o
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
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Florida
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59-3226705
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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618 East South Street
Suite 500
Orlando, Florida 32801
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(Address of principal executive offices)
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Large accelerated filer
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Accelerated filer
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o
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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þ
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Item No.
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Description
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Page
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Cautionary Note Regarding Forward-Looking Statements
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3 | |
PART I
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Item 1.
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Business.
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6 |
Item 1A.
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Risk Factors.
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32 |
Item 1B.
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Unresolved Staff Comments.
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58 |
Item 2.
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Properties.
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59 |
Item 3.
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Legal Proceedings.
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59 |
Item 4.
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Mine Safety Disclosures.
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59 |
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PART II
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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60 |
Item 6.
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Selected Financial Data.
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61 |
Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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61 |
Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk.
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68 |
Item 8.
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Financial Statements and Supplementary Data.
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68 |
Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
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69 |
Item 9A.
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Controls and Procedures.
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69 |
Item 9B.
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Other Information.
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69 |
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance.
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70 |
Item 11.
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Executive Compensation.
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74 |
Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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76 |
Item 13.
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Certain Relationships and Related Transactions, and Director Independence.
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78 |
Item 14.
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Principal Accounting Fees and Services.
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79 |
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PART IV
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Item 15.
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Exhibits, Financial Statement Schedules.
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80 |
Signatures
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81 |
●
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strategy;
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new product discovery and development;
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current or pending clinical trials;
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our products' ability to demonstrate efficacy or an acceptable safety profile;
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actions by the FDA and other regulatory authorities;
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product manufacturing, including our arrangements with third-party suppliers;
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product introduction and sales;
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royalties and contract revenues;
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expenses and net income;
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credit and foreign exchange risk management;
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liquidity;
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asset and liability risk management;
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the outcome of litigation and other proceedings;
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intellectual property rights and protection;
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economic factors;
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competition; and
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legal risks.
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our lack of operating history;
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our current and future capital requirements and our ability to satisfy our capital needs;
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our inability to keep up with industry competition;
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interpretations of current laws and the passages of future laws;
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acceptance of our business model by investors and our ability to raise capital;
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our drug discovery and development activities may not result in products that are approved by the applicable regulatory authorities. Even if our drug candidates do obtain regulatory approval they may never achieve market acceptance or commercial success;
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our reliance on key personnel, including our ability to attract and retain scientists;
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our reliance on third party manufacturing to supply drug for clinical trials and sales;
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our limited distribution organization with no sales and marketing staff;
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our being subject to product liability claims;
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our reliance on key personnel, including our ability to attract and retain scientists;
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legislation or regulation that may increase the cost of our business or limit our service and product offerings;
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risks related to our intellectual property, including our ability to adequately protect intellectual property rights;
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risks related to government regulation, including our ability to obtain approvals for the commercialization of some or all of our drug candidates, and ongoing regulatory obligations and continued regulatory review which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements; and
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our ability to obtain regulatory approvals in foreign jurisdictions to allow us to market our products internationally.
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being permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report;
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not being requested to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley Act”);
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reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and
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exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
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increasing proliferation and functional activities of CD4+T-cells and CD8+T-cells which will play a role in anti-virus and anti-tumor activities;
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increasing maturation of dendritic cells which will initiate and intensify T-cell responses;
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increasing secretion of cytokines such as IL-2, TNF, IL-12 and IFN-γ which will amplify
the T-cell response and mediate interaction among immune cells, forming a modulated and balanced immunity;
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increasing functions of macrophages, resulting in enhanced cellular immunity through secreting a set of cytokines; and
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increasing activity of NK cells which have the ability to kill cancer cells and virus-infected cells.
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1.
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Immune stimulation and regulation effects; and
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2.
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Direct anti-cancer inhibitory effects.
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Title
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Indication(s)
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Dose
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ClinicalTrials.gov Identifier / Status
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Low Dose Naltrexone for Metastatic Melanoma, Castrate Resistant Prostate Cancer and Renal Cancer
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Metastatic Melanoma, Castrate Resistant Prostate Cancer and Renal Cancer
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5 mg/day
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NCT01650350 /
Currently Recruiting
(verified May 2013)
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Effects of Low Dose Naltrexone in Fibromyalgia
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Fibromyalgia
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3-4.5 mg/day
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NCT00568555 / Completed June 2012
(verified June 2012)
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Low Dose Naltrexone in Symptomatic Inflammatory Bowel Disease
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Inflammatory Bowel Disease
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4.5 mg/day
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NCT01810185 /
Not yet recruiting
(verified June 2013)
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Low-Dose Naltrexone for Glioma Patients
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Malignant Glioma
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4.5 mg/day
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NCT01303835 /
Active, not recruiting
(verified January 2014)
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Low-Dose Naltrexone for Depression Relapse and Recurrence
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Major Depressive Disorder
Depression, Unipolar
Recurrence
Relapse
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1 mg/day
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NCT01874951 /
Recruiting
(verified September 2013)
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Adverse Event
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Phase 1 Open-label Study in Adults
N=17
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Phase 2 Randomized, double-blind, placebo-controlled study in Adults
N=40
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Phase 2 Pilot study in Children
N=12 a
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LDN
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Placebo
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LDN
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Placebo
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LDN
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Sleep disturbance
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7
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5
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5
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2
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2
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Unusual dreams
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1
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3
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2
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0
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2
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Insomnia
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5
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0
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0
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0
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0
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Nausea
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1
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4
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4
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0
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1
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Hair thinning/ Hair loss
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1
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1
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0
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1
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0
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Hair growth
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0
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0
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1
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0
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0
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Blurred vision
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1
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0
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0
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0
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0
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Irritability
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1
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0
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0
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0
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0
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Mood swings
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1
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0
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0
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0
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0
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Mild disorientation
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1
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0
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0
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0
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0
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Twitching
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0
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0
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0
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1
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1
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Headaches
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0
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2
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4
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1
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0
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Decreased appetite/ Loss of appetite
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0
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0
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2
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1
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0
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Fatigue
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0
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3
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0
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1
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0
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Flushed ears
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0
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0
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0
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0
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1
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Papules, rash
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0
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0
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0
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1
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0
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Double vision
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0
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0
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0
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0
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1
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Flatulence
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0
|
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5
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6
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0
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0
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Vomiting
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0
|
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1
|
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3
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0
|
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0
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Diarrhea
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|
0
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5
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7
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0
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0
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Abdominal Pain
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0
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5
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5
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0
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0
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Constipation
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0
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0
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2
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0
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0
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Patent:
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Title:
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Expiration:
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License:
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Product or Use:
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||||||||
U.S. Patent Number 6,586,443
(Related to US 5,356,900, 5,013,739 and 4,888,346 – all expired)
(No related foreign patents)
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Multiple sclerosis in a human patient is treated by the administration preferably via a pharmacologically effective route of an essentially pure opiate receptor antagonist.
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January 3, 2019
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Exclusive License from Jacqueline Young.
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IRT-103 (LDN)
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U.S. Patent Number 6,384,044
(No related foreign patents)
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Cancer of the prostate in human male patients even at an advanced state with metastasis to other organs is preferably treated by administration.
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November 8, 2019
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Exclusive License from Jacqueline Young.
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IRT-103 (LDN)
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||||||||
U.S. Patent Number 6,288,074
(No related foreign patents)
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Lymphoproliferative syndrome, including such diseases as malignant lymphoma, chronic lymphocytic leukemia, Hodgkin's lymphoma, and non-Hodgkin's lymphoma, are treated in human patients via administration.
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November 15, 2019
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Exclusive License from Jacqueline Young.
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IRT-103 (LDN)
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||||||||
US Patent Number 6,136,780
(Related to US 6,737,397)
(No related foreign applications)
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Control of cancer growth through the interaction of [Met5] - Enkephalin and the zeta (s) receptor.
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May 17, 2021
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Exclusive License: Penn State University.
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IRT-101 (MENK)
and IRT-103 (LDN)
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||||||||
US Patent No. 6,737,397
(Related to US 6,136,780)
(No related foreign applications)
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Control of cancer growth through the interaction of [Met5]-Enkephalin and the zeta receptor.
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May 17, 2021
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Exclusive license: Penn State University.
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IRT-101 (MENK)
and IRT-103 (LDN)
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US Patent No. 7,879,870
(US PgPub 2008/0015211)
(No related foreign patents)
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Treatment of inflammatory and ulcerative diseases of the bowel with opioid antagonists.
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February 1, 2028
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License with Dr. Jill Smith and LDN Research Group, LLC.
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IRT-103 (LDN)
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Treatment of inflammatory and ulcerative diseases of the bowel with opioid antagonists.
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Pending
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License with Dr. Jill Smith and LDN Research Group, LLC.
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Treatment of Crohn’s disease
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US Application Number: 11/061,932
(Claims Priority to US60/548,021)
Canadian Application Number: 2,557,504 (Pending)
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Combinatorial therapies for the treatment of neoplasias using the opioid growth factor receptor.
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Pending application
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Exclusive license: Penn State University.
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IRT-101 (MENK)
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||||||||
US Patent No. 8,003,630 (Application Number: 11/510,682)
(US PgPub 2007/0053838)
(Claims Priority to US60/548,021)
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Combinatorial therapies for the treatment of neoplasias using the opioid growth factor receptor.
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May 22, 2028
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Exclusive license: Penn State University.
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IRT-101 (MENK)
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||||||||
US PgPub 2013/0084242 A1
(Application Number: 13/660,129)
(Claims Priority to US60/548,021)
Patent Cooperation Treaty (PCT) application:
PCT/US2010/030967
(Claims priority to US61/173,351)
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Combinatorial therapies for the treatment of neoplasias using the opioid growth factor receptor.
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Pending
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Exclusive license: Penn State University.
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IRT-101 (MENK)
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||||||||
US 7,807,368
(US PgPub 2008-0146512 A1)
(No related foreign applications)
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Cyclin-dependent kinase inhibitors as targets for opioid growth factor treatment.
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October 4, 2027
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Exclusive license: Penn State University.
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IRT-101 (MENK)
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||||||||
US 7,576,180
(Claims priority to US60/106,879)
(There is a related PCT application PCT/US1999/025802, claiming priority to the US60/106,879, but no National Phase applications were filed)
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Opioid growth factor receptors.
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August 17, 2026
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Exclusive license: Penn State University.
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IRT-101 (MENK)
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||||||||
US 7,122,651
(No related foreign applications)
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Novel nucleic acid molecules encoding opioid growth factor receptors.
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October 17, 2023
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Exclusive license: Penn State University.
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Treatment of cancer
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||||||||
US 7,517,649
(US PgPub 20060073565)
(No related foreign applications)
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Methods of detecting opioid growth factor receptor (OGFr) in tissue.
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April 13, 2026
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Exclusive license: Penn State University.
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IRT-101 (MENK)
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CN 200910011030
(No related US applications)
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Shan Fengping, Nikola Polonikov, Lu Changlong: Application of naloxone and composition thereof in preparing drug for treating cancer. Shan Fengping: August 26, 2009.
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August 23, 2026
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Exclusive license: Nicholas Plotnikoff and Fengping Shan.
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IRT-101 (MENK)
and IRT-103 (LDN)
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CN 200710051586
(No related US applications)
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Huang Jianyin, Zhang Ding, Shan Fengping, Luo Zhinong: Application of methionine enkephalin in preparing human or animal vaccination. Huang Jianyin: August, 20 2008.
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August 20, 2025
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Exclusive license: Nicholas Plotnikoff and Fengping Shan.
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IRT-101 (MENK)
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CN 200710158742
(No related US applications)
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Shan Fengping, Lv Changlong, Nikola Polonikov, Huang Jianyin: Application of compounds Methionine Enkephalin for preparing medicine for curing blood medulla hematopoietic system cancer. Dan Fengping: May 14, 2008.
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May 13, 2025
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Exclusive license: Nicholas Plotnikoff and Fengping Shan.
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IRT-101 (MENK)
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CN 200610046249
(No related US applications)
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Shan Fengping, Lv Changlong, Huang Jianyin, Zhang Ding, Luo Zhinong: Aerosol containing Met-Enkephalin. Shan Fengping: November 15, 2006.
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November 14, 2023
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Exclusive license: Nicholas Plotnikoff and Fengping Shan.
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IRT-101 (MENK)
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CN 200310120896
(No related US applications)
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Shan Fengping, Li Li: Integrated health food for regulating human body immune balance. Liaoning Academy of Microorganism Sciences: July 6, 2005.
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July 5, 2022
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Exclusive license: Nicholas Plotnikoff and Fengping Shan.
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Oncology treatments
and cancer treatment
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WO 2007/067753
(PCT/US2006/046925
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Huang John, Chang Ding, Lo Shi-Lung, Shan Fengping: Methods of reducing side effects in cancer therapy. Penta Biotech: June 14, 2007.
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Pending
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Exclusive license: Fengping Shan.
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IRT-101 (MENK)
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CN 200510019964
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Huang Jianyin, Zhang Ding, Luo Zhinong, Shan Fengping: Use of Methionine Enkephalin in preparation of medicine for reducing toxic side effects of chemical or radioactive therapy. Huang Jianyin: August 9, 2006.
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August 8, 2023
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Exclusive license: Fengping Shan.
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IRT-101 (MENK)
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US PgPub 2003/0148942 A1
(Application Number: 10/146,999)
Our Docket #6463-0101PUS1
(Claims Priority to US60/291,237)
|
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Methods for inducing sustained immune response.
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May 16, 2022
|
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Assigned and licensed: Nicholas Plotnikoff.
|
|
IRT-101 (MENK)
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Russian Application 2003136161/14
(Claims Priority to US60/291,237)
|
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Methods for inducing sustained immune response.
|
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May 16, 2022
|
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Assigned and licensed: Nicholas Plotnikoff.
|
|
IRT-101 (MENK)
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PCT application PCT/US2002/018529
(Claims priority to the US60/291,237)
|
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Methods for inducing sustained immune response.
|
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May 16, 2022
|
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Assigned and licensed: Nicholas Plotnikoff.
|
|
IRT-101 (MENK)
|
National Phase entries filed off the PCT/US2002/018529
China 02814327.2
(Pending)
EP App 2002746503 Granted: November 29, 2006
India Patent No. 220265 (App 01627/KOLNP/2003)
Japan App Withdrawn
|
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Methods for inducing sustained immune response.
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May 16, 2022
|
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Assigned and licensed: Nicholas Plotnikoff.
|
|
IRT-101 (MENK)
|
China Patent 200810229085
|
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The invention belongs to the technical field of treating tumors by immunization therapy. In particular, a method for treating intestinal cancer and pancreatic cancer cells by Methionine Enkephalin under conditions of in-vivo injection and in-vitro cell culture so as to achieve the treating aim.
|
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March 21, 2026
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Licensed: Fengping Shan.
|
|
IRT-101 (MENK)
|
|
●
|
Active Immunotherapy by which drugs or vaccines stimulate the body’s own defenses to fight disease;
|
|
●
|
Adoptive Immunotherapy which uses immune system components (e.g., antibodies, cytokines, or immune cells) created outside the body and then administered to patients; and
|
|
●
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Non-Specific Immunotherapies which stimulate the body’s immune system in general ways, including activity against cancer cells or virus-infected cells.
