Delaware | 000-53072 | 41-2254389 |
(State or Other Jurisdiction | (Commission File Number) | (IRS Employer Identification No.) |
of Incorporation) |
20725 S. Western Avenue, Suite 136, Torrance, CA 90501 | ||
(Address, including zip code, off principal executive offices)
|
||
Registrant’s telephone number, including area code
310-214-0065
|
AFH ACQUISITION IV, INC. | ||
9595 Wilshire Blvd., Suite 700, Beverly Hills, CA 90212 | ||
(Former Name or Former Address, if Changed Since Last Report)
|
Name
|
Position
|
|
Yutaka Niihara, M.D., MPH
|
President and Chief Executive Officer
|
|
Willis C. Lee
|
Chief Operating Officer and Director
|
|
Lan T. Tran
|
Chief Administrative Officer and Corporate Secretary
|
|
Yasushi Nagasaki
|
Chief Financial Officer
|
|
Steve Warnecke
|
Director
|
|
Henry A. McKinnell, Jr., Ph.D.,
|
Chairman of the Board
|
|
Amir Heshmatpour
|
Director
|
|
Douglas W. Wilmore, M.D.
|
Director
|
● | completion of preclinical studies; | |
● | the submission to the FDA of a request for authorization to conduct clinical trials on an investigational new drug application, or IND, which must become effective before clinical trials may commence; | |
● |
adequate and well-controlled Phase 1, Phase 2 and Phase 3 clinical trials to establish and confirm the safety and efficacy of a drug candidate;
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● |
submission to the FDA of a new drug application, or NDA, for the drug candidate for marketing approval; and
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● | review and approval of the NDA by the FDA before the product may be shipped or sold commercially. |
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●
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promote our L-glutamine therapy to SCD specialist physicians;
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●
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promote awareness of our L-glutamine therapy at all U.S. community-based treatment centers;
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●
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develop L-glutamine therapy collateral materials and informational packets to educate patients and physicians and garner industry support;
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●
|
establish collaborative relationships with non-profit organizations that focus on SCD; and
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●
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identify international opportunities for our L-glutamine therapy.
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●
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the duration and results of the clinical trials for our various products going forward;
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●
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unexpected delays or developments in seeking regulatory approvals;
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●
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the time and cost in preparing, filing, prosecuting, maintaining and enforcing patent claims;
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●
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other unexpected developments encountered in implementing our business development and commercialization strategies; and
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●
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the outcome of litigation, if any, and further arrangements, if any, with collaborators.
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●
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the duration of the clinical trial;
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●
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the number of sites included in the trials;
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●
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the countries in which the trial is conducted;
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●
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the length of time required to enroll eligible patients;
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●
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the number of patients that participate in the trials;
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●
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the number of doses that patients receive;
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●
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the drop-out or discontinuation rates of patients;
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●
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per patient trial costs;
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●
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potential additional safety monitoring or other studies requested by regulatory agencies;
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●
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the duration of patient follow-up;
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●
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the efficacy and safety profile of the product candidate;
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●
|
the costs and timing of obtaining regulatory approvals; and
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●
|
the costs involved in enforcing or defending patent claims or other intellectual property rights.
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●
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the chance that our preclinical testing or clinical trials could show that our L-glutamine treatment or other drug product candidates are ineffective an/or cause harmful side effects;
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●
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the failure of our drug product candidates to receive necessary regulatory approvals from the FDA or foreign regulatory authorities in a timely manner, or at all;
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●
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the failure of our drug product candidates, once approved, to be produced in commercial quantities or at reasonable costs;
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●
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physicians’ reluctance to switch from existing treatment methods, including traditional therapy agents, to our products;
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●
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the failure of our drug product candidates, once approved, to achieve commercial acceptance;
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●
|
the introduction of products by our competitors that are more effective or have a different safety profile than our products;
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●
|
the application of restrictions to our drug product candidates by regulatory or governmental authorities, which could adversely affect their commercial success;
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●
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the proprietary rights of other parties preventing us or our potential collaborative partners from marketing our drug product candidates;
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●
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the possibility that we may not be able to maintain the orphan drug designation or obtain orphan drug exclusivity for our product; and
|
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●
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the possibility that our fast track designation may not actually lead to a faster development or regulatory review or approval process.
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●
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the availability of suitable candidates;
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●
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competition from other companies for the purchase of available candidates;
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●
|
our ability to value those candidates accurately and negotiate favorable terms for those acquisitions;
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●
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the availability of funds to finance acquisitions;
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●
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the ability to establish new informational, operational and financial systems to meet the needs of our business;
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●
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the ability to achieve anticipated synergies, including with respect to complementary products; and
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●
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the availability of management resources to oversee the integration and operation of the acquired businesses.
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●
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provide the board of directors with the ability to alter the bylaws without stockholder approval; and
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●
|
provide that vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum.
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●
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access to the capital markets of the United States;
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●
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the increased market liquidity expected to result from exchanging stock in a private company for securities of a public company that may eventually be traded;
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●
|
the ability to use registered securities to make acquisition of assets or businesses;
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●
|
increased visibility in the financial community;
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●
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enhanced access to the capital markets;
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●
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improved transparency of operations; and
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●
|
perceived credibility and enhanced corporate image of being a publicly traded company.
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●
|
our ability to raise additional capital to fund our operations;
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●
|
our obtaining FDA and other regulatory approval for our drug products;
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|
●
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successful completion of our clinical trials;
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●
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our ability to achieve regulatory approval for our L-glutamine treatment for SCD;
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●
|
our ability to commercialize our L-glutamine treatment for SCD;
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●
|
our reliance on third party manufacturers for our drug products;
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●
|
market acceptance of our products;
|
|
●
|
our dependence on licenses for certain of our products;
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|
●
|
our reliance on the expected growth in demand for our products;
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●
|
exposure to product liability and defect claims;
|
|
●
|
exposure to intellectual property claims from third parties;
|
|
●
|
development of a public trading market for our securities;
|
|
●
|
the cost of complying with current and future governmental regulations and the impact of any changes in the regulations on our operations; and
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●
|
the other factors referenced in this Current Report, including, without limitation, under the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.”
|
Year Ended December 31,
|
From
December 20, 2000 (date of inception) to December 31, |
|||||||||||
2010
|
2009
|
2010
|
||||||||||
REVENUES
|
$ | 138,734 | $ | 100,281 | $ | 344,142 | ||||||
COST OF GOODS SOLD
|
99,373 | 85,226 | 226,034 | |||||||||
GROSS PROFIT
|
39,361 | 15,055 | 118,108 | |||||||||
OPERATING EXPENSES
|
||||||||||||
Research and development
|
1,062,031 | 532,351 | 4,899,652 | |||||||||
Scrapped inventory
|
235,537 | — | 235,537 | |||||||||
Selling
|
656,200 | 696,949 | 1,802,208 | |||||||||
General and administrative
|
1,817,728 | 1,300,397 | 5,612,740 | |||||||||
3,771,496 | 2,529,697 | 12,550,137 | ||||||||||
LOSS FROM OPERATIONS
|
(3,732,135 | ) | (2,514,642 | ) | (12,432,029 | ) | ||||||
OTHER INCOME (EXPENSE)
|
||||||||||||
Interest income
|
39,005 | 19,659 | 85,234 | |||||||||
Interest expense
|
(59,936 | ) | (71,600 | ) | (389,993 | ) | ||||||
(20,931 | ) | (51,941 | ) | (304,759 | ) | |||||||
LOSS BEFORE INCOME TAXES
|
(3,753,066 | ) | (2,566,583 | ) | (12,736,788 | ) | ||||||
INCOME TAXES
|
4,304 | 1,224 | 14,848 | |||||||||
NET LOSS
|
(3,757,370 | ) | (2,567,807 | ) | (12,751,636 | ) |
|
●
|
as a result of increased payroll, expanded infrastructure and higher consulting, legal, accounting and investor relations costs, and director and officer insurance premiums associated with being a public company;
|
|
●
|
to support research and development activities, which the Company expects to expand as development of our product candidate(s) continue; and
|
|
●
|
to build a sales and marketing team before we receive regulatory approval of a product candidate in anticipation of commercial launch.
