transactions contemplated herein, and this Agreement and the transactions contemplated herein are legal, valid, and binding obligations, enforceable as to BioTime in accordance with their terms. The execution, delivery and performance of this Agreement and the transactions contemplated herein do not and will not violate (or result in the violation) or conflict with BioTime’s governing internal documents;
|
4.2.
|
Without derogating from the Company's representations and warranties hereunder, BioTime has spoken to members of the management of the Company, has been afforded with the opportunity to ask questions and has performed independent due diligence. BioTime further acknowledges that, except as otherwise expressly provided for herein, no express or implied warranty, representation or covenant whatsoever has been made by the Company hereunder;
|
4.3.
|
BioTime has the requisite knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment envisaged under this Agreement, and of investing in the Company, and BioTime acknowledges and represent that such investment may be completely lost, and it is financially able to bear such risk. BioTime understands that the New Issue Shares have not been registered under the securities laws of Israel or of any other state or jurisdiction;
|
4.4.
|
The execution of this Agreement by BioTime and the performance of its obligations hereunder do not require the consent or agreement of any person, authority or entity which has not been or will not be obtained prior to the date of the Closing, and will not violate any provision of any instrument, judgment, order, writ, decree or contract to which it is party or by which it is bound, or any provision of law, rule or regulation applicable to BioTime which would prevent the execution by BioTime of this Agreement or the performance of its obligations hereunder and thereunder;
|
4.5.
|
BioTime has not employed nor made any agreement with any broker, finder or similar agent or any person or firm, which will result in the obligation of the Company or BioTime to pay any finder’s fee, brokerage fees or commission or similar payment in connection with the transactions contemplated hereby;
and
|
4.6.
|
The Traded Stock to be issued pursuant to this Agreement will not be issued in violation of any preemptive rights of the current or past shareholders of BioTime, or any agreement to which BioTime was or is a party or bound. When issued and delivered in accordance with this Agreement, the Traded Stock shall be (a) duly and validly authorized, issued and outstanding in compliance with all applicable federal or state securities laws, fully paid and non-assessable, (b) listed for trading on the NYSE MKT and (c) free and clear of any liens, claims, charges, rights, pledges, security interests, mortgages, options, title defects or other encumbrances, restrictions or limitations of any nature whatsoever.
|
4.7.
|
BioTime has filed all reports, schedules, forms, statements and other documents required to be filed by it with the U.S. Securities and Exchange Commission (“
SEC
”), pursuant to the reporting requirements of all applicable federal and securities laws (all of the foregoing that were scheduled to be filed prior to the Closing Date, and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, are hereinafter referred to as the “
SEC Documents
”). The SEC Documents comply in all material respects with the requirements of all applicable federal and securities laws, rules and regulations. The SEC Documents do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading with respect to the periods presented.
|
4.8.
|
Each of the financial statements (including, in each case, any related notes) contained in the SEC Documents, including any SEC Documents filed after the Effective Date until the Closing, complied or will comply as to form in all material respects with the applicable published rules and regulations of the SEC with respect thereto, was prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly presented the consolidated financial position of BioTime and its subsidiaries as at the respective dates and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be material in amount.
|
5.
|
TRADED STOCK PRE-CLOSING AND POST-CLOSING COVENANTS AND ADJUSTMENT
|
5.1.
|
BioTime will cause the Traded Stock issuable to the Company pursuant to this Agreement to be authorized for listing on the NYSE MKT.
|
5.2.
|
If the Traded Stock issued to the Company has not been registered for sale under the Securities Act of 1933, as amended (“Securities Act”), then BioTime will file, as promptly as practicable after the Effective Date, at its own expense, a registration statement on Form S-3 with the SEC to register the Traded Stock under the Securities Act. BioTime shall use commercially reasonable efforts to obtain effectiveness of such registration statement and to keep such registration statement effective until such time as all the Traded Stock registered thereon has been sold or the Company agrees to terminate the registration.
|
5.3.