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●
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Autoimmune diseases or immune disorders such as Crohn’s disease and multiple sclerosis;
|
●
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As an adjunct to antivirals in the treatment of HIV/AIDS; and
|
●
|
In cancer patients undergoing chemotherapy, radiation treatments or surgery.
|
1.
|
Smith JP, Bingaman SI, Ruggiero F, Mauger DT, Mukherjee A, McGovern CO, Zagon IS. Therapy with the Opioid Antagonist Naltrexone Promotes Mucosal Healing in Active Crohn’s Disease: A Randomized Placebo-Controlled Trial. Dig Dis Sci . 2011 July; 56(7): 2088-2097.
|
2.
|
Smith JP, Field D, Bingaman SI, Evans R, Mauger DT. Safety and Tolerability of Low-dose Naltrexone Therapy in Children With Moderate to Severe Crohn’s Disease A Pilot Study. J Clin Gastroenterol . 2013 Apr; 47(4):339-45.
|
3.
|
Smith JP, Stock H, Bingaman SI, Mauger DT, Rogosnitzky M, Zagon IS. Low-Dose Naltrexone Therapy Improves Active Crohn’s Disease. Am J Gastroenterol . 2007; 102:820-828.
|
IND #
|
Indication
|
Product Name
|
Status
|
34,442
|
HIV/AIDS
|
MENK
|
Inactive
|
67,442
|
Crohn’s Disease
|
Naltrexone HCL
|
Active
|
50,987
|
Pancreatic Cancer
|
MENK/OGF
|
Active
|
●
|
Commencing by the end of the second quarter of 2014, the distribution of IRT 103 LDN to support the large scale treatment in emerging nations, initially in Africa and Central/South America as an immune-stimulating therapy for HIV/AIDS, cancer, autoimmune disease and immune disorders;
|
●
|
Commencing by the end of the second quarter of 2014, the distribution of IRT-103 LDN marketed under the name Lodonal™ through various distribution agreements;
|
●
|
Outsourcing of the manufacturing of IRT-103 LDN to Laboratorios Ramos in Managua, Nicaragua to provide LDN in capsule, tablet and/or cream form, throughout Africa and expanding to other developing nations. Work on the outsourcing commenced in the last quarter of 2013. Laboratorios Ramos has already produced LDN, and the Company will commence shipments when all regulatory approvals have been received in Africa for the importation of LDN; and
|
●
|
A cooperative venture with the Hubei Qianjiang Pharmaceutical Company (“Qianjiang”), to be in operation by the end of 2014, pursuant to which Qianjiang will provide the funding required for the clinical trials of the Company’s products in China in exchange for the Company providing exclusive licensing rights in China. The Company will also receive 6% of the gross revenue from sales of those products in China.
|
●
|
The Community MA is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use of the EMA, and is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, and medicinal products indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.
|
●
|
National MAs, which are issued by the competent authorities of the member states of the EEA and only cover their respective territory, are available for products not falling within the mandatory scope of the Centralized Procedure. Where a product has already been authorized for marketing in a member state of the EEA, this National MA can be recognized in another member state through the Mutual Recognition Procedure. If the product has not received a National MA in any member state at the time of application, it can be approved simultaneously in various member states through the Decentralized Procedure.
|
1.
|
Drug use naltrexone (4.5 mg) in the treatment of diseases requiring immune system stimulating cancer, HIV infection, multiple sclerosis, etc., as demonstrated by the Company, at a cost of $1/day or 450 x F.CFA/day.
|
2.
|
Management – laboratory for quality control and to analyze drugs imported in to Equatorial Guinea.
|
|
3.
|
The implementation of local production of quality essential medicines.
|
NEW DRUG CANDIDATES IN LATE-STAGE DEVELOPMENT
|
||
CANDIDATE
|
INDICATION
|
REGULATORY ACTIONS
|
IRT-101
|
Pancreatic Cancer
|
End-of-Phase 1 Meeting with FDA Complete 3Q 2013
|
IRT-103
|
Crohn’s Disease
|
Type C Meeting with FDA Complete 2Q 2013
Scientific Advice with EMA Complete 1Q 2014
|
●
|
The Company may be unable to successfully complete the clinical development of IRT-103 (LDN);
|
●
|
The Company must comply with any possible additional requests and recommendations from the United States Food and Drug Administration (“FDA”), including additional clinical trials;
|
●
|
The Company may not obtain all necessary approvals from the FDA and similar foreign regulatory agencies;
|
●
|
The Company may not commit sufficient resources to the development, regulatory approval, marketing and distribution of IRT-103 (LDN);
|
●
|
IRT-103 (LDN) must be manufactured in compliance with requirements of the FDA and similar foreign regulatory agencies and in commercial quantities sufficient to meet market demand;
|
●
|
IRT-103 (LDN) may not achieve market acceptance by physicians, patients and third party payers;
|
●
|
IRT-103 (LDN) may not successfully compete against alternative products and therapies; and
|
●
|
The Company or any other pharmaceutical organization may independently develop products that compete with IRT-103 (LDN).
|
●
|
delays or failures in obtaining sufficient quantities of the API and/or drug product;
|
●
|
delays or failures in reaching an agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective sites and with the FDA or other foreign regulatory bodies;
|
●
|
delays or failures in obtaining Institutional Review Board (“IRB”) or Ethics Committee (“EC”) approvals to conduct a clinical trial at a prospective site;
|
●
|
the need to successfully complete, on a timely basis, preclinical safety pharmacology studies (for IRT-101 (MENK));
|
●
|
the limited number of, and competition for, suitable sites to conduct the clinical trials;
|
●
|
the limited number of, and competition for, suitable patients for enrollment in the clinical trials; and
|
●
|
delays or failures in obtaining regulatory approval to commence a clinical trial.
|
●
|
slower than expected rates of patient recruitment and enrollment;
|
●
|
failure of patients to complete the clinical trials;
|
●
|
failure of our third party vendors to timely or adequately perform their contractual obligations relating to the clinical trials;
|
●
|
inability or unwillingness of patients or medical investigators to follow our clinical trial protocols;
|
●
|
inability to monitor patients adequately during or after treatment;
|
●
|
termination of the clinical trials by one or more clinical trial sites;
|
●
|
unforeseen safety issues;
|
●
|
lack of efficacy demonstrated during clinical trial results;
|
●
|
lack of adequate funding to continue the clinical trials;
|
●
|
the need for unexpected discussions with the FDA or other foreign regulatory agencies regarding the scope or design of our clinical trials or the need to conduct additional trials;
|
●
|
unforeseen delays by the FDA or other foreign regulatory agencies after submission of our results;
|
●
|
an unfavorable FDA inspection of our contract manufacturers of APIs or drug products; and/or
|
●
|
inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold.
|
●
|
the efficacy and safety of our drug candidates as demonstrated in clinical trials;
|
●
|
the clinical indications for which the drug is approved;
|
●
|
acceptance by physicians, major operators of clinics and patients of the drug as a safe and effective treatment;
|
●
|
the potential and perceived advantages of our drug candidates over alternative treatments;
|
●
|
the safety of drug candidates seen in a broader patient group, including its use outside the approved indications;
|
●
|
the cost of treatment in relation to alternative treatments;
|
●
|
the availability of adequate reimbursement and pricing by third parties and government authorities;
|
●
|
relative convenience and ease of administration;
|
●
|
the prevalence and severity of adverse side effects; and
|
●
|
the effectiveness of our sales and marketing efforts.
|
●
|
we may be unable to successfully complete the clinical development of IRT-103;
|
●
|
our lack of experience in commercializing and marketing drug products;
|
●
|
we may not have or be able to obtain sufficient financial resources to develop and commercialize IRT-103;
|
●
|
we may not be able to identify a suitable co-development partner;
|
●
|
we, or any of our future partners, may fail to fulfill our responsibilities in a timely manner or fail to commit sufficient resources to the development, regulatory approval, and commercialization efforts related to IRT-103;
|
●
|
we, or any of our future partners, must comply with additional requests and recommendations from the FDA, including additional clinical trials;
|
●
|
we, or any of our future partners, may not obtain all necessary approvals from the FDA and similar foreign regulatory agencies;
|
●
|
IRT-103 must be manufactured in compliance with requirements of the FDA and similar foreign regulatory agencies and in commercial quantities sufficient to meet market demand;
|
●
|
IRT-103 may not achieve market acceptance by physicians, patients and third party payers;
|
●
|
IRT-103 may not compete successfully against alternative products and therapies; and
|
●
|
we, or any pharmaceutical company, may independently develop products that compete with IRT-103.
|
●
|
regulatory authorities may withdraw approval of the drug or seize the drug;
|
●
|
we may be required to recall the drug or change the way the drug is administered;
|
●
|
additional restrictions may be imposed on the marketing or the manufacturing processes of the particular drug;
|
●
|
we may be subject to fines, injunctions or the imposition of civil or criminal penalties;
|
●
|
regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
|
●
|
we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
|
●
|
we could be sued and held liable for harm caused to patients;
|
●
|
the drug may become less competitive; and
|
●
|
our reputation may suffer.
|
●
|
the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities;
|
●
|
the timing of, and costs involved in, seeking and obtaining FDA and other regulatory approvals;
|
●
|
the continuation and success of our strategic alliances and future collaboration partners;
|
●
|
the exercise of remaining options under current collaborative agreements;
|
●
|
the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, including litigation costs and the results of such litigation;
|
●
|
our ability to enter into additional collaboration, licensing, government or other arrangements and the terms and timing of such arrangements;
|
●
|
potential acquisition or in-licensing of other products or technologies; and
|
●
|
the technologies or other adverse market developments.
|
●
|
manage our clinical trials effectively, including our clinical trials for IRT-103 (LDN) which will be conducted at numerous trial sites throughout the world;
|
●
|
manage our internal development efforts effectively while carrying out our contractual obligations to licensors, contractors, collaborators, government agencies and other third parties;
|
●
|
manage operations in both regulated and unregulated businesses
|
●
|
continue to improve our operational, financial and management controls and reporting systems and procedures; and
|
●
|
identify, recruit, maintain, motivate and integrate additional employees.
|
●
|
withdrawal of clinical trial volunteers, investigators, patients or trial sites;
|
●
|
the inability to commercialize our drug candidates;
|
●
|
decreased demand for our drug candidates;
|
●
|
regulatory investigations that could require costly recalls or product modifications;
|
●
|
loss of revenues;
|
●
|
substantial costs of litigation;
|
●
|
liabilities that substantially exceed our product liability insurance, which we would then be required to pay ourselves;
|
●
|
an increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all;
|
●
|
the diversion of management’s attention from our business; and
|
●
|
damage to our reputation and the reputation of our products.
|
●
|
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
|
●
|
taking advantage of an extension of time to comply with new or revised financial accounting standards;
|
●
|
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and
|
●
|
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
|
●
|
problems assimilating the purchased technologies, products or business operations;
|
●
|
issues maintaining uniform standards, procedures, controls and policies;
|
●
|
unanticipated costs associated with acquisitions;
|
●
|
diversion of management’s attention from our core business;
|
●
|
adverse effects on existing business relationships with suppliers and customers;
|
●
|
risks associated with entering new markets in which we have limited or no experience;
|
●
|
potential loss of key employees of acquired businesses; and
|
●
|
Increased legal and accounting compliance costs.
|
●
|
the degree and range of protection any patents will afford us against competitors, including whether third parties will find ways to make, use, sell, offer to sell or import competitive products without infringing our patents;
|
●
|
if and when patents will issue;
|
●
|
whether or not others will obtain patents claiming inventions similar to those covered by our patents and patent applications; or
|
●
|
whether we will need to initiate litigation or administrative proceedings in connection with patent rights, which may be costly whether we win or lose.
|
●
|
For IRT - 103 for Crohn’s disease, Patent Number 7879870, filed April 16, 2007, issued February 1, 2011, Methods for the treatment of inflammatory and ulcerative diseases of the bowel (e.g., Crohn’s disease and ulcerative colitis) with low dose opioid antagonists (e.g., naltrexone, nalmefene or naloxone), pharmaceutical compositions for use in such methods, and methods for the manufacture of such pharmaceutical compositions.
|
●
|
Our license agreement with Dr. Jill Smith and LDN Research owned by Dr. Ian S. Zagon, Dr. Patricia J. McLaughlin and Moshe Rogosnitzky. The license may be terminated if we materially breach the agreement and fail to cure our breach during an applicable cure period. Our failure to use commercially reasonable efforts to develop and commercialize naltrexone (oral) and IRT-103 in the United States and certain other specified countries or to perform our other diligence obligations under the license agreement would constitute a material breach of the license agreement. In the event our license agreement with Dr. Jill Smith and LDN Research is terminated, we will lose all of our rights to develop and commercialize the drug candidates covered by such license, which would significantly harm our business. TNI BioTech owns a number of other patents having to do with the development of naltrexone in low dose which would allow us to continue our development of those indications.
|
●
|
We depend significantly on our license agreement with Pennsylvania State University for the development of IRT-101 for pancreatic cancer covered by patents US Patent Numbers 6,737,397, CA 2,557,504, US 20010046968 , US 6737397 , US 6136780 , US 20080015211 , US 20070053838 , US 8003630 , US 20110123437 , US 7807368 , US 7576180 , US 7517649 , US 20080146512 , US 7122651 , US 20060073565 , US 20050191241 , Patent No 8,003,630. issued between 2001 and 2011. Our license agreement with Pennsylvania State University may be terminated if we materially breach the agreement and fail to cure our breach during an applicable cure period. Our failure to use commercially reasonable efforts to develop and commercialize OGF sometimes referred to as MENK (intravenous) and IRT-101 in the United States and certain other specified countries or to perform our other diligence obligations under the license agreement would constitute a material breach of the license agreement. In the event our license agreement with Pennsylvania State University is terminated, we will lose all of our rights to develop and commercialize the drug candidates covered by such license, which would harm our business and future prospects. TNI BioTech owns a number of other patents having to do with the development of MENK which would allow us to continue our development of those indications.
|
●
|
warning letters;
|
●
|
civil and criminal penalties;
|
●
|
injunctions;
|
●
|
withdrawal of approved products;
|
●
|
product seizure or detention;
|
●
|
product recalls;
|
●
|
total or partial suspension of production; and
|
●
|
refusal to approve pending NDAs or supplements to approved NDAs.
|
●
|
a drug candidate may not be deemed safe or effective;
|
●
|
FDA officials may not find the data from preclinical studies and clinical trials sufficient;
|
●
|
the FDA might not approve our or our third party manufacturer’s processes or facilities; or
|
●
|
the FDA may change its approval policies or adopt new regulations.
|
●
|
warning letters;
|
●
|
civil or criminal penalties;
|
●
|
injunctions;
|
●
|
suspension of or withdrawal of regulatory approval;
|
●
|
suspension of any ongoing clinical trials;
|
●
|
voluntary or mandatory product recalls and publicity requirements;
|
●
|
refusal to approve pending applications for marketing approval of new drugs or supplements to approved applications filed by us;
|
●
|
restrictions on operations, including costly new manufacturing requirements; or
|
●
|
seizure or detention of our products or import bans.