|
Year Ended December 31,
|
From December
20, 2000 (date of inception) to December 31, |
|||||||||||
2010
|
2009
|
2010
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net loss
|
$ | (3,757,370 | ) | $ | (2,567,807 | ) | $ | (12,751,636 | ) | |||
Adjustments to reconcile net loss to net cash flows
from operating activities
|
||||||||||||
Depreciation and amortization
|
280,032 | 281,443 | 706,748 | |||||||||
Net changes in operating assets and liabilities
|
||||||||||||
Accounts receivable
|
(9,833 | ) | 31,939 | (27,852 | ) | |||||||
Inventory
|
101,334 | 45,644 | (126,563 | ) | ||||||||
Prepaid expenses and other current assets
|
1,503 | (3,279 | ) | (29,479 | ) | |||||||
Deposits
|
(296,907 | ) | — | (297,772 | ) | |||||||
Accounts payable and accrued expenses
|
(16,015 | ) | (2,082 | ) | 148,219 | |||||||
Net cash flows used in operating activities
|
(3,697,256 | ) | (2,214,142 | ) | (12,378,335 | ) |
Year Ended December 31,
|
From
December 20, 2000 (date of inception) to December 31, |
|||||||||||
2010
|
2009
|
2010
|
||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Payment towards license
|
— | — | (750,000 | ) | ||||||||
Purchases of marketable securities
|
— | (1,131,813 | ) | (1,131,813 | ) | |||||||
Cash paid for acquisition of subsidiary
|
(18,250 | ) | — | (18,250 | ) | |||||||
Purchases of property and equipment
|
(5,720 | ) | (10,257 | ) | (185,807 | ) | ||||||
Net cash flows used in investing activities
|
(23,970 | ) | (1,142,070 | ) | (2,085,870 | ) |
Year Ended December 31,
|
From
December 20, 2000 (date of inception) to December 31, |
|||||||||||
2010
|
2009
|
2010
|
||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Borrowings from line of credit
|
— | — | 299,500 | |||||||||
Repayment of line of credit
|
— | (299,500 | ) | (299,500 | ) | |||||||
Proceeds from notes payable issued
|
— | 742,463 | 742,463 | |||||||||
Payments of notes payable
|
(35,576 | ) | — | (35,576 | ) | |||||||
Proceeds from convertible notes payable issued
|
1,490,030 | — | 1,490,030 | |||||||||
Proceeds from issuance of common stock
|
2,124,294 | 2,238,925 | 12,514,364 | |||||||||
Net cash flows from financing activities
|
3,578,748 | 2,681,888 | 14,711,281 |
|
(i)
|
have equal ratable rights to dividends from funds legally available therefore, if declared by our Board of Directors;
|
|
(ii)
|
are entitled to share ratably in all of the Company’s assets available for distribution to holders of common stock upon our liquidation, dissolution or winding up;
|
|
(iii)
|
do not have preemptive, subscription or conversion rights or redemption or sinking fund provisions; and
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(iv)
|
are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of our stockholders.
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|
●
|
our financial position and results of operations;
|
|
●
|
our ability to obtain additional financing and, if available, the terms and conditions of the financing;
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|
●
|
the ability of our products to gain market acceptance;
|
|
●
|
announcements of innovations or new products by us or our competitors;
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|
●
|
federal and state regulatory actions and the impact of such requirements on our business;
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|
●
|
the development of litigation against us;
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|
●
|
changes in estimates of our performance by any securities analysts;
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●
|
the issuance of new equity securities pursuant to a future offering or acquisition;
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●
|
competitive developments, including announcements by competitors of new products or services or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
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|
●
|
period-to-period fluctuations in our operating results;
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|
●
|
investor perceptions of us; and
|
|
●
|
general economic and other national conditions.
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|
●
|
prior to such date, the Board of Directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
|
|
●
|
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
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●
|
on or subsequent to such date, the business combination is approved by the Board of Directors and authorized at an annual meeting or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
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●
|
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
|
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●
|
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
|
|
●
|
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or
|
|
●
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
|
|
●
|
provide our board of directors with the ability to alter its bylaws without stockholder approval; and
|
|
●
|
provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum.
|
Name
|
Age
|
Position
|
|||
Yutaka Niihara, M.D., MPH
|
51
|
President and Chief Executive Officer
|
|||
Willis C. Lee
|
50
|
Chief Operating Officer and Director
|
|||
Lan T. Tran
|
35
|
Chief Administrative Officer and Corporate Secretary
|
|||
Yasushi Nagasaki
|
43
|
Chief Financial Officer
|
|||
Steve Warnecke
|
54
|
Director
|
|||
Henry A. McKinnell, Jr., Ph.D.
|
68
|
Chairman of the Board
|
|||
Amir Heshmatpour
|
44
|
Director
|
|||
Douglas W. Wilmore, M.D.
|
72
|
Director
|
|
●
|
The appointment, replacement, compensation, and oversight of work of the independent auditor, including resolution of disagreements between management and the independent auditor regarding financial reporting, for the purpose of preparing or issuing an audit report or performing other audit, review or attest services.
|
|
●
|
Reviewing and discussing with management and the independent auditor various topics and events that may have significant financial impact on our company or that are the subject of discussions between management and the independent auditors.
|
Name and Position
|
Year
|
Salary
($)
|
Total
($)
|
|||||||
Yutaka Niihara, M.D., MPH
|
2010
|
125,000 | 125,000 | |||||||
President and Chief Executive Officer
|
2009
|
125,000 | 125,000 | |||||||
Willis C. Lee
|
2010
|
119,693 | 119,693 | |||||||
Chief Operating Officer and Director
|
2009
|
26,188 | 26,188 | |||||||
Lan T. Tran
|
2010
|
104,000 | 104,000 | |||||||
Chief Administrative Officer and
|
2009
|
110,500 | 110,500 | |||||||
Corporate Secretary
|
||||||||||
Amir F. Heshmatpour (1)
|
2010
|
— | — | |||||||
Former President, Secretary and Chief
Financial Officer
|
2009
|
— | — |
Name
|
Fees Earned
or Paid in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||
Steve Warnecke
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Henry A. McKinnell, Jr., Ph.D.
|
3,000
|
(1) |
—
|
36,000
|
—
|
—
|
—
|
39,000
|
||||||||||||
Amir Heshmatpour
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Douglas W. Wilmore, M.D.
|
2,000
|
(1) |
—
|
36,000
|
—
|
—
|
—
|
38,000
|
Name
|
Position
|
||
Yutaka Niihara, M.D.
|
President and Chief Executive Officer
|
||
Willis C. Lee
|
Chief Operating Officer and Director
|
||
Lan T. Tran
|
Chief Administrative Officer and Corporate Secretary
|
||
Yasushi Nagasaki
|
Chief Financial Officer
|
||
Steve Warnecke
|
Director
|
||
Henry A. McKinnell, Jr., Ph.D.,
|
Chairman of the Board
|
||
Amir Heshmatpour
|
Director
|
||
Douglas W. Wilmore, M.D.
|
Director
|
|
●
|
indemnify officers and directors against certain liabilities that may arise because of their status as officers or directors;
|
|
●
|
advance expenses, as incurred, to officers and directors in connection with a legal proceeding, subject to limited exceptions; or
|
|
●
|
obtain directors’ and officers’ insurance.
|
●
|
Each person known to be the beneficial owner of 5% or more of our outstanding common stock;
|
●
|
Each executive officer;
|
●
|
Each director; and
|
●
|
All of the executive officers and directors as a group.
|
Name and Address
of Beneficial Owner
|
Title
|
Beneficially
Owned Post-Merger |
Percent
of Class (1) |
|||||||
Directors and Executive Officers
|
||||||||||
Yutaka Niihara, M.D., MPH
|
President and Chief Executive Officer
|
9,544,454 | (2) | 39.1 | % | |||||
Yasushi Nagasaki
|
Chief Financial Officer
|
— | — | |||||||
Willis C. Lee
|
Chief Operating Officer and Director
|
176,913 | 0.7 | % | ||||||
Lan T. Tran
|
Chief Administrative Officer and Corporate Secretary
|
23,294 | 0.1 | % | ||||||
Steve Warnecke
|
Director
|
— | — | |||||||
Henry A. McKinnell, Jr., Ph.D.