|
Should the average price of the Traded Stock during the 10 (ten) trading days commencing on May 1, 2013 increase or decrease above or below the Average Price by more than 15% (fifteen percent), an adjustment shall be made pro rata to the Traded Stock remaining in the Company's possession as of May 1, 2013 up to a maximum of 33% (thirty three percent). The adjustment shall be made, in the case of an increase in the average price of the Traded Stock, via an issuance of additional New Issue Shares to BioTime or, in the case of a decrease in the average price of the Traded Stock, via the issuance of additional Traded Stock to the Company. Increases or decreases in the Average Price of less than 15% (fifteen percent) will not trigger any adjustment. In no event shall the adjustment be more than 33% (thirty three percent). For the sake of illustration, if BioTime purchased New Issue Shares in the Company by way of 100,000 shares of Traded Stock at a Average Price of US$4.50 and on May 1, 2013 the Company still retained the entire 100,000 shares but the average price of the Traded Stock during the 10 (ten) trading days starting on May 1, 2013 fell by 25% (twenty five percent) to US$3.38, then BioTime would be required to issue to the Company an additional 33,136 shares of Traded Stock. Conversely, if BioTime acquired 11,244 New Shares in exchange for 100,000 Traded Shares, and the average price of the Traded Stock for such ten trading days starting on May 1, 2013 increased by 25% from $4.50 to $5.63, the Company would be required to issue to BioTime 2,824 additional New Shares.
|
5.4.
|
Cantor Fitzgerald & Co., or such other broker-dealer as BioTime may designate in its place, will act as a broker (the "
Broker
") to effect trades of BioTime stock on behalf of BioTime and all of its subsidiaries who hold freely tradable BioTime stock (the "
BioTime Group
"). All determinations to sell Traded Stock shall be made by a committee of the Board, consisting of David Schlahet and Al Kingsley (or any other persons appointed by the Board, by unanimous consent), who shall confer with the CEO and the Company's Chief Financial Officer (the "
CFO
"). All determinations to sell Traded Stock shall be communicated in writing to the Broker by the Company through the CEO or the CFO. The Company acknowledges that if the Broker receives requests to sell BioTime common shares from any member of the BioTime Group while any request to sell BioTime common shares by any other member(s) of the BioTime Group remains open, the Broker may allocate among the members of the BioTime Group seeking to sell shares the number of shares that may offered and sold during any trading day, so as to maintain an orderly market for the BioTime common shares. Such allocation shall be pro rata based on the number of shares that each member of the BioTime Group requests the Broker to sell for its account and the proceeds shall be distributed between such members of the BioTime Group as per the average price attained by the Broker for all of the shares so sold on such trading day.
|
6.
|
CONFIDENTIAL INFORMATION; PUBLICATION
|
6.1.
|
BioTime agrees that it will keep confidential and will not disclose, divulge or use for any purpose, other than to monitor its investment in the Company, any confidential, proprietary or secret information which BioTime may obtain from the Company regarding its research and development programs or any other information, reports or materials submitted by the Company to BioTime pursuant to this Agreement or pursuant to visitation or inspection rights granted to BioTime pursuant to the SHA (“
Confidential Information
”), unless such Confidential Information is known, or until such Confidential Information becomes known, to the public (other than as a result of a breach of this Section by BioTime);
provided
,
however
, that BioTime may disclose Confidential Information (i) to its attorneys, accountants, consultants and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (ii) to any prospective purchaser of any New Issue Shares, or other Company shares, from BioTime, as long as such prospective purchaser agrees in writing to be bound by the provisions of this Section, (iii) to any Affiliate of BioTime or to a partner, shareholder or subsidiary of BioTime provided that such person agrees in writing to be bound by the provisions of this Section, or (iv) as may otherwise be required by court order, statute, regulation, or legal disclosure obligation, provided that BioTime informs the Company of any such required disclosure in advance, takes reasonable steps to minimize the extent of any such required disclosure and cooperates with the Company in any challenge by the Company of any such obligation.
|
6.2.
|
The foregoing restrictions shall not apply to such of the Confidential Information that BioTime can document: (i) at the time of disclosure was publicly available, or after disclosure becomes a part of the public domain through no act or omission by BioTime; (ii) was, prior to the time of disclosure, in BioTime's possession and not subject to any obligation to a third party of non-disclosure, as shown by BioTime's written records; (iii) was subsequently received by BioTime from a third party free of any obligation of non-disclosure imposed on or by the third party; or (iv) was developed by BioTime independently of, and without reference to, Confidential Information.
|
6.3.
|
The Parties have agreed on the form of a press release which is attached hereto as
Schedule 6.3
, which press release may be issued by the Company and/or BioTime following the date hereof. Thereafter, neither Party shall issue any press release, statement or otherwise make any disclosure related hereto without first providing the other Party with a draft of the proposed disclosure and the opportunity to comment,
and the disclosing Party shall strive to implement any comments provided by the other Party
.