|
●
|
lack of adequate protection from intellectual property rights in foreign countries, which could occur if we do not have issued patents in force in such foreign countries covering our products, their methods of use and methods of manufacture;
|
●
|
the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices (for instance, because the goods have patent protection in such country), opts to import goods from a foreign market (with low or lower prices) rather than buy them locally;
|
●
|
unexpected changes in tariffs, trade barriers and regulatory requirements
|
●
|
economic weakness, including inflation, or political instability in particular foreign economies and markets;
|
●
|
compliance with laws for employees traveling abroad;
|
●
|
foreign taxes, including withholding of payroll taxes;
|
●
|
foreign currency fluctuations, which could result in increased operating expenses and reduced revenues;
|
●
|
workforce uncertainty in countries where labor unrest is more common than in the U.S.;
|
●
|
production shortages resulting from any events affecting the API and/or finished drug product supply or manufacturing capabilities abroad;
|
●
|
business interruptions resulting from geo-political actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires; and
|
●
|
failure to comply with Office of Foreign Asset Control rules and regulations and the Foreign Corrupt Practices Act
|
●
|
the federal healthcare program Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;
|
●
|
the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements to obtain payment from the federal government, and which may apply to entities like us which may provide coding and billing advice to customers;
|
●
|
federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; and
|
●
|
the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; and state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
|
●
|
delaying, deferring or preventing a change in control of our company;
|
●
|
impeding a merger, consolidation, takeover or other business combination involving our company; or
|
●
|
causing us to enter into transactions or agreements that are not in the best interests of all stockholders
|
●
|
results from, and delays in, clinical trial programs relating to our drug candidates, including the ongoing and planned clinical trials for IRT-103 (LDN), IRT-101 (MENK) and other drug candidates;
|
●
|
announcements of regulatory approvals or disapprovals of our drug candidates including IRT-103 (LDN) and IRT-101 (MENK) or delays in any regulatory agency review or approval processes;
|
●
|
failure or discontinuation of any of our research programs;
|
●
|
loss of significant clients or customers;
|
●
|
loss of significant strategic relationships;
|
●
|
announcements relating to future collaborations or our existing collaborations;
|
●
|
our failure to achieve and maintain profitability;
|
●
|
changes in earnings estimates and recommendations by financial analysts;
|
●
|
changes in market valuations of similar companies;
|
●
|
wholesalers’ buying patterns;
|
●
|
addition or termination of clinical trials or funding support;
|
●
|
regulatory developments affecting our drug candidates or those of our competitors;
|
●
|
the Company’s sales decrease internationally;
|
●
|
variations in the level of expenses related to our drug candidates or future development programs;
|
●
|
ability to secure new government contracts and allocation of our resources to or away from performing work under government contracts; and
|
●
|
general economic conditions in the United States and abroad;
|
●
|
acquisitions and sales of new products, technologies or business;
|
●
|
delays
|
●
|
market conditions in the pharmaceutical, biopharmaceutical and biotechnology sectors;
|
●
|
the issuance of new or changed securities analysts’ reports or recommendations regarding us, our competitors or our industry in general;
|
●
|
actual and anticipated fluctuations in our quarterly operating results;
|
●
|
disputes concerning our intellectual property or other proprietary rights;
|
●
|
introduction of technological innovations or new products by us or our competitors;
|
●
|
manufacturing issues related to our drug candidates for clinical trials or future products for commercialization;
|
●
|
market acceptance of our future products;
|
●
|
deviations in our operating results from the estimates of analysts;
|
●
|
third party payor coverage and reimbursement policies;
|
●
|
new legislation in the United States relating to the sale or pricing of pharmaceuticals;
|
●
|
FDA or other U.S. or foreign regulatory actions affecting us or our industry;
|
●
|
product liability claims or other litigation or public concern about the safety of our drug candidates or future drugs;
|
●
|
our ability to obtain necessary intellectual property licenses including, if necessary, those relating to IRT-103 (LDN) and other drug candidates;
|
●
|
the outcome of any future legal actions to which we are a party;
|
●
|
sales of our common stock by our officers, directors or significant stockholders;
|
●
|
frequent, irregular, under market, or large sales of shares of our common stock by any shareholder;
|
●
|
additions or departures of key personnel; and
|
●
|
external factors, including natural disasters and other crises.
|
●
|
Investors may have difficulty buying and selling or obtaining market quotations;
|
●
|
Market visibility for our common stock may be limited; and
|
●
|
A lack of visibility for our common stock may have a depressive effect on the market price for our common stock
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Period |
|
|||||||
Price Range | ||||||||
High | Low | |||||||
Quarter Ended December 31, 2013:
|
$ |
3.20
|
$
|
1.01
|
||||
Quarter Ended:
|
||||||||
September 30, 2013
|
|
$
|
3.45
|
$
|
0.68
|
|
||
June 30, 2013
|
|
$
|
5.25
|
|
|
$
|
2.99
|
|
March 31, 2013
|
$
|
10.20
|
|
|
$
|
4.00
|
Quarter Ended December 31, 2012:
|
$ | 9.70 | $ | 1.40 | ||||
Quarter Ended
|
||||||||
September 30, 2012
|
$ | 2.75 | $ | 0.72 | ||||
June 30, 2012
|
$ | 8.00 | $ | 2.60 | ||||
March 31, 2012
|
$ | 10.01 | $ | 9.00 |
Item 6.
|
Selected Financial Data
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation
|
2013
|
2012
|
|||||||
Selling, general and administrative
|
$
|
71,104
|
$
|
48,558
|
||||
Increase from prior year
|
$
|
22,546
|
$
|
48,558
|
||||
Percent increase from prior year
|
133.4
|
%
|
100
|
% |
●
|
consulting services obtained to assist the Company in raising capital, manage investor relations, and develop business in new markets, in the amount of $1,269,973 in 2013, an increase of $997,365 or 366% over the $272,608 spent in 2012;
|
●
|
professional fees for legal, tax and accounting services in the amount of $1,096,652 in 2013, an increase of $792,460 or 261% over the $304,192 spent in 2012;
|
●
|
payroll in the amount of $1,004,447 in 2013, an increase of $538,995 or 116% over the $465,452 spent in 2012;
|
●
|
and travel in the amount of $427,860 in 2013, an increase of $362,790 or 557% over the $65,070 spent in 2012.
|
2013
|
2012
|
||||||||||
Research and development
|
$
|
22,024
|
$
|
4,960
|
|||||||
Increase/ (decrease) from prior year
|
$
|
17,064
|
$
|
4,960
|
|||||||
Percent increase from prior year
|
344
|
%
|
100
|
%
|
●
|
payments for contracted technical services ($1,446,723 in 2013, an increase of $1,424,723 or 1,556% over the $42,000 spent in 2012), reflecting the increased use of contractors to perform some of our research activities;
|
●
|
patent expenses ($122,633 in 2013, compared to $0 for 2012), reflecting increased costs incurred in 2013 to maintain licenses and patents acquired in 2012 and 2013,
|
●
|
legal fees ($83,495 in 2013, compared to $0 in 2012), incurred mainly to document new licenses and patents;
|
●
|
payroll ($438,648 in 2013, an increase of $281,682 or 359% over the $78,483 spent in 2012), reflecting the hire of three new R&D employees in 2013; and
|
●
|
travel ($42,013 in 2013, an increase of $38,939 or 1,267% over the $3,074 in 2012).
|
2013
|
2012
|
|||||||
Depreciation expense
|
$
|
1
|
$
|
0.1
|
||||
Amortization expense
|
$
|
2,852
|
$
|
1,570
|
||||
Increase from prior year
|
$
|
1,283
|
$
|
1,570
|
||||
Percentage increase from prior year
|
45%
|
100%
|
2013
|
2012
|
|||||||
Interest expense
|
$
|
1,437
|
$
|
27
|
||||
Increase from prior year
|
$
|
1,410
|
$
|
69
|
||||
Percentage increase from prior year
|
5,222%
|
256%
|
Item 7A.
|
Quantitative and Qualitative Disclosure About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Name
|
Age
|
Date of Appointment
|
Position
|
|||
Noreen Griffin
|
62
|
March 2012
|
Chief Executive Officer and Director
|
|||
Dr. Nicholas Plotnikoff
|
86
|
March 2012
|
Non-Executive Chairman of the Board and Director
|
|||
Christopher Pearce
|
70
|
March 2012
|
Chief Operating Officer and Director (*)
|
|||
Dr. Eugene Youkilis
|
75
|
March 2012
|
President and Director
|
|||
Peter Aronstam
|
61
|
January 2013
|
Chief Financial Officer
|
|||
Dr. Fengping Shan
|
55
|
March 2012
|
Chief Science Officer and Director
|
|||
Dr. Gloria B. Herndon
|
63
|
March 2012
|
Director
|
|||
Dr. Angus Dalgleish
|
64
|
June 2013
|
Chief Medical Officer and Director of Research and Development (#)
|
|||
Dr. Joseph M. Fortunak
|
59
|
April 2013
|
Vice President of Global Research and Development and Chemical Development
|
Item 11.
|
Executive Compensation
|
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | All Other Compensation | Total ($) | |||||||||||||||||||
Noreen Griffin
|
2013
|
$ | 341,667 | (5 | ) | $ | — | $ | — | $ | — | $ | 18,000 | (2 | ) | $ | 359,667 | |||||||||
Chief Executive Officer
|
2012
|
$ | 213,643 | (5 | ) | $ | — | $ | 5,000 | (1 | ) | $ | — | $ | 18,000 | (2 | ) | $ | 236,643 | |||||||
Christopher Pearce
|
2013
|
$ | 259,375 | (5 | ) | $ | — | $ | — | $ | — | $ | 18,000 | (4 | ) | $ | 267,375 | |||||||||
Chief Operating Officer, Director (*)
|
2012
|
$ | 195,860 | (5 | ) | $ | 4,000 | (3 | ) | $ | — | $ | — | $ | 18,000 | (4 | ) | $ | 217,8600 | |||||||
Eugene Youkilis
|
2013
|
$ | 85,118 | $ | — | $ | — | $ | — | $ | — | $ | 85,118 | |||||||||||||
President, Director
|
2012
|
$ | 15,983 | $ | — | $ | — | $ | — | $ | — | $ | 15,983 | |||||||||||||
Peter Aronstam (*)
|
2013
|
$ | 60,000 | $ | — | $ | — | $ | — | $ | 152,250 | (6 | ) | $ | 212,750 | |||||||||||
Chief Financial Officer
|
2012
|
$ | 5,000 | $ | — | $ | — | $ | — | $ | — | $ | 5,000 | |||||||||||||
Dr. Fengping Shan
|
2013
|
$ | 60,000 | $ | — | $ | — | $ | — | $ | — | $ | 60,000 | |||||||||||||
Chief Science Officer, Director
|
2012
|
$ | 15,000 | $ | — | $ | — | $ | — | $ | — | $ | 15,000 | |||||||||||||
Dr. Ronald B. Herberman (#)
|
2013
|
$ | 149,223 | $ | — | $ | — | $ | — | $ | — | $ | 149,223 | |||||||||||||
Chief Medical Officer and Director of Medical Research and Development
|
2012
|
$ | 62,500 | $ | — | $ | — | $ | — | $ | — | $ | 62,500 |
Name and Principal Position
|
Year
|
Fees Paid or Earned in Cash
($)
|
Stock Awards
|
Option Awards
($)
|
Non-equity incentive plan compen-sation
|
Non-qualified incentive plan compen-sation
|
All Other Compen-sation
($)
|
Total ($)
|
Dr. Nicholas Plotnikoff
|
2013
|
60,000
|
—
|
—
|
—
|
—
|
—
|
60,000
|
Non-Executive Chairman of the Board
|
||||||||
Dr. Gloria B. Herndon,
|
2013
|
60,000
|
—
|
—
|
—
|
—
|
—
|
382,500
|
Director
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
●
|
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
|
●
|
each of our named executive officers and directors; and
|
●
|
all our executive officers and directors as a group.
|
Name and Address
|
Amount of Beneficial Ownership(1)
|
Percentage of
Class %**
|
||||||
Nicholas Plotnikoff
|
6,750,000
|
(2)
|
8.0
|
|||||
618 East South Street, suite 500
|
||||||||
Orlando, Florida 32801
|
||||||||
Eugene Youkilis
|
2,000,000
|
(3)
|
2.4
|
|||||
618 East South Street, suite 500
|
||||||||
Orlando, Florida 32801
|
||||||||
Noreen Griffin
|
2,860,000
|
(4)
|
3.3
|
|||||
618 East South Street, suite 500
|
||||||||
Orlando, Florida 32801
|
||||||||
Gloria Herndon
|
1,684,182
|
(5)
|
2.0
|
|||||
618 East South Street, suite 500
|
||||||||
Orlando, Florida 32801
|
||||||||
Christopher Pearce
|
3,833,000
|
(6)
|
4.5
|
|||||
618 East South Street, suite 500
|
||||||||
Orlando, Florida 32801
|
||||||||
Fengping Shan
|
1,500,000
|
1.8
|
||||||
618 East South Street, suite 500
|
||||||||
Orlando, Florida 32801
|
||||||||
Peter Aronstam | 75,000 |
(7)
|
* | |||||
618 East South Street, suite 500
|
||||||||
Orlando, Florida 32801
|
||||||||
All directors and officers as a group (6 persons)
|
18,702,182
|
21.9
|
(1)
|
Except as otherwise indicated below, each person possesses sole voting and investment power with respect to the shares shown as beneficially owned.
|
|
(2)
|
These shares are held by the Plotnikoff Family Trust.