|
Chairman of the Board
|
11,795 | (3) | * | ||||||
Douglas W. Wilmore, M.D.
|
Director
|
114,995 | (4) | 0.5 | % | |||||
Amir Heshmatpour
9595 Wilshire Blvd, Suite 700
Beverly Hills, CA 90212
|
Director
|
2,672,250 | (5) | 10.9 | % | |||||
Officers and Directors as a Group (total of 8 persons)
|
12,543,701 | (6) | 51.3 | % | ||||||
5% Holders
|
||||||||||
AFH Holding & Advisory, LLC (7)
9595 Wilshire Blvd, Suite 700
Beverly Hills, CA 90212
|
2,372,250 | 9.7 | % | |||||||
Daniel R. and Yuka I. Kimbell | 2,434,028 | (8) | 9.9 | % |
(1)
|
Each stockholder’s percentage of ownership in the above table is based upon
24,423,714
shares of the Company’s common stock outstanding as of May 3, 2011.
|
(2)
|
Includes 9,529,711 shares that are held jointly by Yutaka and Soomi Niihara. Also includes 14,743 shares of common stock owned by Robert Niihara. Dr. Niihara may be deemed the indirect beneficial owner of these securities since he has sole voting and investment control over the securities.
|
(3)
|
Represents options to purchase 11,795 shares of common stock.
|
(4)
|
Includes options to purchase 11,795 shares of common stock held by Dr. Wilmore and 103,200 shares of common stock owned by Dr. Wilmore's spouse over which Dr. Wilmore is deemed to have shared investment and voting power. Dr. Wilmore disclaims beneficial ownership of the shares owned by his spouse.
|
(5)
|
Represents 2,372,250 shares of common stock owned by AFH Advisory and 300,000 shares of common stock owned by Griffin Ventures LTD (“Griffin”). Mr. Heshmatpour is the sole member of AFH Advisory and the control person of Griffin and has sole voting and investment control over the shares of common stock owned of record by AFH Advisory and Griffin. Accordingly, he may be deemed a beneficial owner of the 2,372,250 shares of common stock owned by AFH Advisory and the 300,000 shares of common stock owned by Griffin.
|
(6)
|
Includes options to purchase 23,590 shares of common stock.
|
(7)
|
Mr. Heshmatpour is the managing partner of AFH Advisory and may be deemed to have voting and dispositive controls with respect to these shares. Mr. Heshmatpour disclaims beneficial ownership of any shares in which he does not have a pecuniary interest.
|
(8)
|
Includes 44,229 shares of common stock held by the holder for the benefit of his children. Daniel and Yuka Kimbell may be deemed the indirect beneficial owner of these securities since they have sole voting and investment control over the securities.
|
EMMAUS MEDICAL, INC.
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
PAGE
|
||
65 | ||
66 | ||
67 | ||
68 | ||
71 | ||
72 |
As of
|
||||||||
December 31,
|
||||||||
|
2010
|
2009
|
||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 258,676 | $ | 389,554 | ||||
Accounts receivable
|
21,746 | 18,022 | ||||||
Inventories
|
130,573 | 227,897 | ||||||
Marketable securities
|
1,674,386 | 1,131,813 | ||||||
Prepaid expenses and other current assets
|
11,479 | 12,982 | ||||||
Total Current Assets
|
2,096,860 | 1,780,268 | ||||||
PROPERTY AND EQUIPMENT, net
|
94,179 | 114,539 | ||||||
OTHER ASSETS
|
||||||||
Intangibles, net
|
134,880 | 388,832 | ||||||
Notes receivable
|
18,000 | 18,000 | ||||||
Deposits
|
348,408 | 865 | ||||||
Total Other Assets
|
501,288 | 407,697 | ||||||
Total Assets
|
$ | 2,692,327 | $ | 2,302,504 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable and accrued expenses
|
$ | 190,107 | $ | 164,235 | ||||
Notes payable
|
706,889 | 742,465 | ||||||
LONG-TERM LIABILITIES
|
||||||||
Convertible notes payable
|
184,030 | — | ||||||
Total Liabilities
|
1,081,026 | 906,700 | ||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Common stock – par value $0.001 per share, 1,000,000 shares authorized, 690,692 and 652,240 shares issued and outstanding at December 31, 2010 and 2009, respectively.
|
691 | 652 | ||||||
Additional paid-in capital
|
13,819,673 | 10,389,418 | ||||||
Accumulated other comprehensive income
|
542,573 | — | ||||||
Deficit accumulated during the development stage
|
(12,751,636 | ) | (8,994,266 | ) | ||||
Total Shareholders’ Equity
|
1,611,301 | 1,395,804 | ||||||
Total Liabilities & Shareholders’ Equity
|
$ | 2,692,327 | $ | 2,302,504 |
Year Ended December 31,
|
From
December 20, 2000
(date of inception) to December 31, |
|||||||||||
2010
|
2009
|
2010
|
||||||||||
REVENUES
|
$ | 138,734 | $ | 100,281 | $ | 344,142 | ||||||
COST OF GOODS SOLD
|
99,373 | 85,226 | 226,034 | |||||||||
GROSS PROFIT
|
39,361 | 15,055 | 118,108 | |||||||||
OPERATING EXPENSES
|
||||||||||||
Research and development
|
1,062,031 | 532,351 | 4,899,652 | |||||||||
Scrapped inventory
|
235,537 | — | 235,537 | |||||||||
Selling
|
656,200 | 696,949 | 1,802,208 | |||||||||
General and administrative
|
1,817,728 | 1,300,397 | 5,612,740 | |||||||||
3,771,496 | 2,529,697 | 12,550,137 | ||||||||||
LOSS FROM OPERATIONS
|
(3,732,135 | ) | (2,514,642 | ) | (12,432,029 | ) | ||||||
OTHER INCOME (EXPENSE)
|
||||||||||||
Interest income
|
39,005 | 19,659 | 85,234 | |||||||||
Interest expense
|
(59,936 | ) | (71,600 | ) | (389,993 | ) | ||||||
(20,931 | ) | (51,941 | ) | (304,759 | ) | |||||||
LOSS BEFORE INCOME TAXES
|
(3,753,066 | ) | (2,566,583 | ) | (12,736,788 | ) | ||||||
INCOME TAXES
|
4,304 | 1,224 | 14,848 | |||||||||
NET LOSS
|
(3,757,370 | ) | (2,567,807 | ) | (12,751,636 | ) | ||||||
OTHER INCOME
|
||||||||||||
Unrealized holding gain on securities available-for-sale
|
542,573 | — | 542,573 | |||||||||
COMPREHENSIVE LOSS
|
$ | (3,214,797 | ) | $ | (2,567,807 | ) | $ | (12,209,063 | ) | |||
NET LOSS PER COMMON SHARE
|
$ | (5.63 | ) | $ | (4.02 | ) | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
666,824 | 638,079 |
Common stock – par value
$0.001 per share, 1,000,000 shares authorized |
Additional
Paid-in
Capital
|
Accumulated
Other Comprehensive
income
|
Deficit
Accumulated during Development Stage |
Total
|
||||||||||||||||||||
Shares
|
Common stock
|
|||||||||||||||||||||||
Balance, December 31, 2000 (1)
|
425,000 | $ | 425 | $ | 9,175 | — | $ | — | $ | 9,600 | ||||||||||||||
Net loss
|
— | — | — | — | (21,942 | ) | (21,942 | ) | ||||||||||||||||
Balance, December 31, 2001
|
425,000 | 425 | 9,175 | — | (21,942 | ) | (12,342 | ) | ||||||||||||||||
Net loss
|
— | — | — | — | (12,464 | ) | (12,464 | ) | ||||||||||||||||
Balance, December 31, 2002
|
425,000 | 425 | 9,175 | — | (34,406 | ) | (24,806 | ) | ||||||||||||||||
Constructive distribution of retained loss to
|
— | — | (34,406 | ) | — | 34,406 | — | |||||||||||||||||
Additional Paid-in Capital
|
||||||||||||||||||||||||
Common stock issued
|
25,000 | 25 | 249,975 | — | — | 250,000 | ||||||||||||||||||
— | ||||||||||||||||||||||||
Net loss
|
— | — | — | — | (97,481 | ) | (97,481 | ) | ||||||||||||||||
Balance, December 31, 2003
|
450,000 | 450 | 224,744 | — | (97,481 | ) | 127,713 |
|
(1)
|
Reflects recapitalization of members’ equity into 425,000 shares of common stock of Emmaus Medical, Inc.