The provisions of this Section 6 shall not apply to any disclosure that is (a)
financial reporting,
or
(b) consistent with a previous press release, statement or disclosure made pursuant to the 2010 SPA or this Section 6.3 by the Company or by BioTime.
|
7.
|
INDEMNIFICATION AND REMEDIES
|
7.1.
|
In the event of any breach or misrepresentation of any covenant, warranty or representation made by the Company under this Agreement, the Company agrees to protect, defend, indemnify and hold harmless BioTime, its respective officers, employees, directors and partners against any and all loss, liability, deficiency, damage, cost or other expenses (including reasonable legal fees and expenses) (collectively, “
Losses
”), as and when incurred, based upon or arising out of any breach or misrepresentation of any of the representations or warranties of the Company contained in this Agreement.
|
7.2.
|
In the event of any material breach or misrepresentation of any covenant, warranty or representation made by BioTime under this Agreement or any other provision to this Agreement, BioTime agrees to protect, defend, indemnify and hold harmless the Company, and its respective officers, employees, directors and partners, against any and all Losses, as and when incurred, based upon or arising out of any material breach of any of the representations or warranties of BioTime contained in this Agreement.
|
7.3.
|
Notwithstanding anything to the contrary herein, the maximum liability of BioTime and the Company to BioTime and the total indemnification by BioTime and/or the Company, as the case may be (the "
Maximum Liability
") shall not exceed the amount of the Purchase Price.
|
7.4.
|
Promptly after receipt by BioTime or the Company of notice of the commencement of any claim, action, suit, proceeding or investigation in respect of which indemnity may be sought pursuant to this Section 7 (“
Claim
”), such party (the "
Indemnitee
") shall so notify the other party from whom indemnification is sought hereunder (the "
Indemnitor
") in writing, describing in reasonable detail the facts and circumstances upon which the asserted claim for indemnification is based, and shall thereafter keep the Indemnitor reasonably informed with respect thereto. In any event, the Indemnitee shall cooperate with the Indemnitor in the defense of any Claim for which the Indemnitor assumes the defense. The Indemnitor shall have the right to assume the defense of any Claim, at its discretion, with counsel reasonably satisfactory to the Indemnitee, except if, in the opinion of Indemnitee, there is any conflict of interest between the Indemnitee and the Indemnitor. The Indemnitor shall not be liable for the settlement by the Indemnitee of any Claim effected without its consent, which consent shall not be unreasonably withheld. The Indemnitor shall not enter into any settlement of a Claim to which the Indemnitee is a party, unless such settlement includes a general release of the Indemnitee with no payment by the Indemnitee of consideration and without an admission of liability.
|
7.5.
|
Notwithstanding the foregoing, no claims shall be asserted under this Section
7
unless the aggregate amount claimed is in excess of US$20,000 (Twenty Thousand US Dollars).
|
7.6.
|
EXCEPT IN THE CASE OF A WILLFUL OR FRAUDULENT MISREPRESENTATION UNDER THIS AGREEMENT, IN NO EVENT SHALL A PARTY BE LIABLE TO THE OTHER PARTY OR TO SUCH PARTY'S AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR GOODWILL) SUFFERED OR INCURRED BY ANY OTHER PARTY, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE OR TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT.
|
7.7.
|
Except in the case of fraud or intentional misrepresentation, the indemnification set forth in this Section 7 shall not apply with respect to demands and claims, if such demands or claims were first made after 18 (eighteen) months following the date of the Closing.
|
8.
|
MISCELLANEOUS
|
8.1.
|
Notices.
|
All
notices or other communications hereunder shall be in writing and shall be given in person, by air delivery service, by registered mail (registered international air mail if mailed internationally) or by facsimile transmission (
provided
that
written confirmation of receipt is provided), addressed as set forth below:
|
|
Or such other address as a Party may designate to the other Party in accordance with the aforesaid procedure.
|
|
All notices and other communications delivered in person or by courier or air delivery service shall be deemed to have been delivered as of actual delivery thereof, those given by facsimile transmission shall be deemed delivered on the following business day after transmission with confirmed transmission thereof, and all notices and other communications sent by registered mail (or air mail if the posting is international) shall be deemed given seven (7) days after posting.
|
8.2.