An additional 700,000 shares are in the process of being transferred from the Plotnikoff Family Trust to a trustee in the TNI Pharma bankruptcy. The trust does not have any beneficial ownership of these shares, nor does it control or direct their voting interests in any manner or have dispositive control.
|
|
(3)
|
Represents 1,000,000 shares held in the name of CDR Youkilis, LLC, of which Eugene Youkilis is the manager; and 1,000,000 shares held by Eugene Youkilis, individually.
|
|
(4)
|
Represents 300,000 shares held in the name of Griffin Enterprises Group, Inc., which is 50% owned and managed by Robert Wilson, Ms. Griffin’s son; 1,000,000 shares held by the Griffin Family Trust, an irrevocable trust that is not managed by Ms. Griffin, plus 960,000 that the Griffin Family Trust is entitled to but has not yet been issued; and 600,000 shares held by Noreen Griffin, individually.
|
|
(5)
|
Represents 4,182 shares held by GB Investment Holdings Ltd.; 180,000 shares held by Gloria Herndon, individually; and 1,500,000 shares held by The Gloria Herndon 2010 Irrevocable Trust.
|
|
(6)
|
1,933,000 shares are held by Mr. Pearce individually; and 1,900,000 shares are held by the Pearce Family Trust over which Mr. Pearce has no voting or dispositive control.
|
|
(7)
|
Represents warrants to purchase 75,000 shares of common stock for $1.00 per share until December 2018.
|
(*)
|
Less than 1 percent.
|
(**)
|
Percentage ownership is based on 84,469,639 shares of our common stock outstanding as of March 26, 2014 and, for each person or entity listed above, warrants or options to purchase shares of our common stock which are exercisable within 60 days of the date of this Form 10-K.
|
December 31, 2013
|
December 31, 2012
|
|||||||
Audit Fees
|
$ | 11,100 | $ | 42,065 | ||||
Audited Related Fees
|
$ | — | $ | — | ||||
Tax Fees
|
$ | — | $ | — | ||||
All Other Fees
|
$ | 41,045 | $ | — |
Exhibit
|
|
Description
|
2.1
|
|
Bylaws*
|
3.1
|
|
Restated Articles of Incorporation*
|
3.2
|
|
Bylaws*
|
10.1
|
|
Sale and Assignment of Patent and Transfer of Technology Agreement with Nicholas Plotnikoff †>
|
10.2
|
|
Agreement with Professor Shan †>
|
10.3
|
|
Patent License Agreement with Penn State Research Foundation r†
|
10.4
|
|
Patent License Agreement Between TNI BioTech, Inc. and Jacqueline Young for the intellectual property of Dr. Bernard Bihari#
|
10.5
|
|
Patent License Agreement with Dr. Jill Smith and LDN Research Group, LLC r†
|
10.6
|
|
Strategic Framework Agreement for Cooperation with Hubei Qianjiang Pharmaceutical Company, and Commissioned Processing Contract, and Addendum to Venture Cooperation †>
|
10.7
|
|
Malawi Memorandum of Agreement with GB Oncology & Imaging Group Ltd.#
|
10.8
|
|
Letter of Intent between GB Oncology & Imaging Group Ltd. and G-Ex Technologies St. Maris Pharma Limited #
|
10.9
|
|
Distribution Agreement in Nigeria with GB Pharma Holdings Inc. †>
|
10.10
|
|
ViPharma Agreement †>
|
10.11
|
|
Strategic Framework Agreement, Addendum to Venture Cooperation and Supplementary Agreement with Hubei Qianjiang Pharmaceutical Company (MENK) µ
|
10.12
|
|
Manufacturing Agreement with Laboratorios Ramos (and English translation)
>
|
10.13
|
|
Engagement Agreement for Corporate Advisory Services by the Brewer Group?
|
10.14
|
Employment Agreement with Noreen Griffin µ
|
|
10.15
|
Employment Agreement with Christopher Pearce µ
|
|
10.16
|
Employment Agreement with Peter Aronstam µ
|
|
10.17
|
Master Service Agreement with American Peptide Company µ
|
|
10.18
|
Agreement with AHAR Pharma µ
|
|
10.19 | Consulting agreement with Dr. Graham Burton µ | |
10.20 | Consulting agreement with Gary Gemignani µ | |
14.1
|
Code of Ethics µ
|
|
16.1
|
|
Letter re change in certifying accountant Î
|
21.1
|
List of Subsidiaries µ
|
|
31.1
|
|
Chief Executive Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002 µ
|
31.2
|
|
Chief Financial Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002 µ
|
32.1
|
|
Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 µ
|
*
|
filed with the Form 10 Registration Statement filed with the SEC on April 22, 2013 and the Amendment No. 1 to the Form 10 Registration Statement filed with the SEC on June 7, 2013 and incorporated herein by reference.
|
#
|
filed with the Amendment No. 1 to the Form 10 Registration Statement filed with the SEC on June 7, 2013 and incorporated herein by reference.
|
+
|
filed with the Amendment No. 2 to the Form 10 Registration Statement filed with the SEC on July 18, 2013 and incorporated herein by reference.
|
^
|
filed with the Amendment No. 3 to the Form 10 Registration Statement filed with the SEC on August 23, 2013 and incorporated herein by reference.
|
?
|
filed with the Amendment No. 4 to the Form 10 Registration Statement filed with the SEC on September 25, 2013 and incorporated herein by reference.
|
Î
|
filed with the Amendment No. 5 to the Form 10 Registration Statement filed with the SEC on October 11, 2013 and incorporated herein by reference.
|
†
|
Portions of this exhibit have been redacted pursuant to a confidential treatment order granted by the Securities and Exchange Commission.
|
>
|
Filed with the Amendment No. 6 to the Form 10 Registration Statement filed with the SEC on November 21, 2013 and incorporated hereby by reference.
|
r
|
Filed with the Amendment No. 7 to the Form 10 Registration Statement filed with the SEC on January 22, 2014 and incorporated hereby by reference.
|
µ | Filed herewith. |
2013
|
2012
|
|||||||
Revenues, net
|
$
|
|
-
|
$
|
-
|
|||
Operating expenses:
|
||||||||
Selling, general and administrative
|
71,104,088
|
48,558,177
|
||||||
Research and development expense
|
22,023,951
|
4,960,169
|
||||||
Depreciation and amortization expense
|
2,853,436
|
1,570,232
|
||||||
Impairment of goodwill
|
-
|
98,000,000
|
||||||
Total operating expenses
|
95,981,475
|
153,088,578
|
||||||
Loss from operations
|
(95,981,475)
|
(153,088,578
|
||||||
Other expense:
|
||||||||
Interest expense
|
(1,437,392)
|
(27,003
|
)
|
|||||
Foreign Exchange loss
|
(224)
|
-
|
||||||
Loss on settlement of debt
|
(8,640,971)
|
(22,105,265)
|
||||||
Total other expense
|
(10,078,587)
|
(22,132,268
|
)
|
|||||
Loss from continuing operations
|
(106,060,062)
|
(175,220,846
|
)
|
|||||
Gain from discontinued operations
|
-
|
231,356
|
||||||
Net loss
|
$
|
(106,060,062)
|
$
|
(174,989,49
|
)
|
|||
Basic and diluted loss per share:
|
||||||||
Loss from continuing operations
|
$
|
(1.85)
|
$
|
(6.85
|
)
|
|||
Gain from discontinued operations
|
0.00
|
0.01
|
||||||
$
|
(1.85)
|
$
|
(6.84
|
)
|
||||
Weighted average number of shares outstanding
|
57,234,251
|
25,583,111
|
Common Stock
|
Additional Paid
|
Stock to
|
Prepaid
|
Accumulated
|
||||||||||||||||||||||||
Shares
|
Amount
|
in Capital
|
Be Issued
|
Services
|
Deficit
|
Total
|
||||||||||||||||||||||
Balance, December 31, 2011
|
113,644
|
$
|
114
|
$
|
1,005,603
|
$
|
-
|
|
$ |
-
|
$
|
(1,953,126
|
)
|
$
|
(947,409
|
)
|
||||||||||||
Issuance of common stock for services
|
6,966,800
|
6,967
|
9,150,053
|
-
|
-
|
-
|
9,157,020
|
|||||||||||||||||||||
Issuance of common stock - dividend
|
1,182,474
|
1,182
|
(1,182
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Issuance of common stock in exchange for debt
|
2,901,450
|
2,901
|
22,472,407
|
-
|
-
|
-
|
22,475,308
|
|||||||||||||||||||||
Issuance of common stock for Acquisition of TNI BioTech IP including Plotnikoff Patent
|
20,250,000
|
20,250
|
113, 985,750
|
-
|
-
|
-
|
114,006,000
|
|||||||||||||||||||||
Issuance of common stock for prepaid services
|
6,790,000
|
6,790
|
23,080,460
|
-
|
(23,087,250
|
)
|
-
|
-
|
||||||||||||||||||||
Amortization of prepaid services
|
-
|
-
|
-
|
17,004,479
|
-
|
17,004,479
|
||||||||||||||||||||||
Issuance of common stock for cash
|
7,285,000
|
7,285
|
1,129,215
|
-
|
-
|
-
|
1,136,500
|
|||||||||||||||||||||
Issuance of warrants as inducement for sale of common stock
|
-
|
-
|
25,810,469
|
-
|
-
|
-
|
25,810,469
|
|||||||||||||||||||||
Shares to be issued for patents and licenses
|
-
|
-
|
-
|
3,687,000
|
-
|
-
|
3,687,000
|
|||||||||||||||||||||
Shares to be issued for services
|
-
|
-
|
-
|
3,960
|
-
|
-
|
3,960
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
(174,989,490
|
)
|
(174,989,490
|
)
|
|||||||||||||||||||
Balance, December 31, 2012
|
45,489,368
|
$
|
45,489
|
$
|
196,632,775
|
$
|
3,690,960
|
$
|
(6,082,771
|
)
|
$
|
(176,942,616
|
)
|
$
|
17,343,837
|
|||||||||||||
Issuance of common stock for prepaid services
|
20,903,000
|
20,903
|
82,142,447
|
-
|
(82,163,350)
|
-
|
-
|
|||||||||||||||||||||
Return of common stock for prepaid services
|
(350,000)
|
(350)
|
-
|
-
|
-
|
-
|
(350)
|
|||||||||||||||||||||
Amortization of prepaid services
|
-
|
-
|
-
|
-
|
74,799,012
|
-
|
74,799,012
|
|||||||||||||||||||||
Issuance of common stock for Jill Smith/LDN license
|
300,000
|
300
|
2,714,700
|
(2,715,000)
|
-
|
-
|
-
|
|||||||||||||||||||||
Issuance of common stock for Penn State license
|
300,000
|
300
|
2,549,700
|
-
|
-
|
-
|
2,550,000
|
|||||||||||||||||||||
Issuance of common stock for charitable donation
|
100,000
|
100
|
749,900
|
-
|
-
|
-
|
750,000
|
|||||||||||||||||||||
Issuance of common stock in exchange for debt
|
1,567,103
|
1,567
|
7,455,232
|
1,252,000
|
-
|
-
|
8,708,799
|
|||||||||||||||||||||
Issuance of common stock for loan expenses and interest
|
387,500
|
387
|
1,230,374
|
224,800
|
-
|
-
|
1,455,561
|
|||||||||||||||||||||
Issuance of common stock for cash and exercise of warrants
|
5,464,668
|
5,464
|
4,107,174
|
2,440,739
|
-
|
-
|
6,553,377
|
|||||||||||||||||||||
Issuance of warrants as inducement for sale of common stock
|
-
|
-
|
10,531,073
|
-
|
-
|
-
|
10,531,073
|
|||||||||||||||||||||
Net loss
|
(106,060,062)
|
(106,060,062)
|
||||||||||||||||||||||||||
Balance December 31, 2013
|
74,161,639
|
$ |
74,160
|
$ |
308,113,375
|
$ |
4,893,499
|
$ |
(13,447,109)
|
$ |
(283,002,677)
|
$ |
16,631,248
|
2013 | 2012 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|||||||||
Net loss
|
$ | (106,060,062 | ) | $ | (174,989,490 | ) | |||
(Gain) from discontinued operations
|
(231,356 | ) | |||||||
Loss from continuing operations
|
(106,060,062 | ) | (175,220,846 | ) | |||||
Adjustments to reconcile loss from continuing operations to
|
|||||||||
net cash flows used in operating activities:
|
|||||||||
Depreciation
|
1,175 | 118 | |||||||
Amortization
|
2,852,261 | 1,570,114 | |||||||
Impairment of goodwill
|
- | 98,000,000 | |||||||
Stock issued for services
|
- | 9,160,980 | |||||||
Amortization of stock issued for prepaid services
|
74,798,662 | 17,004,479 | |||||||
Loss on settlement of debt
|
8,594,633 | 22,105,265 | |||||||
Stock warrant expense
|
10,531,073 | 25,810,469 | |||||||
Stock Issued for donation
|
750,000 | - | |||||||
Stock issued for loan expenses and interest
|
1,455,561 | - | |||||||
Changes in operating assets and liabilities:
|
|||||||||
Prepaid expenses and deposits
|
(208,407 | ) | (24,928 | ) | |||||
Accrued liabilities
|
161,061 | 452,569 | |||||||
Payable to officer
|
- | 76,000 | |||||||
Accounts payable
|
553,211 | 121,314 | |||||||
Net cash used in operating activities
|
|||||||||
from continuing operations
|
(6,570,832 | ) | (944,466 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|||||||||
Purchase of Penn State License
|
(160,539 | ) | - | ||||||
Purchase of computer equipment
|
(5,838 | ) | (1,062 | ) | |||||
Net cash used in investing activities
|
|||||||||
from continuing operations
|
(166,377 | ) | (1,062 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|||||||||
Proceeds from sale of common stock
|
6,553,377 | 1,136,500 | |||||||
Proceeds from notes payable
|
599,000 | 146,128 | |||||||
Payments made on patent liability
|
(221,667 | ) | (60,000 | ) | |||||
Repayment of notes payable
|
(100,000 | ) | |||||||
Net cash provided by financing activities
|
|||||||||
from continuing operations
|
6,830,710 | 1,222,628 | |||||||
CASH FLOWS FROM DISCONTINUED OPERATIONS
|
|||||||||
Net cash provided by operating activities
|
- | 35,983 | |||||||
Increase in cash
|
93,501 | 313,083 | |||||||
Cash, beginning of year
|
313,095 | 12 | |||||||
Cash, end of year
|
$ | 406,596 | $ | 313,095 |
Year Ended December 31, | |||||
2013
|
2012
|
||||
Common Stock Purchase Warrants
|
7,957,500
|
7,260,000
|
December 31, | ||||||||
2013 | 2012 | |||||||
Property and equipment:
|
||||||||
Computer equipment
|
$
|
6,900
|
$
|
1,062
|
||||
Less accumulated depreciation
|
(1,293
|
)
|
(118
|
)
|
||||
Property and equipment, net
|
$
|
5,607
|
$
|
944
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Worldpoints Travel Rewards Card
|
$
|
-
|
$
|
(242)
|
||||
Accrued Payroll to Officers
|
(548,291
|
)
|
(355,603)
|
|||||
Accrued Interest - Notes Payable
|
(39,980
|
)
|
(3,288
|
)
|
||||
Payroll Liabilities
|
-
|
(62,478)
|
||||||
State Payroll Taxes
|
-
|
(5,600)
|
||||||
Total accrued expenses and other liabilities
|
$
|
(588,271
|
)
|
$
|
(427,211
|
)
|
●
|
Robert J. Dailey, issued March 11, 2013 for $99,000, with a maturity date of March 25, 2013, and bearing an interest rate of 2% annually, an origination fee of 10,000 restricted common stock shares, a penalty of 10,000 restricted common stock shares if not paid by maturity and an additional 10,000 shares every 30 days after maturity if the loan is not satisfied in full.
|
●
|
Robert J. Dailey, issued April 25, 2013 for $100,000, with a maturity date of May 9, 2013, and bearing an interest rate of 2% annually, an origination fee of 10,000 restricted common stock shares, a penalty of 10,000 restricted common stock shares if not paid by maturity and an additional 10,000 shares every 30 days after maturity if the loan is not satisfied in full.
|
●
|
Joel Yanowitz, issued March 11, 2013 for $50,000, with a maturity date of March 25, 2013, and bearing an interest rate of 2% annually, an origination fee of 5,000 restricted common stock shares, a penalty of 5,000 restricted common stock shares if not paid by maturity and an additional 5,000 shares every 30 days after maturity if the loan is not satisfied in full.