|
Common stock – par value
$0.001 per share, 1,000,000 shares authorized |
Additional
Paid-in
|
Accumulated
Other
|
Deficit
Accumulated during Development Stage |
Total | ||||||||||||||||||||
Shares
|
Common stock
|
|||||||||||||||||||||||
Balance, December 31, 2003
|
450,000 | 450 | 224,744 | — | (97,481 | ) | 127,713 | |||||||||||||||||
Common stock issued
|
54,792 | 55 | 648,020 | — | — | 648,075 | ||||||||||||||||||
Net loss
|
— | — | — | — | (624,936 | ) | (624,936 | ) | ||||||||||||||||
Balance, December 31, 2004
|
504,792 | 505 | 872,764 | — | (722,417 | ) | 150,852 | |||||||||||||||||
Common stock issued
|
13,517 | 13 | 328,272 | — | — | 328,285 | ||||||||||||||||||
Net loss
|
— | — | — | — | (668,091 | ) | (668,091 | ) | ||||||||||||||||
Balance, December 31, 2005
|
518,309 | 518 | 1,201,036 | — | (1,390,508 | ) | (188,954 | ) | ||||||||||||||||
Common stock issued
|
17,751 | 18 | 825,022 | — | — | 825,040 | ||||||||||||||||||
Net loss
|
— | — | — | — | (759,962 | ) | (759,962 | ) | ||||||||||||||||
Balance, December 31, 2006
|
536,060 | 536 | 2,026,058 | — | (2,150,470 | ) | (123,876 | ) | ||||||||||||||||
Common stock issued
|
45,588 | 46 | 2,733,814 | — | — | 2,733,860 | ||||||||||||||||||
Net loss
|
— | — | — | — | (1,282,212 | ) | (1,282,212 | ) | ||||||||||||||||
Balance, December 31, 2007
|
581,648 | 582 | 4,759,872 | — | (3,432,682 | ) | 1,327,772 |
Common stock – par value
$0.001 per share, 1,000,000 shares authorized |
Additional
Paid-in
|
Accumulated
Other
income
|
Deficit
Accumulated during Development Stage |
Total
|
||||||||||||||||||||
Shares
|
Common stock
|
|||||||||||||||||||||||
Balance, December 31, 2007
|
581,648 | 582 | 4,759,872 | — | (3,432,682 | ) | 1,327,772 | |||||||||||||||||
Common stock issued
|
41,613 | 41 | 3,390,650 | — | — | 3,390,691 | ||||||||||||||||||
Net loss
|
— | — | — | — | (2,993,777 | ) | (2,993,777 | ) | ||||||||||||||||
Balance, December 31, 2008
|
623,261 | 623 | 8,150,522 | — | (6,426,459 | ) | 1,724,686 | |||||||||||||||||
Warrants issued
|
— | — | 160,000 | — | — | 160,000 | ||||||||||||||||||
Common stock issued, net of issuance cost of $ 160,000
|
28,979 | 29 | 2,078,896 | — | — | 2,078,925 | ||||||||||||||||||
Net loss
|
— | — | — | — | (2,567,807 | ) | (2,567,807 | ) | ||||||||||||||||
Balance, December 31, 2009
|
652,240 | 652 | 10,389,418 | — | (8,994,266 | ) | 1,395,804 | |||||||||||||||||
Warrants issued
|
— | — | 480,000 | — | — | 480,000 | ||||||||||||||||||
Common stock issued, net of issuance cost of $ 480,000
|
23,941 | 24 | 1,644,270 | — | — | 1,644,294 | ||||||||||||||||||
Conversion of notes payable to common stock
|
14,511 | 15 | 1,305,985 | — | — | 1,306,000 | ||||||||||||||||||
Unrealized gain on securities available for sale
|
— | — | — | 542,573 | — | 542,573 | ||||||||||||||||||
Net loss
|
— | — | — | — | (3,757,370 | ) | (3,757,370 | ) | ||||||||||||||||
Balance, December 31, 2010
|
690,692 | $ | 691 | $ | 13,819,673 | $ | 542,573 | $ | (12,751,636 | ) | $ | 1,611,301 |
Year Ended December 31,
|
From
December 20, 2000 (date of inception) to December 31, |
|||||||||||
2010
|
2009
|
2010
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net loss
|
$ | (3,757,370 | ) | $ | (2,567,807 | ) | $ | (12,751,636 | ) | |||
Adjustments to reconcile net loss to net cash flows
from operating activities
|
||||||||||||
Depreciation and amortization
|
280,032 | 281,443 | 706,748 | |||||||||
Net changes in operating assets and liabilities
|
||||||||||||
Accounts receivable
|
(9,833 | ) | 31,939 | (27,852 | ) | |||||||
Inventory
|
101,334 | 45,644 | (126,563 | ) | ||||||||
Prepaid expenses and other current assets
|
1,503 | (3,279 | ) | (29,479 | ) | |||||||
Deposits
|
(296,907 | ) | — | (297,772 | ) | |||||||
Accounts payable and accrued expenses
|
16,015 | (2,082 | ) | 148,219 | ||||||||
Net cash flows used in operating activities
|
(3,697,256 | ) | (2,214,142 | ) | (12,378,335 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Payment towards license
|
— | — | (750,000 | ) | ||||||||
Purchases of marketable securities
|
— | (1,131,813 | ) | (1,131,813 | ) | |||||||
Cash paid for acquisition of subsidiary
|
(18,250 | ) | — | (18,250 | ) | |||||||
Purchases of property and equipment
|
(5,720 | ) | (10,257 | ) | (185,807 | ) | ||||||
Net cash flows used in investing activities
|
(23,970 | ) | (1,142,070 | ) | (2,085,870 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Borrowings from line of credit
|
— | — | 299,500 | |||||||||
Repayment of line of credit
|
— | (299,500 | ) | (299,500 | ) | |||||||
Proceeds from notes payable issued
|
— | 742,463 | 742,463 | |||||||||
Payments of notes payable
|
(35,576 | ) | — | (35,576 | ) | |||||||
Proceeds from convertible notes payable issued
|
1,490,030 | — | 1,490,030 | |||||||||
Proceeds from issuance of common stock
|
2,124,294 | 2,238,925 | 12,514,364 | |||||||||
Net cash flows from financing activities
|
3,578,748 | 2,681,888 | 14,711,281 | |||||||||
Net increase in cash and cash equivalents
|
(142,478 | ) | (674,324 | ) | 247,076 | |||||||
Cash and cash equivalents, beginning of period
|
389,554 | 1,063,878 | — | |||||||||
Cash acquired
|
11,600 | — | 11,600 | |||||||||
Cash and cash equivalents, end of period
|
$ | 258,676 | $ | 389,554 | $ | 258,676 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES
|
||||||||||||
Interest paid
|
$ | 59,936 | $ | 71,600 | $ | 89,993 | ||||||
Income taxes paid
|
$ | 4,304 | $ | 1,224 | $ | 14,848 | ||||||
Non cash transaction:
|
||||||||||||
Conversion of notes payable to common stock
|
$ | 1,306,000 | $ | — | $ | 1,306,000 |
●
|
significantly lower performance relative to expected historical or projected future operating results;
|
|
●
|
market projections;
|
|
●
|
its ability to obtain patents, including continuation patents, on technology;
|
|
●
|
significant changes in its strategic business objectives and utilization of the assets;
|
|
●
|
significant negative industry or economic trends, including legal factors;
|
|
●
|
potential for strategic partnerships for the development of its patented technology;
|
|
●
|
changing or implementation of rules regarding manufacture
|
|
●
|
Quoted prices for similar assets or liabilities in active markets;
|
|
●
|
Quoted prices for identical or similar assets or liabilities in inactive markets;
|
|
●
|
Inputs other than quoted prices that are observable for the asset or liability;
|
|
●
|
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
2010
|
2009
|
|||||||
Equipment
|
$ | 110,484 | $ | 104,764 | ||||
Leasehold Improvements
|
23,054 | 23,054 | ||||||
Furniture and Fixtures
|
52,269 | 52,269 | ||||||
185,807 | 180,087 | |||||||
Less: accumulated depreciation
|
(91,628 | ) | (65,548 | ) | ||||
$ | 94,179 | $ | 114,539 |
2010
|
2009
|
|||||||
License fees and patent filing costs
|
$ | 750,000 | $ | 750,000 | ||||
Less: accumulated amortization
|
(615,120 | ) | (361,168 | ) | ||||
$ | 134,880 | $ | 388,832 |
2010
|
2009
|
|||||||
Notes payable to shareholders, due on demand, interest payable monthly at 6.5% annum.