|
Successors and Assigns
|
Except
as otherwise expressly limited herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the Parties hereto. None of the rights, privileges, or obligations set forth in, arising under, or created by this Agreement may be assigned without the prior consent in writing of each Party to this Agreement.
|
8.3.
|
Expenses
|
Each
Party shall bear its own costs and expenses related to the transactions contemplated hereby.
|
8.4.
|
Delays or Omissions; Waiver
|
|
No
delay or omission to exercise any right, power, or remedy accruing to either the Company or BioTime, upon any breach or default by the other hereunder, shall impair any such right or remedy nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein or in any similar breach or default thereafter occurring. Any waiver, permit, consent or approval of any kind or character on any Party’s part of any breach, default or noncompliance under this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.
|
8.5.
|
Taxes
|
Each
of the Parties shall bear and pay the taxes and levies imposed on it (if at all) under any law in relation with this Agreement and the transactions contemplated herein.
|
8.6.
|
Entire Agreement; Amendment
|
|
This
Agreement (together with the schedules and exhibits attached hereto), contain the entire understanding of the Parties with respect to its subject matter and all prior negotiations, discussions, commitments, representations, covenants and understandings heretofore between them with respect to the matters hereof are merged herein. Nothing in this Agreement, however, shall be construed as derogating from the rights and obligations of the Parties pursuant to the 2010 SPA and the SHA which was attached thereto. Any term of this Agreement may be amended with the written consent of the Company and BioTime. The observance of any term hereof may be waived (either prospectively or retroactively and either generally or in a particular instance) in writing by the Party against which the waiver is sought and shall be effective only to the extent specifically set forth in such writing.
|
8.7.
|
Counterparts.
|
This
Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. A Party may enter into this Agreement by signing any such counterpart and each counterpart may be signed and executed by the Parties and transmitted by facsimile or by electronic mail in PDF format and shall be as valid and effective as if executed as an original.
|
8.8.
|
Governing Law.
|
This
Agreement shall be exclusively governed by and construed in accordance with the laws of the State of Israel, without giving effect to the rules respecting conflict of law. The Parties hereto irrevocably submit to the exclusive jurisdiction of the courts of Tel-Aviv/ Jaffa in respect of any dispute or matter arising out of or connected with this Agreement.
|
8.9.
|
Further Actions.
|
At
any time and from time to time, each Party agrees, without further consideration, to take such actions and to execute and deliver such documents as may be reasonably necessary to effectuate the purposes of this Agreement.
|
8.10.
|
Severability.
|
In
case any provision of this Agreement is held invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
|
8.11.
|
Termination
.
|
Notwithstanding anything to the contrary herein, the Company may terminate this Agreement at any time before the Closing Date if the Closing has not taken place within 6 (six) months of the Effective Date.
|
By: | /s/ Charles Irving | ||
Name: | Dr. Charles Irving | ||
Title: | Chief Executive Officer |
By: | /s/ Robert W. Peabody | ||
Name: | Robert W. Peabody | ||
Title: | Senior Vice President and Chief Operating Officer |
Schedule | Description | ||
2.2.1 |
Cell Cure Share Certificate
|
||
2.2.3 | Cell Cure Shareholders Resolution | ||
2.2.4 | Cell Cure Board of Directors Resolution | ||
2.2.5 | Shareholder waivers | ||
2.2.6 | Compliance certificate | ||
2.2.7 | Share register | ||
2.2.8 | Amendment to ESI License Agreement | ||
3.7 | Amended Articles of Association | ||
3.8 | List of Shareholders | ||
3.10 | Post-closing Shareholder List | ||
3.14 | Changes in financial data | ||
3.19 | Licensed patents | ||
3.21 | Patent attorney report | ||
3.22 | Material Agreements | ||
3.23 | Transactions with officers and directors or in which they have an interest | ||
3.25 | List of officers, employees, and consultants | ||
6.3 | Draft press release |
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the periodic reports are being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 9, 2012
|
|
|
|
/s/ Michael D. West
|
|
Michael D. West
|
|
Chief Executive Officer
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the periodic reports are being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 9, 2012
|
|
|
|
/s/ Peter S. Garcia
|
|
Peter S. Garcia
|
|
Chief Financial Officer
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 9, 2012
|
|
|
|
/
s/ Michael D. West
|
|
Michael D. West
|
|
Chief Executive Officer
|
|
/s/ Peter S. Garcia
|
|
Peter S. Garcia
|
|
Chief Financial Officer
|
|