|
●
|
Roger D. Bozarth, issued April 5, 2013 for $100,000, with a maturity date of April 19, 2013 and bearing an interest rate of 2% annually, an origination fee of 10,000 restricted common stock shares, a penalty of 10,000 restricted common stock shares if not paid by maturity and an additional 10,000 shares every 30 days after maturity if the loan is not satisfied in full.
|
●
|
Christine Dailey, issued August 30, 2013 for $50,000, with a maturity date of October 14, 2013, and bearing an interest rate of 2% annually, a penalty of 15,000 restricted common stock shares if not paid by maturity and an additional 5,000 shares every 30 days after maturity if the loan is not satisfied in full.
|
●
|
First Choice International Company, issued December 23, 2013 for $100,000, with a maturity date of June 23, 2014, and bearing an interest rate of 10% annually, a penalty of 30,000 restricted common shares if not paid by maturity and an additional 10,000 shares every 30 days after maturity if the loan is not satisfied in full.
|
●
|
The exercise price of 32 warrants was reduced from a range of $1.00 to $15.00 to a range of $0.50 to $0.75.
|
●
|
The reduction in exercise price applied to 15 shareholders, and affected 4,461,668 shares of common stock.
|
●
|
The total incremental compensation cost resulting from the modifications was $8,334,493.
|
Number of Shares
|
Exercise Price
|
Weighted Average Price
|
||||||||||
Warrants as of December 31, 2011
|
-
|
$
|
-
|
$
|
-
|
|||||||
Issued in 2012
|
7,260,000
|
$
|
1.00 – 1.50
|
$
|
1.02
|
|||||||
Expired
|
- | $ |
-
|
$ |
-
|
|||||||
Exercised
|
-
|
$
|
-
|
$
|
-
|
|||||||
Warrants as of December 31, 2012
|
7,260,000
|
$
|
1.00-1.50
|
$
|
1.02
|
|||||||
Issued in 2013
|
5,159,168
|
$
|
1.00 – 15.00
|
$
|
1.77
|
|||||||
Expired
|
- | $ |
-
|
$ |
-
|
|||||||
Exercised
|
4,461,668
|
$
|
0.50-0.75
|
$
|
0.55
|
|||||||
Warrants as of December 31, 2013
|
7,957,500
|
$
|
1.00 – 15.00
|
$
|
1.77
|
Expiration Date
|
Number of Shares
|
Exercise Price
|
Remaining Life (years)
|
|||||||||
2013
|
-
|
-
|
-
|
|||||||||
2014
|
-
|
-
|
-
|
|||||||||
2015
|
-
|
-
|
-
|
|||||||||
2016
|
-
|
-
|
-
|
|||||||||
September 2017
|
500,000
|
$
|
1.00-1.50
|
3.8
|
||||||||
October 2017
|
2,700,000
|
$
|
1.00
|
3.8
|
||||||||
November 2017
|
1,241,666
|
$
|
1.00 – 1.50
|
3.9
|
||||||||
January 2018
|
125,000
|
$
|
15.00
|
4.1
|
||||||||
February 2018
|
1,750
|
$
|
15.00
|
4.2
|
||||||||
March 2018
|
750
|
$
|
15.00
|
4.3
|
||||||||
May 2018
|
370,834
|
$
|
3.00-15.00
|
4.4
|
||||||||
July 2018
|
525,000
|
$
|
1.00-5.00
|
4.5
|
||||||||
August 2018
|
605,000
|
$
|
1.50-5.00
|
4.6
|
||||||||
September 2018
|
221,250
|
$
|
1.50
|
4.7
|
||||||||
October 2018
|
1,001,250
|
$
|
1.50
|
4.8
|
||||||||
November 2018
|
168,000
|
$
|
1.50
|
4.9
|
||||||||
December 2018
|
497,000
|
$
|
1.50
|
4.9
|
2013
|
2012
|
|||||||
Net operating losses
|
$
|
35,160,000
|
$
|
33,885,000
|
||||
Stock based compensation | 29,019,000 | - | ||||||
Amortization and depreciation | 970,000 | - | ||||||
Capitalization of start-up costs for tax purposes | 1,854,000 | - | ||||||
Loss on debt converrsion of debt | 2,938,000 | - | ||||||
Total deferred tax assets | 69,941,000 | 33,885,000 | ||||||
Valuation allowance
|
(69,941,000
|
)
|
(33,885,000
|
)
|
||||
Total deferred tax assets, net
|
$
|
-
|
$
|
-
|
2013 | 2012 | |||||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||
Benefits for income tax at federal statutory rate
|
$ | 36,060,000 | 34 | % | $ | 59,500,000 | 34 | % | ||||||||
Change in valuation allowance
|
(36,056,000 | ) | (34 | )% | $ | (26,180,000 | ) | (15 | ) | |||||||
Permanent differences
|
(4,000 | ) | - | - | - | |||||||||||
Non-deductible impairment of goodwill
|
- | - | (33,320,000 | ) | (19 | ) | ||||||||||
$ | - | - | $ | - | - | % |
Twelve Months Ended December 31
|
||||||||
2013
|
2012
|
|||||||
Net Sales
|
$ | 0 | $ | 0 | ||||
Earnings before Income Taxes
|
0 | 231,356 | ||||||
Income Taxes
|
0 | 0 | ||||||
Net Earnings from Discontinued Operations
|
0 | 231,356 |
A.
|
Upon initiation of each Phase III trial, the Company will pay $350,000.
|
B.
|
Upon positive completion of each Phase III clinical trial of the therapeutic use of an LDN compound in the Field of Use, the Company will pay $150,000.
|
C.
|
When an NDA is accepted for review by the FDA, the Company will pay $250,000.
|
D.
|
When FDA approval to market the NDA is approved, the Company will pay $750,000.
|
E.
|
Upon the first dosing of the first patient in a Phase III clinical trial for each Licensed Product, the Company will pay 250,000 shares of the Company’s common stock.
|
F.
|
Upon the first sale of each Licensed Product, the Company will issue 400,000 shares of the Company’s common stock.
|
G.
|
Upon the achievement of $20 Million in cumulative sales for each licensed product covered by NDAs, the Company will issue 500,000 shares of the Company’s common stock.
|
TNI BioTech, Inc. | |||
Date: March 31
, 2014
|
By:
|
/s/ Noreen Griffin | |
Name: Noreen Griffin | |||
Title: Chief Executive Officer | |||
(Principal Executive Officer) | |||
By: | /s/ Peter Aronstam | ||
Name: Peter Aronstam | |||
Title: Chief Financial Officer | |||
(Principal Accounting Officer) |
Person
|
Capacity
|
Date
|
||
/s/ Nicholas Plotnikoff
|
Chairman of the Board
|
March 31, 2014
|
||
Nicholas Plotnikoff | ||||
/s/ Noreen Griffin
|
Director
|
March 31, 2014
|
||
Noreen Griffin
|
||||
/s/ Christopher Pearce
|
Director
|
March 31, 2014
|
||
Christopher Pearce
|
||||
/s/ Eugene Youkilis
|
Director
|
March 31, 2014
|
||
Eugene Youkilis
|
||||
/s/ Fengping Shan
|
Director
|
March 31, 2014
|
||
Fengping Shan
|
||||
/s/ Gloria B. Herndon
|
Director
|
March 31, 2014
|
||
Gloria B. Herndon
|
1.
|
Definitions
|
1.1
|
“
Adverse Event
” means any untoward medical occurrence in a patient or clinical investigation subject administered a Product, whether or not caused by the treatment, including any unfavorable and unintended sign (including an abnormal laboratory finding), symptom or disease (including clinically significant worsening of a disease or pre-existing condition) temporally related to a Product. Adverse Event also means any report of lack of efficacy of a Product and any treatment of a pregnant woman, any abuse or overdose (accidental or intentional), any other accidental exposure and lack of expected pharmacological action temporally related to a Product.
|
1.2
|
“
Affiliate
” means, with respect to a party, any person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such party. For purposes of this definition and
Section 10.4
, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” as used with respect to a person means (a) the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such person, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise, or (b) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of a person.
|
1.3
|
“
Applicable Law
” means all applicable laws, statutes, ordinances, rules, regulations, judgments, injunctions, guidelines, guidances, orders and decrees.
|
1.4
|
“
Carton
” means a single package containing one month’s supply of Product for a single patient, comprising 30 capsules of Product.
|
1.5
|
“
Confidential Information
” means any and all information or material, whether oral, visual, in writing or in any other form, that, at any time before, on or after the Effective Date, has been or is provided, communicated or otherwise made known to the receiving party by or on behalf of the disclosing party pursuant to this Agreement, or in connection with the transactions contemplated hereby or any discussions or negotiations with respect thereto, any data, ideas, concepts or techniques contained therein and any modifications thereof or derivations therefrom. Notwithstanding the foregoing, all complaints and adverse events related to the Products disclosed by Distributor to Company hereunder shall be the Confidential Information of Company and Company shall be the disclosing party with respect thereto.
|
1.6
|
“
Country
” means a country within the Territory.
|
1.7
|
“
GDP
” means the then-current standards for good distribution practices as promulgated under Applicable Laws.
|
1.8
|
“
Losses
” means any and all claims, losses, obligations, liabilities, costs and expenses, including related interest, penalties and reasonable attorneys’ fees and disbursements.
|
1.9
|
“
Product
” means each product listed in
Schedule 1
.
|
1.10
|
“
Product Quality Complaint
” means any and all manufacturing or packaging-related complaints related to a Product, including (a) any complaint involving the possible failure of such Product to meet any of the specifications for such Product or (b) any dissatisfaction with the design, package or labeling of such Product.
|
1.11
|
“
Territory
” means Nigeria and such other countries as may be added to the Territory in accordance with
Section 2.2
.
|
1.12
|
“
Trademark
” means each trademark listed in
Schedule 1
.
|
2.
|
Scope and Restrictions
|
2.1
|
Appointment as Distributor
. Company hereby appoints Distributor to market, distribute, offer for sale and sell the Products in the Territory (i) on an exclusive basis, subject to
Section 2.3
, to customers in the private sector, and (ii) on a non-exclusive basis to customers in the public sector, and Distributor hereby accepts such appointments. Notwithstanding the foregoing, Company may sell the Products to corporate customers in the Territory, whether such customer is in the public or private sector, if either (x) Distributor is not currently selling any Products to that customer, or (y) Distributor is unable to fulfill the purchase orders of such customer because of a lack of funds necessary to purchase the Products from Company to supply to such customer. Distributor may promote and sell the Products within the Territory only. Distributor may not directly or indirectly market, promote, solicit sales or sell the Products to customers anywhere outside of the Territory, or ship or export any Products to any destination outside the Territory. Notwithstanding the foregoing, Company acknowledges the difficulty for Distributor to determine whether orders placed by individuals through the internet are intended for customers inside or outside the Territory and accordingly Distributor shall be required only to use its best efforts to ensure that it does not sell the Products to any individual anywhere outside the Territory . Distributor shall promote and sell the Products in the Territory based on sound competition and in a nondiscriminatory manner. If Distributor or any of its Affiliates receive any orders for Products from outside the Territory, Distributor shall promptly refer such orders to Company.
|
2.2
|
Territory
. At any time before the end of eighteen (18) months from the Effective Date, Distributor may elect to add one or more of Kenya, Tanzania or Zambia to the Territory upon written notice to Company and each such country shall be added to the Territory upon the date that Company receives such written notice relating to such country. If during such initial eighteen (18) months period Company receives any
bona fide
offer from any third party to distribute the Products in any such country that has not already been added to the Territory, Company shall notify Distributor and Distributor shall have ten (10) days from receipt of such notification to elect to add such country to the Territory upon written notice to Company. If Distributor does not serve written notice of its election to add such country to the Territory before the end of ten (10) days from receipt of the notification from Company, Company may proceed to conclude an agreement with the third party to distribute the Products in such country, and Distributor shall have no further rights with respect to the distribution of the Products in such country.
|
2.3
|
Exclusivity
. The appointment of Distributor for sale of Products to customers in the private sector shall initially be on an exclusive basis with respect to each Country. If Distributor fails to purchase in a particular month at least such quantities of Product as are set forth in the applicable Firm Order for a particular Country, the Company, at its sole discretion, shall be entitled to (i) terminate this Agreement in its entirety or with respect to such Country only, pursuant to Section 8.3, with immediate effect upon written notice to Distributor, or (ii) immediately convert the appointment of Distributor to a non-exclusive appointment with respect to the sale of Products to customers in the private sector in such Country, and Company shall be entitled to appoint one or more other distributors of Product in such Country.
|
2.4
|
Product Prices
. Company shall supply Products to Distributor at the Company’s list price for the Product for the applicable country (“List Price”). The List Price for the Product in Nigeria as at the Effective Date is specified in
Schedule 2
. If Distributor elects to add another country to the Territory pursuant to
Section 2.2
, the Parties shall agree the List Price for such country at such time, provided that if the Parties are unable to reach agreement on the List Price within thirty (30) days of Distributor’s election to add the country to the Territory, the List Price in such country shall be deemed to be the then current List Price for the Product in Nigeria. Company may raise the List Price prior to December 31, 2014 effective upon thirty (30) days’ notice to Distributor, but only if and to the extent that Company’s cost of purchasing active pharmaceutical ingredient for the Product increases. Thereafter, Company may adjust the List Price from time to time during the term of the Agreement, effective upon thirty (30) days’ notice to Distributor. Distributor may not sell the Product to any customers in the public sector in Nigeria at a price that exceeds US $1.50 per pill without Company’s prior written consent. For any Carton sold by Distributor at a price above US $1.50 per pill, Distributor shall pay Company an amount equal to twelve and a half (12.5) percent of the difference between US $1.50 (or the List Price if higher) and the actual selling price for such Carton. The parties agree that, upon the failure of Company to deliver all or any portion of a purchase order within sixty (60) days after the requested delivery date specified in the purchase order for reasons other than those attributable to Distributor, then, Distributor shall be released from the obligation to purchase such delayed quantities. Subject to the foregoing, Company shall have no liability if for any reason Company is unable to deliver any Product ordered by Distributor by the requested delivery date.
|
2.5
|
Product Specifications and Acceptance of Delivered Products
. Company warrants that, at the time of delivery thereof, the Products shall be of the kind and quality described in the product specifications set forth on
Schedule 3
. Distributor shall inspect the Products upon customs release in the Territory in order to verify that the delivery conforms to the applicable purchase order and that the packaging and labeling is undamaged. If any obvious physical, packaging or labeling damage or defect is evident upon visual inspect of the Product and discoverable without affecting the integrity of the Product packaging, Company shall, upon receipt of written notification by Distributor within five (5) business days after customs release, replace the defective Product, packaging or labeling promptly and pay all freight and duty with respect to such replacement,
provided
that Distributor shall have returned the defective Product to Company. If Distributor fails to notify Company in writing within five (5) business days after customs release of any defective Product, packaging or labeling, delivered Products shall be considered accepted by Distributor and as conforming to this Agreement.