|
$ | 706,889 | $ | 742,465 | ||||
Convertible notes payable to shareholders, due 2015, 0% interest payable. Interest was imputed at the incremental borrowing rate of 6% per annum
|
132,030 | — | ||||||
Convertible notes payable to shareholders, due in 2015, interest payable monthly at 6% per annum.
|
52,000 | — | ||||||
$ | 890,919 | $ | 742,465 |
Years ended December 31
|
Weighted Average
Exercise Price |
|||||||||||
2010
|
2009
|
|||||||||||
|
||||||||||||
Warrants outstanding, beginning of year
beginning of the year
|
3,653 | — | $ | 90 | ||||||||
Granted
|
6,270 | 3,653 | 90 | |||||||||
Cancelled, forfeited and expired
|
— | — | — | |||||||||
Less: accumulated depreciation
|
9,923 | 3,653 | $ | 90 |
Outstanding
|
Exercisable
|
|||||||||||||||||||
Exercise Prices
|
Total
|
Weighted Average
Remaining Contractual Life (Years) |
Weighted
Average Exercise Price |
Total
|
Weighted
Average Exercise Price |
|||||||||||||||
December 31, 2010
|
||||||||||||||||||||
$90.00
|
6,270 | 4.56 | $ | 90.00 | 6,270 | $ | 90.00 | |||||||||||||
December 31, 2009
|
||||||||||||||||||||
$90.00
|
3,653 | 3.99 | $ | 90.00 | 3,653 | $ | 90.00 |
2010
|
2009
|
|||||||
Current
|
$ | 4,304 | $ | 1,224 | ||||
Deferred
|
— | — | ||||||
$ | 4,304 | $ | 1,224 |
2010
|
2009
|
|||||||
Net operating loss carryforward
|
$ | 4,412,000 | $ | 2,850,000 | ||||
General business tax credit
|
728,000 | 728,000 | ||||||
5,140,000 | 3,578,000 | |||||||
Variation allowance
|
(5,140,000 | ) | (3,578,000 | ) | ||||
$ | — | $ | — |
2011
|
$ | 95,558 | ||
2012
|
20,280 | |||
2013
|
20,280 | |||
$ | 136,118 |
2010
|
2009
|
|||||||
Numerator for the net loss per share: | ||||||||
Net loss
|
$ | (3,757,370 | ) | $ | (2,567,465 | ) | ||
Denominator for the net loss per share: | ||||||||
Weighted average shares
|
666,824 | 638,079 | ||||||
$ | (5.63 | ) | $ | (4.02 | ) |
Exhibit No.
|
Exhibit Description
|
|
2.1
|
Merger Agreement dated as of April 21, 2011 by and among the registrant, AFH Merger Sub, Inc., AFH Holding and Advisory, LLC, and Emmaus Medical, Inc. (incorporated by reference from Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2011).
|
|
3.1
|
Certificate of Incorporation (incorporated by reference from Exhibit 3.1 to the registrant’s Form 10-SB filed with the Securities and Exchange Commission on February 1, 2008).
|
|
3.2
|
Bylaws (incorporated by reference from Exhibit 3.2 to the registrant’s Form 10-SB filed with the Securities and Exchange Commission on February 1, 2008).
|
|
3.3
|
Certificate of Ownership and Merger filed with the Office of Secretary of State of Delaware on May 3, 2011.
|
|
4.1
|
Form of Warrant.
|
|
4.2
|
Convertible Promissory Note (Cash Interest) dated March 14, 2011.
|
|
4.3
|
Form of Convertible Note (No Interest) entered into with the persons indicated in Schedule A attached to the Form of Convertible Note.
|
|
4.4
|
Convertible Promissory Note (2-5 Years) dated January 12, 2009.
|
|
10.1
|
Share Cancellation Agreement dated as of April 21, 2011 by and between the registrant and AFH Holding and Advisory, LLC.
|
|
10.2
|
Registration Rights Agreement dated as of May 3, 2011 by and among the registrant and the individuals listed on Schedule A thereto.
|
|
10.3
|
Emmaus Holdings, Inc. 2011 Stock Incentive Plan.
|
|
10.3(a)
|
Form of Incentive Stock Option Agreement (Time-based and Performance-based Vesting) under the Emmaus Holdings, Inc. 2011 Stock Incentive Plan.
|
|
10.3(b)
|
Form of Incentive Stock Option Agreement (Time-based Vesting) under the Emmaus Holdings, Inc. 2011 Stock Incentive Plan.
|
|
10.3(c)
|
Form of Non-Qualified Stock Option Agreement (Time-based and Performance-based Vesting) under the Emmaus Holdings, Inc. 2011 Stock Incentive Plan.
|
|
10.3(d)
|
Form of Non-Qualified Stock Option Agreement (Time-based Vesting) under the Emmaus Holdings, Inc. 2011 Stock Incentive Plan.
|
|
10.3(e)
|
Form of Restricted Stock Agreement (Time-based and Performance-based Vesting) under the Emmaus Holdings, Inc. 2011 Stock Incentive Plan
|
|
10.3(f)
|
Form of Restricted Stock Agreement (Time-based Vesting) under the Emmaus Holdings, Inc. 2011 Stock Incentive Plan
|
|
10.4
|
Reserved.
|
|
10.5
|
Reserved.
|
|
10.6
|
Office Lease, dated March 12, 2008, by and between Emmaus Medical, Inc. and 20655 S. Western Avenue, LLC.
|
|
10.7
|
Sublicense Agreement dated as of October 18, 2007 by and between Cato Holding Company and Emmaus Medical, Inc.
|
|
10.8
|
Assignment and Transfer Agreement dated as of February 1, 2011 by and among Cato Holding Company, Nutritional Restart Pharmaceutical Limited Partnership and Emmaus Medical, Inc.
|
|
10.9
|
Promotional Rights Agreement effective as of March 12, 2008 by and between Ares Trading S.A. and Emmaus Medical, Inc.
|
|
10.10
|
Joint Research and Development Agreement dated as of April 8, 2011 by and between Emmaus Medical, Inc. and CellSeed, Inc.
|
|
10.11
|
Individual Agreement dated as of April 8, 2011 by and between Emmaus Medical, Inc. and CellSeed, Inc.
|
|
10.12
|
Employment Agreement dated as of April 5, 2011 by and between Emmaus Medical, Inc. and Yutaka Niihara, M.D., MPH.
|
|
10.13
|
Employment Agreement dated as of April 5, 2011 by and between Emmaus Medical, Inc. and Willis C. Lee.
|
|
10.14
|
Employment Agreement dated as of April 5, 2011 by and between Emmaus Medical, Inc. and Lan T. Tran.
|
|
10.15
|
Employment Agreement dated as of April 8, 2011 by and between Emmaus Medical, Inc. and Yasushi
|
Nagasaki. | ||
10.16
|
Promissory Note dated as of January 12, 2009 by and between Emmaus Medical, Inc. and Yutaka Niihara, M.D., MPH.
|
|
10.17
|
Promissory Note dated as of April 23, 2009 by and between Emmaus Medical, Inc. and Yutaka Niihara, M.D., MPH.
|
|
10.18
|
Promissory Note dated as of January 12, 2011 by and between Emmaus Medical, Inc. and Willis C. Lee.
|
|
10.19
|
Promissory Note dated as of January 12, 2011 by and between Emmaus Medical, Inc. and Hope International Hospice, Inc.
|
|
10.20
|
Form of Indemnification Agreement and List of Officers and Directors.
|
|
21.1
|
List of Subsidiaries.
|
Emmaus Holdings, Inc. | |||
Date: May 4, 2011 | |||
|
By:
|
/s/ Yutaka Niihara | |
Name: Yutaka Niihara M.D., MPH. | |||
Title: President and Chief Executive Officer |
AFH Acquisition IV, Inc.
|
|||
By:
|
/s/ Yutzaka Niihara
|
||
Name:
|
Yutzaka Niihara M.D, MPH
|
||
Title:
|
Chief Executive Officer
|
Date of Issuance: | Void after: | ||
[_____] | [_______] |
X =
|
Y
(
A – B
)
|
||
A
|
X =
|
The number of Shares to be issued to the Holder.
|
Y =
|
The number of Shares purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being cancelled (at the date of such calculation).
|
A =
|
The fair market value of one (I) Share (at the date of such calculation).
|
B =
|
The Exercise Price (as adjusted to the date of such calculation).
|
EMMAUS MEDICAL, INC. | |||
|
By:
|
/s/ Yutaka Niihara | |
Name: | Yutaka Niihara | ||
Title: | President, CEO & Chairman | ||
By: | |||
Name: |
Date: | By: |
|
|||
Name: |
|
||||
|
Address: |
|
|||
Principal Amount:
$ 500,000
|
Date:
March 14, 2011
|
Lender’s Name:
|
Mitsubishi UFJ Capital III. Limited
|
||
Lender’s Address
|
1-7-17 Nihonbashi, Chuoku
|
||
Tokyo 103-0027 Japan
|
|||
Principal Amount:
|
USD
$500,000
|
||
Maturity Date:
|
Fifth (5
th
) anniversary of March 13, 2016
|
||
Monthly Interest at 10% (to accrue from January 1, 2012)
Per Annum on Principal Amount: $
50,000
|
|||
Monthly Interest Due Dates:
|
End of each month
|
Conversion Date:
|
||
Applicable Conversion Price:
|
||
Signature:
|
||
Name:
|
||
Address:
|
||
Amount to be converted:
|
$
|
|
Amount of Note
|
||
unconverted:
|
$
|
|
Number of shares of
|
||
Common Stock to be issued:
|
||
Please issue the shares of
|
||
Common Stock in the
|
||
following name and to the
|
||
following address:
|
||
Name:
|
||
Address:
|
||
Phone Number:
|
Principal Amount: $_______________________
|
Date: _______________________
|
Note No.: _______________________
|
Emmaus Medical, Inc.
|
||
By:
|
/s/ Yutaka Niihara, M.D.
|
|
Name:
|
Yutaka Niihara, M.D.
|
|
Title:
|
President and CEO
|
Lender’s Name:
|
|
Lender’s Address:
|
|
Principal Amount:
|
USD$______________
|
Conversion Date:
|
|
Applicable Conversion Price:
|
|
Signature:
|
|
Name:
|
|
Address:
|
|
Amount to be converted
|
$
|
Amount of Note unconverted
|
$
|
Number of shares of Common Stock to be issued:
|
|
Please issue the shares of Common Stock in the following Name to the following address
|
|
Address:
|
|
Address:
|
|
Phone Number:
|
Lender
|
Date of Note
|
Principal Amount
|
M’s Support Co., Ltd.
|
August 17, 2010
|
$18,000
|
Nami Murakami
|
August 16, 2010
|
$18,000
|
Makoto Murakami
|
August 16, 2010
|
$18,000
|
Kazu Murakami
|
August 16, 2010
|
$18,000
|
Lender Name:
|
Shigeru Matsuda
|
Lender Address:
|
c/o Eastwind Ltd.
Nippon Press Center Bldg., 6
th
Fl.
Chiyoda-ku, Tokyo
JAPAN 100-0011
|
Loan Amount:
|
Japanese ¥20,000,000
|
Quarterly Interest at 6.5% Per Annum on Loan Amount:
|
Japanese ¥325,000
|
AFH ACQUISITION IV, INC.
By:
/s/ Amir Heshmatpour
Name:
Amir F. Heshmatpour
Title: President
|
|
STOCKHOLDER
AFH HOLDING & ADVISORY, LLC
By:
/s/ Amir Heshmatpour
Name:
Amir F. Heshmatpour
Title: Manager
|
1.
|
DEFINITIONS
. The following capitalized terms used herein have the following meanings:
|
3.
|
Related Obligations
.
|
|
4.
|
4.
|
Obligations of the Holders
.
|
5.
|
Expenses of Registration
.
|
6.
|
Indemnification
.
|
7.
|
Assignment of Registration Rights
.
|
8.
|
Amendment of Registration Rights
.
|
9.
|
Miscellaneous
.
|
COMPANY:
EMMAUS HOLDINGS, INC.
|
||||
By:
|
/s/ Yutaka Niihara | |||
Name:
|
Yutaka Niihara, MD, MPH
|
|||
Title:
|
Chief Executive Officer
|
AFH HOLDING AND ADVISORY, LLC
9595 Wilshire Blvd., Suite 700
Beverly Hills, California 90212
Attention: Amir F. Heshmatpour
Amir@afhholding.com
Fax: (310) 492-9926
|
|
GRIFFIN VENTURES, LTD
9595 Wilshire Blvd., Suite 700
Beverly Hills, California 90212
Attention: Amir F. Heshmatpour
Amir@afhholding.com
Fax: (310) 492-9926
|
If to the Company:
|
Emmaus Holdings, Inc.
|
|
20725 S. Western Ave. Suite 136
|
||
Torrance, CA 90501
|
If to the Grantee:
|
To the Grantee’s address as set forth in Company’s payroll records.
|
EMMAUS HOLDINGS, INC.
|
|||
By:
|
|||
Name:
|
|||
Title:
|
Percentage of Performance-Based Option
Shares Becoming Vested
5
|
Performance Targets
6
|
|
35%, based on Company Performance
|
Performance Target #1
|
|
35%, based on Division Performance
|
Performance Target #2
|
|
30%, based on Personal Performance
|
Performance Target #3
|
|
|
|||
[NAME] | |||
Address: |
If to the Company:
|
Emmaus Holdings, Inc.
|
|
20725 S. Western Ave. Suite 136
|
||
Torrance, CA 90501
|
If to the Grantee:
|
To the Grantee’s address as set forth in Company’s payroll records.
|
EMMAUS HOLDINGS, INC.
|
|||
By:
|
|||
Name:
|
|||
Title:
|
|
|||
[NAME] | |||
Address: |
|
If to the Company:
|
Emmaus Holdings, Inc.
|
|
20725 S. Western Ave. Suite 136
|
|
Torrance, CA 90501
|
|
If to the Grantee:
|
To the Grantee’s address as set forth in Company’s payroll records.
|
EMMAUS HOLDINGS, INC.
|
|||
By:
|
|||
Name:
|
|||
Title:
|
Percentage of Performance-Based Option
Shares Becoming Vested 3 |
Performance Targets
4
|
|
35%, based on Company Performance
|
Performance Target #1
|
|
35%, based on Division Performance
|
Performance Target #2
|
|
30%, based on Personal Performance
|
Performance Target #3
|
[NAME]
|
|||
Address:
|
If to the Company:
|
Emmaus Holdings, Inc.