|
2.6
|
No Returns
. All sales of Product under this Agreement are final. Distributor shall not have the right to return any Product to Company, except in the case of a defect notified by Distributor in accordance with
Section 2.5
. In the event that Company receives any returned Product from a third party, Company shall notify Distributor of such returned Product and destroy such Product at Distributor’s sole expense, unless such returns relate to a Company initiated or governmental authority recall not caused by Distributor’s negligence or breach of this Agreement, in which case Company shall accept the return of such Products at Company’s sole cost and expense.
|
2.7
|
Additional Products
. In the event that Company or an Affiliate obtains a marketing authorization in the Territory for any pharmaceutical product other than a Product (“Additional Product”), Company shall notify Distributor and Distributor shall have the option to negotiate exclusively, for a period of forty-five (45) days from receipt of such notification, an agreement with Company to distribute such Additional Product in the Territory. If by the end of such forty-five (45) day period the parties have been unable to reach such an agreement Company shall be free to distribute such Additional Product in the Territory itself or to appoint another distributor for such Additional Product.
|
3.
|
Distributor Rights and Obligations
|
3.1
|
Terms and Conditions of Resale
. Subject to the terms and conditions of this Agreement, Distributor shall have sole discretion over the terms and conditions of the sale of the Products in the Territory. Without limiting the generality of the foregoing, Distributor shall have sole discretion over Distributor’s price(s) for the Products and any pricing, discount and credit policies for its customers and shall be responsible for all costs and credit risks associated with sale and shipment of the Products to Distributor’s customers, including shipping and insurance costs, risks of its customers’ credit, returns and debt collection for any and all Product purchases made by Distributor’s customers. Distributor shall be responsible for (a) Product order processing, tracking and fulfillment, (b) processing and payment of chargebacks and rebates with respect to Products and (c) processing of returns of Products to Distributor. Upon request, Distributor shall provide Company a copy of any policies it maintains related to any of the foregoing.
|
3.2
|
Product Packaging
. Distributor shall sell the Products in the original packaging as supplied by Company and shall not change any marking or other legend on the packaging, labels or instruction for use without Company’s prior written consent. If Company consents to any such changes, such changes shall be effected at Distributor’s sole cost and expense. In case Applicable Law requires modification of any packaging, labels or instructions for use in the Territory, Distributor shall immediately notify Company thereof.
|
3.3
|
Trademarks
. Distributor shall sell the Products under the Lodonal Trademark in accordance with the instructions regarding use of the Trademark that Company may issue from time to time. Company hereby grants to Distributor a non-exclusive, non-sublicensable, royalty-free license to use the Lodonal Trademark solely for the purposes set forth in this Agreement, which license shall terminate upon the expiration or termination of this Agreement. Distributor shall ensure that each reference to and all use by it of the Lodonal Trademark, or any label, packaging, pamphlet, promotional or advertising material or other document is in accordance with such instructions. Distributor shall not, and shall cause its Affiliates not to, use the Lodonal Trademark in any manner whatsoever that may jeopardize the significance, distinctiveness or validity thereof. Distributor agrees that all right, title and interest in and to the Lodonal Trademark shall at all times remain the exclusive property of Company and any use of the Lodonal Trademark in the Territory shall inure to the benefit of Company only and not Distributor. Distributor hereby recognizes the validity of the Lodonal Trademark and the registrations thereof, and shall not, and shall cause its Affiliates not to, during the term of this Agreement or thereafter, contest the validity thereof. Distributor acknowledges that all use of the Lodonal Trademark by or on behalf of Distributor shall inure to the benefit of Company or its Affiliates, as the case may be. Distributor shall not be entitled to any compensation for any increase in the value of the Lodonal Trademark or in the goodwill associated therewith.
|
3.4
|
Safety Stock
. With effect from 1 June 2014, Distributor shall at all times maintain an adequate stock of Products to cover at least three (3) months’ demand and Distributor’s Forecasts (defined in
Section 5.2
) and purchase orders shall be submitted accordingly.
|
3.5
|
Monthly Reports
. No later than ten (10) business days after the end of each month, Distributor shall submit to Company a monthly written report including, but not limited to, on a Country by Country basis the number of Cartons sold, resale price of each Carton, customer details, marketing activities and inventory of the Products. All such reports shall be made using a format to be agreed between the Parties.
|
3.6
|
Records and Audits
. Distributor shall maintain, and shall cause its Affiliates to maintain, complete and accurate books and records in such detail as is necessary to verify Distributor’s compliance with its obligations hereunder. Such books and records shall be maintained for a period of at least five (5) years after the end of the calendar year in which they were generated, or for such longer period as may be required by Applicable Law. Not more than twice during any twelve (12)-consecutive month period, Distributor shall permit Company or its authorized representatives, upon reasonable notice, to inspect, verify and audit Distributor’s compliance with Applicable Law and this Agreement, including Distributor’s books and records and the premises used for the storage of Products, and to audit Distributor’s working methods and procedures with respect to the Products,
provided
that Company shall be entitled to conduct additional inspections and audits in the event (a) Distributor receives any notice of inspection or violation of Applicable Law from any governmental authority to the extent related to any Product or (b) if any audit reveals that Distributor is or was not in material compliance with this Agreement or with Applicable Law to the extent related to any Product, in either case ((a) or (b)), as may be reasonably required by Company to determine whether Distributor has appropriately remedied any such violation or non-compliance. Such audits shall be conducted and shall take place, and Distributor shall, and shall cause its Affiliates to, make such books and records available, during normal business hours at the facilities where such books and records are maintained. If and to the extent Products are stored by a third party on behalf of Distributor, Distributor shall arrange for an audit by Company or its representatives at the facilities of such third party. Following each such audit, Company shall discuss its observations and conclusions with Distributor and Distributor shall implement such corrective actions as may be reasonably determined by Company within sixty (60) days after notification thereof by Company.
|
3.7
|
Compliance with Laws
. Distributor shall at all times comply with Applicable Law, including GDP, in each country in which Distributor is selling the Product or otherwise performing activities under this Agreement. In furtherance of the foregoing, Distributor shall (a) store, handle and distribute the Products in clean and sanitary conditions as required to maintain the quality and traceability of the Products, (b) comply with Applicable Law related to the storage, handling, distribution, marketing and sale of the Products, including applicable recordkeeping obligations and (c) not market the Products in any manner that is inconsistent with the labeling of the Products or Applicable Law or otherwise make any false or misleading representations to customers or others regarding the Products. For the avoidance of doubt, Applicable Law shall include all regulations and guidance issued by the Nigerian National Agency for Food and Drug Administration and Control, and any similar regulatory authorities in each of Kenya, Tanzania or Zambia, to the extent Distributor elects to include such countries within the scope of this Agreement in accordance with
Section 2.2
.
|
3.8
|
Import Requirements
.
|
a)
|
Distributor shall obtain, at Distributor’s cost, all licenses and permits and satisfy any formalities required to import the Products and any related documentation (collectively, “
Company Material
”) into the Territory in accordance with Applicable Law.
|
b)
|
Distributor shall be the importer of record into the Territory for all importations of Company Material and shall comply with and bear sole legal and financial responsibility for complying with Applicable Law, to the extent such compliance is within Distributor’s control, relating to the shipment, transport and importation of Company Material in the Territory. Distributor shall be solely responsible for any and all duties, fines, penalties and similar charges resulting from non-compliance with Applicable Law related to customs and imports in the Territory, to the extent compliance is within Distributor’s control, including but not limited to tariff classification, valuation, country of origin marking, labeling, import permits or licenses, quota or other restrictions or requirements applicable in the Territory or if the Company Material has not been transported or imported into Territory, in accordance with Applicable Law.
|
3.9
|
Export and Trade Controls
.
|
a)
|
Distributor is aware of, and covenants and agrees to observe and comply fully with, Applicable Law related to export control and economic sanctions of the European Union and EU Member States, the Territory, and the United States, including but not limited to the EU export controls on dual-use items established according to Council Regulation 428/2009 (“
EU Dual-use Regulation
”); EU economic and financial sanctions imposed pursuant to EU Regulations and any other restrictive measures imposed pursuant to Member States’ export control and sanctions regulations; Applicable Law of the United States, including but not limited to the Export Administration Regulations (“
EAR
,” 15 C.F.R. Parts 730-774) and economic sanctions laws and regulations maintained and implemented by the U.S. Treasury Department’s Office of Foreign Assets Control (“
OFAC
,” through 31 C.F.R. Part 500
et seq
. and pursuant to various executive orders and statutes administered by OFAC); and any other Applicable Law related to export controls and economic sanctions of other jurisdictions to the extent compliance with such Applicable Law is not prohibited or penalized by Applicable Law of the United States (collectively, “
Export and Trade Controls
”).
|
b)
|
Without limiting the generality of the foregoing, Distributor expressly agrees that it shall not export (directly or indirectly), re-export, divert or otherwise transfer Company Material to any destination, entity or individual restricted or prohibited from receiving such Company Material by applicable Export and Trade Controls without obtaining all required governmental licenses or other authorizations.
|
c)
|
Distributor expressly agrees not to sell, ship or otherwise transfer Company Material to entities or persons identified on, or owned or controlled by entities or persons identified on, any applicable governmental list of denied or restricted parties, including but not limited to the EU Consolidated List of Designated Parties, maintained by the European Union; the Consolidated List of Assets Freeze Targets, maintained by HM Treasury (U.K.); the UN Consolidated List, maintained by the UN Security Council Committee; and the various restricted-party lists and measures maintained by the U.S. Departments of Commerce, State and Treasury, including the List of Specially Designated Nationals and Blocked Persons, the Denied Persons List, the Unverified List, the Entity List, the Debarred List and the nonproliferation sanctions lists (collectively, “
Lists of Restricted Parties
”). Distributor acknowledges that the Lists of Restricted Parties are frequently updated and that the lists maintained by the U.S. government can presently be accessed at: http://export.gov/ecr/eg_main_023148.asp. It is the responsibility of Distributor to ensure that it is not engaging with entities or persons subject to trade restrictions and to routinely check the updated Lists of Restricted Parties. Because nothing in this Agreement is meant to require compliance with Applicable Law of a jurisdiction other than the United States where such compliance would be prohibited or penalized by Applicable Law of the United States, a “restricted party” in this context does not include entities or persons that are subject to boycotts that the United States does not endorse (such as the Arab League boycott of Israel).
|
d)
|
In no event shall Company or Distributor be obligated under this Agreement to take any action or omit to take any action that either party believes, in good faith and in its sole discretion, would cause it to be in violation of or subject to penalties under Applicable Law, including without limitation, Export and Trade Controls.
|
e)
|
In the event Company concludes, in its sole discretion, that Distributor has failed to meet its obligations under
Sections 3.8
or
3.9
, or any Affiliate of Distributor is identified on any applicable Lists of Restricted Parties or is subject to any denial of export privileges, Company shall be entitled to terminate this Agreement, pursuant to
Section 8.3
, with immediate effect upon written notice to Distributor.
|
3.10
|
Regulatory Approvals
. Distributor shall be solely responsible for securing, at Distributor’s cost, all required governmental or regulatory authority approvals, registrations, permits and licenses necessary to market, promote, offer for sale, sell, supply and distribute the Product in the Territory (“Regulatory Approvals”). To the extent permitted by Applicable Law, Distributor shall obtain all such Regulatory Approvals in the name of Company. Subject to compliance with Export and Trade Controls, Company shall make available to Distributor all information in its possession related to the Product and cooperate with Distributor in completing and executing all documents as reasonably necessary to obtain such Regulatory Approvals in English. Distributor shall use such information solely for purposes of obtaining Regulatory Approvals in the Territory, and all such information shall be Confidential Information of Company. Company shall provide to Company free of charge any samples required to be provided to the applicable regulatory authorities in connection with any application for any Regulatory Approval. To the extent permitted by law, all such Regulatory Approvals shall be owned by Company or its designee. If any Regulatory Approval has not been achieved for Nigeria by 31 December 2013, and for Kenya, Tanzania and/or Zambia, as applicable, within eighteen (18) months from the Effective Date, or any other time agreed in writing between the parties, or Distributor has failed to inform Company in writing that any Regulatory Approval is not necessary, Company shall be entitled to terminate this Agreement in its entirety or with respect to the affected Country only, pursuant to
Section 8.3
, with immediate effect upon written notice to Distributor. Distributor shall provide Company with (a) copies of any and all written or electronic correspondence relating to any Product received from any governmental authority and (b) copies of any and all meeting minutes and summaries of all meetings, conferences and discussions relating to any Product with any governmental authority, including copies of all contact reports, in each case ((a) and (b)), within five (5) business days of its receipt or production of the foregoing, as applicable.
|
3.11
|
Promotional Materials
. Distributor shall not use any promotional materials in connection with the marketing, sale or distribution of the Products without Company’s prior written approval,
provided
that notwithstanding any review and approval by Company of any promotional materials, Company shall have no liability whatsoever to Distributor or any other person in connection with any promotional material created or used by Distributor.
|
3.12
|
Intellectual Property Infringements
. Distributor shall without delay notify Company of infringements or potential or suspected infringements by third parties, including counterfeits, of any intellectual property rights concerning the Products that become known to Distributor. Distributor shall at Company’s request assist Company in any action which Company deems necessary in order to investigate and stop any infringement. Company shall reimburse Distributor for its direct costs incurred in such assistance. Distributor is not entitled to take any measures of its own against an infringement without the prior written consent of Company.
|
3.13
|
Non-Competition
. During the term of this Agreement, Distributor shall not manufacture, have manufactured, market, distribute, offer for sale or sell in the Territory, any product that contains the same active pharmaceutical ingredient as the Products, without Company’s prior written consent.
|
3.14
|
Taxes
. Distributor shall be responsible for any national or local sales or use tax, value added tax or international sales tax, excise or similar charge or other assessment (other than that assessed against income). Where any sum due to be paid to either party hereunder is subject to any withholding or similar tax, the parties shall use their best efforts to do all such acts and to sign all such documents as will enable them to take advantage of any applicable double taxation agreement or treaty. In the event there is no applicable double taxation agreement or treaty, or if an applicable double taxation agreement or treaty reduces but does not eliminate such withholding or similar tax, a party making a payment hereunder shall pay such withholding or similar tax to the appropriate government authority, deduct the amount paid from the amount due to the party receiving a payment hereunder and secure and send to such party evidence of the tax payment made to the government authority.
|
3.15
|
Distributor Fees
. Company shall pay Distributor a distribution fee of twenty-five (25) US cents for each Product purchased by Distributor pursuant to this Agreement, of which twelve and a half (12.5) US cents may be credited against Company’s invoices issued pursuant to Section 5.4 and twelve and a half (12.5) US cents shall be paid by Company to Distributor’s Affiliate, [GB Pharma], within thirty (30) days after Company’s receipt of a valid invoice from [GB Pharma]. For the avoidance of doubt, Company shall not be liable to pay any fees relating to distribution of the Products in the Territory under this Agreement to any other party and Distributor shall indemnify Company pursuant to
Section 9.1
in the event that any third party claims to be entitled to receive any such fees from Company.
|
4.