20725 S. Western Ave. Suite 136
Torrance, CA 90501
|
If to the Grantee:
|
To the Grantee’s address as set forth in Company’s payroll records.
|
EMMAUS HOLDINGS, INC.
|
||||
By:
|
||||
Name:
|
||||
Title:
|
[NAME]
|
||||
Address:
|
DATE
|
NUMBER OF RESTRICTED SHARES THAT BECOME VESTED
2
|
[DATE]
|
[RESERVED]
|
|
If to the Company:
|
Emmaus Holdings, Inc.
|
|
20725 S. Western Ave. Suite 136
|
|
Torrance, CA 90501
|
|
If to the Grantee:
|
To the Grantee’s address as set forth in Company’s payroll records.
|
EMMAUS HOLDINGS, INC.
|
|||
By:
|
|||
Name:
|
|||
Title:
|
Performance Targets
6
|
||
35%, based on Company Performance
|
Performance Target #1
|
|
35%, based on Division Performance
|
Performance Target #2
|
|
30%, based on Personal Performance
|
Performance Target #3
|
[NAME]
|
|||
Address:
|
DATE
|
NUMBER OF RESTRICTED SHARES THAT BECOME VESTED
2
|
[DATE]
|
[RESERVED]
|
If to the Company:
|
Emmaus Holdings, Inc.
20725 S. Western Ave. Suite 136
Torrance, CA 90501
|
If to the Grantee:
|
To the Grantee’s address as set forth in Company’s payroll records.
|
EMMAUS HOLDINGS, INC.
|
||||
By:
|
||||
Name:
|
||||
Title:
|
[NAME]
|
||||
Address:
|
¨
|
represents Lessor exclusively (“
Lessor’s Broker
”);
|
|
¨
|
represents Lessee exclusively (“
Lessee’s Broker
”); or
|
|
¨
|
represents both Lessor and Lessee (“
Dual Agency
”). (Also see Paragraph 15.)
|
|
(a)
|
Remove offices shown on attached floor plan.
|
|
(b)
|
Reduce size of one (1) office as shown on attached floor plan.
|
|
(c)
|
Paint and re-carpet premises. Lessee shall be allowed to choose paint color and carpet from Lessor’s standard choices.
|
|
(d)
|
Replace or repaint a/c vents in the ceiling.
|
|
(e)
|
Install new fluorescent light bulbs in existing light fixtures.
|
|
(f)
|
Thoroughly clean premises, including mini blinds, windows, bathrooms and kitchen.
|
|
(g)
|
Install new ceiling tiles throughout suite.
|
Executed at Torrance, California
|
Executed at Torrance, California
|
|||
on
|
on
|
LESSOR:
W.B.C. LIMITED, a California Limited Partnership
|
LESSEE:
EMMAUS MEDICAL, INC., a Delaware corporation
|
|||
By:
|
SURF MANAGEMENT, INC., General Partner
|
|||
By:
|
By:
|
|||
Name:
|
Steven P. Fechner
|
Name:
|
Yutaka Niihara
|
|
Title:
|
President
|
Title:
|
CEO
|
|
Address:
|
357 Van Ness Way, #100
|
Address:
|
||
Torrance, CA 90501
|
||||
Telephone:
|
(310) 533-5900
|
Telephone:
|
||
Facsimile:
|
Facsimile:
|
1.
|
No sign, placard, picture, advertisement, name, or notice shall be inscribed, displayed, printed or affixed to any part of the outside or inside of the Industrial Center without the prior consent of Lessor. Lessor shall have the right to remove any unauthorized sign, placard, picture, advertisement, name or notice, at the expense of, Lessee. All approved signs or lettering on doors shall be printed, painted, affixed or inscribed at the expense of Lessee by a person approved by Lessor. Lessee shall not place anything, or allow anything to be placed, near the glass or any window, door, partition or wall which may appear unsightly from outside the Premises, as determined by Lessor. Lessee shall not, without prior written consent of Lessor, otherwise sunscreen any window. All signs must be maintained in good condition at Lessee’s expense, or Lessor may remove the signs at Lessee’s expense.
|
2.
|
The sidewalks, halls, passages, exits, entrances, and stairways shall not be obstructed by any of the Lessees or used by them for any other purpose other than for ingress and egress to and from their respective Premises.
|
3.
|
Lessee shall not alter any lock or install any new or additional locks or any bolts on any doors or windows of the Premises without prior consent of Lessor, and shall provide Lessor with copies of any new entry keys.
|
4.
|
The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule by Lessee, Lessees employees, or visitors, shall be borne by the Lessee.
|
5.
|
Lessee shall not overload the floor of the Premises or in any way deface the Premises or any part thereof.
|
6.
|
Lessee shall not use, keep or permit to be used or kept any foul or noxious gas or substance in the Premises, or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to the Lessor or other occupants of the Industrial Centers y reason of noise, odors, and/or vibrations, or interfere in any way with other Lessees or those having business therein.
|
7.
|
No animals or birds be brought in or kept in or about the Premises or the Business Center.
|
8.
|
Lessee shall not use or keep in the Premises or the Building any kerosene, gasoline or flammable or combustible fluid or material, or use any method of heating or air conditioning other than that supplied by Lessor.
|
9.
|
Lessor will direct electricians as to where and how telephone and telegraph wires are to be introduced into the building. No boring or cutting wires will be allowed without the consent of the Lessor. The location of telephones, call boxes and other office equipment affixed to the Premises shall be subject to the approval of Lessor.
|
10.
|
Lessor reserved the right to exclude or expel from the Industrial Center any person who, in the judgment of Lessor, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of the rules and regulations of the Industrial Center.
|
11.
|
Lessee shall not disturb, solicit or canvass any occupant of the Industrial Center and shall cooperate to prevent same.
|
12.
|
Without the written consent of Lessor, Lessee shall not use the name of the industrial Center in connection with or in promoting or advertising, the business of Lessee except as Lessee’s address.
|
13.
|
No contact paper or wallpaper of any type may be applied anywhere without Lessor’s written permission, including the application to any walls, cabinets, doors, etc. The expense of returning the premises to its original condition if this clause is violated will be deducted from the security deposit
|
14.
|
Lessee shall not, without the consent of Lessor, park vehicles or store overnight in the common areas of the Industrial Center. Vehicles in violation will be towed without notice to Lessee at Lessee’s expense.
|
15.
|
Lessee and Lessee’s employees, customers, agents, and contractors shall observe all normal vehicle codes while at the Industrial Center and will not drive their vehicles in excess of 5 miles per hour while on the premises. Lessee shall be responsible for enforcing these rules with its employees, customers, agents, and contractors.
|
16.
|
No cooking shall be done or permitted by any Lessee on the Premises, except for a microwave, nor shall the Premises be used for the storage of merchandise in office spaces, for washing clothes, for lodging, or any improper, objectionable or immoral purposes.
|
PLEASE SIGN AND RETURN BOTH COPIES.
A FULLY EXECUTED COPY WILL BE RETURNED TO YOU
|
LESSEE: EMMAUS MEDICAL, INC.
|
||||
By:
|
/s/ Willis C. Lee
|
DATE:
|
4/4/11
|
|
Name:
|
Willis C. Lee
|
|||
Title:
|
CFO
|
LESSOR: 20655 S. WESTERN AVENUE, LLC
BY: SURF MANAGEMENT, INC.
|
||||
By:
|
/s/ Steven P. Fechner
|
DATE:
|
4/11/11
|
|
Name:
|
Steven P. Fechner
|
|||
Title:
|
President
|
Please return to: Surf Management, Inc., P.O. Box 3217, Torrance, CA 90510 Phone 310/533-5900 |
Year
|
Minimum Royalty
|
2008
|
$30,000
|
2009
|
$70,000
|
2010
|
$100,000
|
2011
|
$100,000
|
2012
|
$100,000
|
EMMAUS MEDICAL, INC.
|
CATO HOLDING COMPANY
|
|||
By:
|
/s/ Yutaka Niihara
|
By:
|
/s/ Allen Cato
|
|
Name:
|
Yutaka Niihara
|
Name:
|
Allen Cato
|
|
Title:
|
CEO and President
|
Title:
|
CEO
|
Ares Trading, S.A.
|
||
By:
|
||
Name:
|
||
Title:
|
||
Date:
|
|
A.
|
The Sublicensee Agreement grants rights to EM to sell L-Glutamine in the Territory, which is defined as the United States and its territories,
|
|
B.
|
EM would like to expand its sales territory for L-Glutamine, and Cato is willing to allow EM to expand this territory as set forth below.
|
|
C.
|
The initial capitalized terms used herein shall have the same meaning as used in the Sublicense Agreement unless otherwise indicated herein.