|
Quality Control
|
4.1
|
Traceability
. Distributor shall ensure traceability for all Products in accordance with reasonable Company Standard Operating Procedures.
|
4.2
|
Product Quality Complaints
. Distributor shall notify Company of any Product Quality Complaint promptly and in any event within twenty-four (24) hours of Distributor’s receipt of such Product Quality Complaint. Distributor shall provide Company with such further information and assistance in investigating such Product Quality Complaint as Company may reasonably request.
|
4.3
|
Adverse Events
. Company may establish and provide to Distributor reasonable policies and procedures for reporting Adverse Events and Distributor shall comply with such policies and follow such procedures as may be updated from time to time by written notice from Company to Distributor. Distributor shall report to Company any information that becomes known to Distributor from any source in any form relating to an Adverse Event concerning the Product, that suggests a significant risk in humans exposed to the Product or that otherwise relates to the safety of the Product (collectively, “Relevant Safety Information”). Distributor shall report such Relevant Safety Information to Company as soon as it becomes available, but in any event within twenty-four (24) hours of becoming aware of such Relevant Safety Information. All such Relevant Safety Information shall be transmitted in English in accordance with the policies and procedures provided to Distributor in accordance with this
Section 4.3
and such other instructions as Company shall provide to Distributor from time to time. Such report shall include the incidence and, if requested by Company, the severity of the Adverse Event. Upon Company’s receipt from Distributor of any Relevant Safety Information (whether pursuant to this
Section 4.3
or otherwise), Distributor shall, if requested, provide such further information and assistance as Distributor may reasonably require in connection with such Relevant Safety Information.
|
4.4
|
Recalls
. In the event that any recall of a Product in the Territory shall be required by a governmental authority, or Company shall voluntarily determine to recall any Product or take any other market withdrawal action with respect to any Product, Company shall be responsible for the overall management of such recall or market withdrawal, including communicating with governmental authorities with respect thereto, and Distributor shall conduct the recall or market withdrawal as directed by Company. Company shall be responsible for all recall or market withdrawal expenses, except to the extent such recall or market withdrawal results from a breach of this Agreement by Distributor, in which event Distributor shall reimburse Company for all expenses incurred by Company or its Affiliates in connection with such recall or market withdrawal to the extent attributable to such breach. Prior to determining whether to implement a recall or market withdrawal with respect to a Product in the Territory, Company shall consult in good faith with Distributor,
provided
that if the parties do not agree whether a recall or market withdrawal should be implemented, the decision to initiate a recall or market withdrawal shall be made by Company in its sole discretion, unless such recall is required by a governmental authority. Distributor shall not implement a recall or other market withdrawal in the Territory with respect to any Product without the prior written consent of Company, unless (i) such recall is required by a governmental authority or (ii) Distributor’s failure to implement a recall would result in violations of any Applicable Law by the Distributor or expose the Distributor, or any of its officers, managers, or employees to civil or criminal penalties in the Territory. Distributor shall notify Company immediately of any event or circumstance that may warrant a recall or market withdrawal of any Product.
|
4.5
|
Regulatory Inspection
. In the event of any inspections or audits by any governmental authority of Distributor’s premises or, if applicable, any of its Affiliates’ premises to the extent related to any Product, Distributor promptly shall notify Company and shall furnish to Company any reports by such authority to the extent applicable to any Product as promptly as practicable following receipt thereof by Distributor. Distributor shall provide Company the opportunity to review and approve any and all submissions to any governmental authority to the extent related to any Product prior to the submission thereof.
|
5.
|
Target Sales, Forecasts, Orders and Promotional Activities
|
5.1
|
Target Sales
. Distributor shall use its commercially reasonable efforts to achieve the following monthly sales of Product (the “Target Sales”) in each Country by the following date (the “Target Date”):
|
Country
|
Monthly Sales of Cartons
|
Target Date
|
|||
Nigeria
|
500,000 |
By 31 March 2015
|
|||
Nigeria
|
1,000,000 |
By 31 December 2015
|
|||
Kenya
|
100,000 |
3
rd
anniversary of the Effective Date
|
|||
Tanzania
|
100,000 |
3
rd
anniversary of the Effective Date
|
|||
Zambia
|
100,000 |
3
rd
anniversary of the Effective Date
|
5.2
|
Forecasts and Firm Orders
. With effect from 1 February 2014, no later than one (1) week prior to the end of each month, Distributor shall provide a forecast of its estimated monthly requirements of the Products for at least the six (6) month period beginning with the following month on a Country by Country basis (each, a “
Forecast
”). The beginning month of each Forecast shall be referred to as “Month 1” and each subsequent month shall be numbered sequentially. The quantity of Products indicated for Months 1–4 shall be firm and binding on Distributor (a “
Firm Order
”). Months 5–6 of each Forecast will remain flexible and can be varied by Distributor, subject to Distributor’s efforts to achieve the Target Sales by the Target Dates. Distributor shall be obligated to purchase at least such quantities of Product as are set forth in each Firm Order. The initial Forecast is attached as Schedule 5.
|
5.3
|
Orders and Shipment
. On the Effective Date, Distributor shall place a purchase order for between one million US dollars ($1,000,000) and one and a half million US dollars ($1,500,000) of Product, which the parties intend shall satisfy Distributor’s requirements for Product in 2013 and January 2014. On the Effective Date, Distributor shall pay Company fifty-one thousand US dollars ($51,000) to purchase the API for the Product for such purchase order. Distributor shall pay the balance of such purchase order upon receipt of Regulatory Approval for the Product in Nigeria and Companyshall ship the Product to Distributor upon receipt of such payment. Thereafter, Distributor shall submit purchase orders to Company from time to time, provided that each month Distributor places orders for at least the amount of the Firm Order for such month. Each purchase order shall specify the number of Cartons required per Country and the requested delivery date, which date shall be no more than ninety (90) days and no less than thirty (30) days after the date of the purchase order. Distributor shall pay fifty (50) percent of the price for each delivery of Products within five (5) days of the date of Company’s invoice issued pursuant to Section 5.4 and shall effect payment of the balance, after deducting an amount equal to the fees payable to Distributor with respect to such Products under Section 3.15, not later than ten (10) days prior to the requested delivery date thereof as specified in the applicable purchase order. In any month, Distributor may place orders for more Product than is set out in the Firm Order for such month, provided that Company may reject any purchase orders in excess of ten (10) percent or more of the Firm Order for the applicable month. Products shall not be shipped prior to receipt of payment by Company. If full payment is not received at least ten (10) days prior to the requested delivery date thereof as specified in each purchase order, such purchase order shall be considered cancelled. Products shall be delivered CIP (Incoterms 2010) to a location directed by the Distributor. Title to and risk of loss of Product supplied hereunder shall pass to Distributor upon delivery.
|
5.4
|
Invoices
. Company shall invoice Distributor for Product ordered pursuant to each purchase order within five (5) days of receipt of the applicable purchase order. Distributor shall pay company for Product in accordance with Section 5.3.
|
5.5
|
Letter of Credit
. With each Forecast, Distributor shall provide to Company, at Company’s election, (i) a letter of credit from Distributor’s bank, (ii) a payment on account for an amount equal to the Company’s cost of purchasing the active pharmaceutical ingredient necessary to manufacture the amount of Product forecast to be purchased in Months 1-6 of the applicable Forecast, or (iii) such other form of collateral deemed acceptable by the Company, in accordance with instructions from the manufacturer of the active pharmaceutical ingredient. If Distributor fails to provide such letter of credit, advance payment or other collateral, Company (x) cannot guarantee the price of the Product and shall be entitled to increase the List Price of the Product without notice to reflect the cost of Company’s cost of purchasing active pharmaceutical ingredient for the Product and (y) shall have no liability if Company is unable to supply the quantity of Product required by Distributor. Company shall provide Distributor with the cost of purchasing the active pharmaceutical ingredient from time to time in accordance with price fluctuations in the market. As at the Effective Date, the Company’s cost of purchasing the active pharmaceutical ingredient necessary to manufacture the amount of Product Forecast is US $0.035 per pill or US $1.05 per carton.
|
5.6
|
Annual Marketing and Promotional Activities Plan
. Distributor shall use its best efforts to develop the business with respect to the Products in the Territory, following the global strategy outlined by Company for the Products from time to time. Without limiting the generality of the foregoing, Distributor shall conduct, at its cost, the promotional activities outlined in the Marketing Plan for each calendar year. Distributor shall maintain an adequate promotional and selling organization so as to keep proper contacts with prospective customers. The activities of the Distributor shall be evaluated by Company on a continuous basis. Distributor shall, before December 1, 2013, and thereafter, before October 1 every year during the term of the Agreement, submit an annual promotional and marketing plan (each, a “
Marketing Plan
”) for the coming calendar year to Company for negotiation between the parties and mutual approval. Such Marketing Plan shall include:
|
a)
|
Description of the existing and potential market;
|
b)
|
Projected sales of the Products for the applicable year;
|
c)
|
Coverage of relevant customer groups by sales representatives;
|
d)
|
Requirements for promotional material;
|
e)
|
Proposal for advertising and other promotional efforts;
|
f)
|
List of planned activities such as workshops for the education and training of the customers;
|
g)
|
Launch date for the Products, if applicable; and
|
h)
|
Such additional information as Company may reasonably request.
|
5.7
|
Promotional Material.
Distributor shall submit all promotional material relating to the Products to Company for review and approval at least ten (10) days prior to intended use of such materials.
|
5.8
|
Meetings
. At the request of Company, meetings shall take place between Company and Distributor for discussing the various aspects of (e.g., advertising and sales) promotion activities to be performed.
|
6.
|
Representations and Warranties
|
6.1
|
Ethical Business Practices.
|
a)
|
Distributor hereby represents and warrants that (i) in carrying out its responsibilities under this Agreement, Distributor and its owners, directors, officers, partners, employees and agents shall not pay, offer or promise to pay, or authorize the payment directly or indirectly, of any monies or anything of value to (1) any official, employee, or representative of any government or government agency, any entity that is owned or controlled by a government or government agency, or any public international organization or (2) any political party or candidate for public office, for the purpose of influencing any act or decision of such person or entity, or of the government, to obtain or retain business; (ii) Distributor and its owners, directors, officers, partners, employees and agents shall not pay, offer or promise to pay, or authorize the payment directly or indirectly, of any monies or anything of value to a director, officer or employee of another company or organization in the private sector or to an intermediary for another company or organization in the private sector with the intent of causing the recipient or some other person to violate his or her duty of loyalty to such other company or organization or as a reward for having done so; and (iii) no owner, director, officer, partner, employee or agent of Distributor or of any of its Affiliates is or will become an official or employee of a government during the term of this Agreement without the prior written consent of Company.
|
b)
|
Distributor shall maintain true, accurate and complete books and records sufficient to demonstrate compliance with the representations and warranties in the Agreement, including, without limitation, this
Section 6.1
.
|
c)
|
In the event Company has reason to believe that a breach of any of the representations and warranties in this
Section 6.1
has occurred or may occur, Company may (i) withhold further delivery of Products to Distributor until such time as it has received confirmation to its satisfaction that no breach has occurred or will occur, (ii) audit Distributor’s financial and other books and records in order to satisfy itself that no breach has occurred and (iii) terminate this Agreement, pursuant to
Section 8.3
, with immediate effect upon written notice to Distributor. Company shall not be liable to Distributor for any Losses related to Company’s decision to withhold delivery under this provision.
|
d)
|
In no event shall Company be obligated under this Agreement to take any action or omit to take any action that Company believes, in good faith, would cause it to be in violation of Applicable Law, including, without limitation, the U.S. Foreign Corrupt Practices Act.
|
e)
|
In the event of a breach of any of the representations and warranties in this
Section 6.1
, this Agreement shall be void
ab initio
without the requirement of any written notice of cancellation or termination and the indemnification available to Company and its related parties under
Section 9
shall apply.
|
6.2
|
Debarment
. Neither Distributor nor any of its Affiliates nor any of their respective employees is (a) under investigation by any governmental or regulatory authority for debarment action or (b) presently debarred under Applicable Law.
|
6.3
|
Additional Representations and Warranties
. Each party hereby represents and warrants to the other party as follows:
|
a)
|
Such party (i) is duly incorporated or formed and in good standing under the laws of the jurisdiction of its incorporation or formation, (ii) has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder and (iii) has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such party and constitutes a legal, valid and binding obligation of such party and is enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered a proceeding at law or equity.
|
b)
|
All necessary consents, approvals and authorizations of all governmental authorities and other persons required to be obtained by such party in connection with the execution and delivery of this Agreement and the performance of its obligations hereunder have been obtained.
|
c)
|
The execution and delivery of this Agreement and the performance of such party’s obligations hereunder (i) do not and will not conflict with or violate any requirement of Applicable Law or any provision of the articles of incorporation, bylaws or other constituting documents of such party and (ii) do not and will not conflict with, violate, or breach, or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such party is bound.
|
6.4
|
Disclaimer of Warranty
. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
|
7.
|
Confidentiality
|
7.1
|
Confidential Information
. Subject to the provisions of
Sections 7.2
and 7
.3
, at all times during the term of this Agreement and for ten (10) years following the expiration or termination of this Agreement, each party (a) shall keep completely confidential and shall not publish or otherwise disclose any Confidential Information furnished to it by the other party, except to those of its employees, Affiliates or consultants who have a need to know such information to perform its obligations or exercise its rights hereunder (and who shall be advised of the parties’ obligations hereunder and who are bound by confidentiality obligations with respect to such Confidential Information no less onerous than those set forth in this Agreement) (collectively, “
Recipients
”) and (b) shall not use Confidential Information of the other party directly or indirectly for any purpose other than performing its obligations or exercising its rights hereunder. Each party shall be jointly and severally liable for any breach by any of its Recipients of the restrictions set forth in this Agreement.
|
7.2
|
Exceptions to Confidentiality
. The obligations set forth in
Section 7.1
shall not extend to any Confidential Information:
|
a)
|
that is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no wrongful act, fault or negligence on the part of a party or its Recipients;
|
b)
|
that is received from a third party without restriction and without breach of any obligation of confidentiality between such third party and a party;
|
c)
|
that a party can demonstrate by competent evidence was already in its or its Recipients’ possession without any limitation on use or disclosure prior to its receipt from the other party; or
|
d)
|
that is generally made available to third parties by the other party without restriction on disclosure.
|
7.3
|
Permitted Disclosures
. Each party and its Recipients may disclose Confidential Information to the extent that such disclosure is:
|
a)
|
made in response to a valid order of a court of competent jurisdiction or other governmental authority,
provided
that a party making such disclosure shall first have given notice to the other party and given the other party a reasonable opportunity to quash such order or to obtain a protective order requiring that the Confidential Information or documents that are the subject of such order be held in confidence by such court or governmental authority or, if disclosed, be used only for the purposes for which the order was issued and
provided
further
that if a disclosure order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental order shall be limited to that information which is legally required to be disclosed in such response to such court or governmental order; or
|
b)
|
otherwise required by Applicable Law, in the opinion of counsel to the party making such disclosure,
provided
the party uses commercially reasonable efforts to obtain a protective order or other reliable assurance that confidential treatment will be accorded to the Confidential Information so disclosed; or
|
c)
|
otherwise required to be disclosed in order to comply with the terms of this Agreement.
|
8.
|
Term and Termination
|
8.1
|
Term
. Unless earlier terminated in accordance with the terms hereof, this Agreement shall be valid for a period of five (5) years from the Effective Date, and may thereafter be extended for an additional five-year period, subject to agreement between the parties on Target Sales requirements for the additional five-year term. Distributor shall not be entitled to any compensation in case the parties fail to extend this Agreement.
|
8.2
|
Mutual Termination
. This Agreement may be terminated by either party if the other party:
|
a)
|
is in breach of any obligation under this Agreement,
provided
that if the breach is remediable, the Agreement shall not be terminated if the breaching party, within thirty (30) days after written notice sent by the terminating party, has remedied the breach,
|
b)
|
is guilty of fraud or any other unlawful act or omission in connection with or affecting this Agreement, or
|
c)
|
shall file in any court or with any governmental authority, pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the other party or of its assets, or if the other party proposes a written agreement of composition or extension of its debts, or if the other party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty (60) days after the filing thereof, or if the other party shall propose or be a party to any dissolution or liquidation, or if the other party shall make an assignment for the benefit of its creditors.
|
8.3
|
Termination by Company
.
|
a)
|
This Agreement may be terminated by Company, immediately upon notice, in the event that any third party claims that sale of any Product in the Territory under this Agreement infringes or misappropriates any intellectual property right of such third party.
|
b)
|
Company may, in its sole discretion, (i) terminate this Agreement in its entirety, or (ii) terminate this Agreement on a Country-by-Country basis, in the event that Distributor fails to achieve the Target Sales for a particular Country by the Target Date for such Country.
|
c)
|
Company may, in its sole discretion, (i) terminate this Agreement in its entirety, or (ii) terminate this Agreement on a Country-by-Country basis, in accordance with the terms of
Sections 2.3,
3.9(e)
,
3.10
,
6.1(c)
,
10.4
and
10.6
.
|
8.4
|
Survival
. The expiration or earlier termination of this Agreement shall be without prejudice to any rights or obligations of the parties that may have accrued prior to such expiration or termination (including payment of any amounts due hereunder), and the provisions of
Sections 1
(definitions),
2.6
(no returns),
3.6
(records and audits),
3.13
(non-competition),
4
(quality control), 7 (confidentiality),
8
(term and termination),
9
(indemnification) and
10
(miscellaneous) shall survive the expiration or termination of this Agreement.
|
8.5
|
Return of Inventory
. In the event of termination or expiration of this Agreement, Distributor shall within ninety (90) days make Distributor’s entire inventory of the Products in saleable condition available to the Company, and Company shall have the right but not the obligation to repurchase the inventory for the same price as Distributor paid to Company. If Company does not exercise its right to repurchase within fifteen (15) days after the date on which Distributor makes its inventory available to the Company, Distributor shall be permitted a selloff period of one hundred twenty (120) days to sell off any inventory in its possession. Distributor shall immediately cease all sales, marketing and distribution of the Product at the end of such selloff period and Distributor shall immediately destroy any inventory then-remaining under its control, at its expense, and shall either (a) allow a Company representative to be present during such destruction or (b) provide a certificate of such destruction.
|
8.6
|
Transfer of Rights, Authorizations and Registrations
. Immediately after the expiration or termination of this Agreement, Distributor shall (a) cease using the Trademarks and any other trademark or trade name which, in the reasonable opinion of Company, is confusingly similar thereto and (b) arrange for the transfer to Company (or any other party indicated by Company) of any Regulatory Approvals in the Territory and all documents regarding the Products in the possession of the Distributor.
|
9.
|
Indemnification
|
9.1
|
Indemnification of Company
. Distributor shall indemnify, defend and hold harmless Company and its Affiliates, and their respective directors, officers, employees and agents from and against any and all Losses with respect to third party claims arising from or relating to (a) any breach of this Agreement by Distributor or (b) any negligence or willful misconduct on the part of Distributor, its Affiliates and their respective directors, officers, employees and agents in connection with the performance of this Agreement, in each case except to the extent that such Losses arise from Company’s breach of this Agreement.
|
9.2
|
Indemnification of Distributor
. Company shall indemnify, defend and hold harmless Distributor and its Affiliates, and their respective directors, officers, employees and agents from and against any and all Losses with respect to third party claims arising from or relating to (a) any breach of this Agreement
by Company, (b) any Product recall not caused by Distributor’s negligence or breach of this Agreement, or (c) any negligence or willful misconduct on the part of Company, its Affiliates or their respective directors, officers, employees and agents in connection with the performance of this Agreement, in each case except to the extent that such Losses arise from Distributor’s breach of this Agreement.
|
9.3
|
Notice of Claim
. In the event that any person entitled to indemnification under this
Section 9
is seeking indemnification hereunder, such person shall provide prompt written notice (an “
Indemnification Claim Notice
”) of any Losses or discovery of fact upon which such person intends to make a claim for indemnification (a “
Claim
”) to Distributor or Company as the indemnifying party, as applicable, as soon as reasonably practicable. In no event shall an indemnifying party be liable for any Losses that result from any delay by an indemnitee in providing an Indemnification Claim Notice. Each Indemnification Claim Notice shall contain a description of the Claim and the nature and amount of Losses (to the extent that the nature and amount of such Losses are known at such time). The indemnitee shall furnish promptly to the indemnifying party copies of all papers and official documents received in respect of any such Losses.
|
9.4
|
Control of Defense
. At its option, the indemnifying party may assume the defense of any Claim by giving written notice to the indemnitee within fourteen (14) days after the indemnitee’s submission of an Indemnification Claim Notice. The assumption of the defense of a Claim by the indemnifying party shall not be construed as an acknowledgment that the indemnifying party is liable to indemnify any indemnitee in respect of the Claim, nor shall it constitute a waiver by the indemnifying party of any defense it may assert against any indemnitee’s Claim.
|
9.5
|
Settlement
. With respect to any Losses relating solely to the payment of money damages in connection with a Claim and that will not result in the indemnitee becoming subject to injunctive relief or constitute an admission of liability or fault on the part of the indemnitee and as to which the indemnifying party shall have acknowledged in writing the obligation to indemnify the indemnitee under this
Section 9
, the indemnifying party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Losses, on such terms as the indemnifying party, in its sole discretion, shall deem appropriate. With respect to all other Losses in connection with any Claim, where the indemnifying party has assumed the defense of a Claim in accordance with
Section 9.4
, the indemnifying party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Losses,
provided
that it obtains the prior written consent of the indemnitee (which consent shall not be unreasonably withheld or delayed).
|
9.6
|
No Consequential Damages
. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY,
PROVIDED
THAT THE FOREGOING SHALL NOT LIMIT THE ABILITY OF AN INDEMNITEE TO RECOVER SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES PAID TO ANY THIRD PARTY UNDER SECTION 9.1 OR 9.2.
|
10.
|
Miscellaneous
|
10.1
|
Notices; Contact Persons
. Any notice or other communication authorized or required to be given hereunder or for the purpose hereof shall be deemed to have been duly given if sent by registered mail, e-mail or facsimile to the last known business address, email address or facsimile number of the party to whom it is addressed. Each party is obligated to inform the other party immediately in any case of changes in any such contact information. Distributor and Company shall each designate a competent person to be in charge of all contacts between the parties.
|
10.2
|
Non-Waiver
. Neither the waiver nor the giving of time by either party in respect of any breach of this Agreement shall release the other party from any other obligation of this Agreement or exonerate such other party from any other breach of this Agreement, whether of the same or any other obligation. To be effective any waiver must be in writing.
|
10.3
|
Assignment; Sub-Distributors
. Neither party may assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the other party,
provided
that Company may assign any of its rights or delegate any of its obligations hereunder to any Affiliate, successor in interest to the Company, or successor in interest to the Products. Distributor may not appoint any sub-distributors without the prior written consent of Company. Any purported assignment, delegation or appointment in violation of this section shall be null and void.
|
10.4
|
Change of Control
.
|
a)
|
If Distributor or its direct or indirect parent company should merge into a third party, or if a third party in any other way should acquire control over Distributor, then Distributor shall inform Company thereof, within ten (10) days from the date of the merger or date the third party acquired such control over Distributor. Within thirty (30) days after having received notice from Distributor of such merger or change of control, Company shall be entitled to terminate this Agreement, pursuant to
Section 8.3
, with immediate effect upon written notice to Distributor.
|
b)
|
If Company or its direct or indirect parent company should merge into a third party, or if a third party in any other way should acquire control over Company or the Products, including if Company licenses the Products to a third party or a third party acquires control of an Affiliate of Company to whom the Product has been licensed, (each a “Change Event”), then Company shall be entitled to terminate this Agreement, pursuant to
Section 8.3
, upon written notice to Distributor to take effect six (6) months after the date of the Change Event.
|
10.5
|
Insurance
. Distributor shall maintain adequate liability insurance with sufficient coverage in case of adverse reactions to patients resulting in legal action against either Distributor or Company, with a minimum coverage of two million US dollars ($2,000,000) per single occurrence, and five million US dollars ($5,000,000) in aggregate. Company shall be named as a party on the insurance policy. Upon request, Distributor shall provide Company with a copy of the certificate of insurance evidencing such coverage.
|
10.6
|
Force Majeure
. No party shall be liable or responsible to the other party, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement (except for any obligations to make payments to the other party hereunder), when and to the extent such failure or delay is caused by or results from acts beyond the affected party’s reasonable control, including, without limitation: (a) acts of God; (b) flood, fire, earthquake or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) actions, embargoes, trade restrictions or blockades in effect on or after the date of this Agreement; and (e) national or regional emergency. If any of the foregoing events has been ongoing for a consecutive period of ninety (90) days, the party not affected by such events shall be entitled to terminate this Agreement with immediate effect upon written notice to the other party.
|
10.7
|
Relationship of the Parties
. Distributor may describe itself as Company’s authorized distributor for the Product in the Territory. Distributor expressly acknowledges that it is an independent contractor and that this Agreement does not create a joint venture or partnership between the parties hereto. Neither party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other party or to bind the other party to any contract, agreement or undertaking with any third party. Unless otherwise expressly authorized in writing by Company, Distributor shall have no right or authority to assume or create any obligation or other responsibility, express or implied, on behalf of or in the name of Company or any Company Affiliate, or to bind in any manner whatsoever, or to accept payment from any person on behalf of Company or any Company Affiliates
|
10.8
|
No Third Party Beneficiaries
. This Agreement is for the sole benefit of the parties and their successors and permitted assigns and is not intended to confer upon any third party rights or remedies hereunder.
|
10.9
|
Counterparts
. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one instrument. An executed signature page of this Agreement delivered by facsimile transmission or by e-mail in “portable document format” (“.pdf”) shall be as effective as an original executed signature page.
|
10.10
|
Entire Agreement; Amendments
. This Agreement, including the schedules attached hereto, replaces and supersedes any and all other prior agreements and arrangements between the parties regarding the subject matter hereof. Any amendment to this Agreement shall, in order to be effective, be made in writing and shall be signed by a duly authorized officer or agent of each party.
|
10.11
|
Further Assurance
. Each party shall perform all further acts and things and execute and deliver such further documents as may be necessary or as the other party may reasonably require to implement or give effect to this Agreement.
|
10.12
|
Severability
. If any term or provision of this Agreement is held invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
|
10.13
|
English Language
. This Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language. Any translation into any other language shall not be an official version hereof, and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.
|
10.14
|
Applicable Law
. This Agreement shall be interpreted in accordance with and governed by the substantive laws of the State of New York, without giving effect to any choice or conflict of law provision or rule that would cause the application of laws of any jurisdiction other than those of the State of New York.
|
10.15
|
Dispute Resolution
. Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach hereof, shall be finally settled by arbitration administered by the American Arbitration Association’s International Center for Dispute Resolution, pursuant its “International Arbitration Rules,” in New York, New York. There shall be one (1) arbitrator and the language of such arbitration shall be English.
|
TNI BioTech International, Ltd.
|
AHAR Pharma
|
|||||
By:
|
/s/ Noreen Griffin
|
By:
|
/s/ Richard Afonja
|
|||
Name: Noreen Griffin
|
Name: Richard Afonja M.D.
|
|||||
Title: Chief Executive Officer
|
Title: President
|
|||||
Place:
|
Orlando, Florida
|
Place:
|
Country
|
Price
|
|
Nigeria
|
US $1 per pill (US $30 per Carton)
|
Month
|
Number of Cartons
|
Monthly Revenue (US$)
|
Required API (Kg)
|
|||||||||
February
|
25,000 | 750,000 | 4 | |||||||||
March
|
35,000 | 1,050,000 | 5 | |||||||||
April
|
50,000 | 1,500,000 | 8 | |||||||||
May
|
100,000 | 3,000,000 | 15 | |||||||||
June
|
130,000 | 3,900,000 | 20 | |||||||||
July
|
160,000 | 4,800,000 | 24 | |||||||||
August
|
190,000 | 5,700,000 | 29 | |||||||||
September
|
220,000 | 6,600,000 | 33 | |||||||||
October
|
250,000 | 7,500,000 | 38 | |||||||||
November
|
280,000 | 8,400,000 | 42 | |||||||||
December
|
310,000 | 9,300,000 | 47 |
●
|
Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships, including disclosure to the Chairman of the Audit Committee of any material transaction or relationship that reasonably could be expected to give rise to such a conflict.
|
●
|
Be prohibited from: personally taking advantage of business opportunities that are discovered through the use of corporate property, information or his or her position with the Company; using corporate property, information or his or her position for personal gain; or competing against the Company while an employee.
|
●
|
Provide information within the scope of his or her duties in a manner which promotes full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, government agencies and in the Company's other public communications.
|
●
|
Comply with rules and regulations of foreign, federal, state, provincial and local governments, and other appropriate private and public regulatory agencies, including insider trading laws and the Company’s insider trading policy.
|
●
|
Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing one's independent judgment to be subordinated.
|
●
|
Deal fairly with the Company’s customers, suppliers, competitors and employees, and not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealings.
|
●
|
Keep confidential all confidential information, as discussed in more detail below
|
●
|
Proactively promote and be an example of ethical behavior.
|
●
|
Achieve responsible use of and control over all assets and resources employed or entrusted.
|
●
|
Promptly report to the Chairman of the Audit Committee any conduct that the individual believes to be or would give rise to a violation of law or business ethics or of any provision of this Code of Ethics or the Company's general code of conduct.
|
Date: March 31, 2014
|
/s/ Noreen Griffin
|
|
Noreen Griffin
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Date: March 31, 2014
|
/s/ Peter Aronstam
|
|
Peter Aronstam
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date: March 31, 2014
|
/s/ Noreen Griffin
|
|
Noreen Griffin
|
|
Chief Executive Officer
(Principal Executive Officer)
|
Date: March 31, 2014
|
/s/ Peter Aronstam
|
|
Noreen Griffin
|
|
Chief Financial Officer
(Principal Financial Officer)
|