|
Dated: February 1, 2010
|
Cato Holding Company
|
|||
By:
|
/s/ Mike Cato
|
|||
Name:
|
Mike Cato
|
|||
Title:
|
VP
|
Dated: February 1, 2010
|
Emmaus Medical, Inc.
|
|||
By:
|
/s/ Yutaka Niihara
|
|||
Name:
|
Yutaka Niihara
|
|||
Title:
|
President & CEO
|
|
(1)
|
Cato Holding Company, a North Carolina corporation (“Cato”);
|
|
(2)
|
Nutritional Restart Pharmaceutical Limited Partnership, a Delaware Limited Partnership (“NRP”); and
|
|
(3)
|
Emmaus Medical, Inc., a Delaware corporation (“Emmaus”);
|
1.
|
Transfer of NDA
. NRP hereby assigns and transfers the NDA to Emmaus and agrees to take all reasonable or necessary steps to effect such transfer with the FDA. Emmaus hereby accepts such assignment and transfer.
|
2.
|
Transfer of Nutrestore DMFs
. Cato hereby assigns and transfers the Nutrestore DMFs to Emmaus. Promptly upon execution of this Agreement, the parties shall take all reasonable or necessary steps to transfer the Nutrestore DMFs to Emmaus including, but not limited to, executing and submitting transfer letters to the FDA.
|
3.
|
New DMF
. As soon as commercially practical upon execution of this Agreement, Cato shall submit the New DMF to the FDA on Emmaus’ behalf, which shall be owned by Emmaus. Emmaus agrees to take such reasonable or necessary actions as Cato may request in furtherance of such filing.
|
4.
|
Contents of DMF and NDA
. Cato warrants that NDA is in the form previously provided to Emmaus, that the Nutrestore DMFs are in the form previously provided to Emmaus and that the New DMF, when filed with the FDA shall be in substantially the form provided by Emmaus to Cato. Otherwise, except as expressly set forth in this Agreement, Cato makes no warranties regarding the contents of the NDA, the Nutrestore DMFs or the New DMF, or the suitability of the NDA, the Nutrestore DMFs or the New DMF for any future plans of Emmaus or for any other purpose.
|
5.
|
Transfer of Trademark
. Upon execution of this Agreement, Cato and Emmaus shall execute the Trademark Assignment attached as
Exhibit A
and Cato shall cause such executed document to be filed with the United States Patent and. Trademark Office.
|
6.
|
Effect on Sublicense
and Additional Royalties.
|
|
(a)
|
Sections 2.04, 3.01, 3.02 and 3.03 of the Sublicense (pertaining to the right to reference the DMF and to licensing of the Trademarks) are hereby amended to read as follows:
|
|
(b)
|
Cato agrees to waive its rights to the minimum royalties due under the Sublicense for the 2010, 2011 and 2012 calendar years and waives any obligation of Emmaus to make any minimum Adjusted Gross Sales (as such term is defined in the Sublicense) anywhere in the world. Emmaus agrees to pay Cato ten percent (10%) of its Adjusted Gross Sales (as defined in the Sublicense) of L-Glutamine for use in the Field (as such term is defined in the Sublicense) for the 2010 to 2016 calendar years (the “Extended Payments”). Emmaus agrees that the Extended Payments are being paid (i) for the 2010 and 2011 calendar years, in
|
|
(c)
|
Except as specified in this Section 6, the Sublicense (including, but not limited to, the indemnification provisions of Section 5 thereof) shall remain in full force and effect for the term thereof.
|
7.
|
Effect on Patent Licenses
. This Agreement shall not be construed to affect the ownership of any patent, nor shall it be construed to affect the validity or terms of any license or sublicense of any patent between or among any of the parties to this Agreement.
|
8.
|
Representations and Warranties of NRP
. NRP represents and warrants to Emmaus that:
|
|
(i)
|
Except for (1) the annual report due in August 2010 (the “Annual Report”) which, as of the date of this Agreement, has not been filed, and (2) the accuracy of any information, data or statements regarding Emmaus’ activities, all information and data contained in or submitted in connection with the NDA was true and correct and conformed to the requirements of the FDA when submitted to the FDA, and continues to be true and correct in conformance with the requirements of the FDA as of the Effective Date;
|
|
(ii)
|
NRP has not received any notice of withdrawal of approval or a pending withdrawal of approval of the. NDA, whether related to the delay in the filing of the Annual Report or otherwise and (ii) NRP shall file the Annual Report within 20 days after the Effective Date.
|
|
(iii)
|
No suit, action, or other proceeding is threatened or pending before any court or governmental agency which is likely to materially and adversely affect the effectiveness of the NDA or Emmaus’ ability to market Nutrestore pursuant to the NDA; and NRP has not assigned or licensed any rights to the NDA to any other party.
|
9.
|
Representations and Warranties of Cato
. Cato represents and warrants to Emmaus that:
|
|
(i)
|
All information and data contained in or submitted in conjunction with the Nutrestore DMFs was true and correct and conformed the requirements of the FDA when submitted to the FDA, and continues to be true and correct in conformance with the requirements of the FDA as of the Effective Date;
|
|
(ii)
|
No suit, action, or other proceeding is threatened or pending before any court or governmental agency which is likely to materially and adversely affect the effectiveness of the Nutrestore DMFs or Emmaus’ ability to manufacture
|
|
(iii)
|
To the knowledge of Cato’s personnel familiar with Nutrestore, the Trademarks do not infringe upon the trademarks or intellectual property rights of any third party, nor has any third party claimed such infringement; and Cato has not assigned or licensed any rights to the Nutrestore DMFs or the Trademarks to any other party.
|
10.
|
Indemnification
. Each of Cato and NRP (each, an “Indemnifying Party”) (severally, and not jointly) shall defend, indemnify and hold harmless Emmaus and its shareholders, affiliates, officers, directors, employees, agents, attorneys, successors, successors-in-interests and assigns from and against any and all costs, damages and losses attributable to any third-party claims, causes of action, suits, litigation, or proceedings,(including settlement costs and costs of investigation, expenses, fees and reasonable attorneys’ fees) to the extent attributable to (i) the negligent or intentionally wrongful actions or omissions of such Indemnifying Party in connection with the NDA or any Nutrestore DMF prior to the date hereof and/or (ii) the breach or violation of any representations, warranties, covenants or obligations required of such Indemnifying Party under this Agreement. As a condition precedent to such indemnification Emmaus shall providing the relevant Indemnifying Party prompt notice of the event or events(s) giving rise to such indemnification and shall allow such Indemnifying Party to control the defense and settlement of such claim using counsel reasonably acceptable to Emmaus, provided that such Indemnifying Party shall not admit any fault on behalf of Emmaus without Emmaus’ prior consent, not to be unreasonably withheld.
|
11.
|
Counterparts
. This Agreement may be signed in any number of counterparts, including counterparts exchanged by facsimile or electronic transmission of scanned copies, each of which shall be deemed an original and all of which, together, shall constitute one and the same agreement.
|
12.
|
Governing Law
. This Agreement shall be governed by the substantive law of the State of North Carolina without reference to conflict of laws principles.
|
13.
|
Venue
. Any legal action, suit, claim and/or proceeding arising out of or relating to this Agreement shall be instituted or brought solely and exclusively in any state or federal court located within the County of Los Angeles, State of California.
|
14.
|
Complete Agreement
. This Agreement is the complete agreement between the parties with respect to the transfer of the NDA, the Nutrestore DMFs, the New DMF and the Trademarks to Emmaus and supersedes all prior agreements and any contemporaneous oral agreements. This Agreement may only be amended in a writing executed by all parties hereto specifically referencing this Agreement.
|
Cato Holding Company Ltd.
|
Nutritional Restart Pharmaceutical L.P.
|
|||
By:
|
/s/ Lynda Sutton
|
By:
|
/s/ Lynda Sutton
|
|
Name:
|
Lynda Sutton
|
Name:
|
Lynda Sutton
|
|
Title:
|
President
|
Title:
|
Secretary
|
Emmaus Medical, Inc.
|
||
By:
|
/s/ Yutaka Niihara
|
|
Name:
|
Yutaka Niihara
|
|
Title:
|
President and CEO
|
Policy
|
Limits
|
Coverage
|
Commercial General Liability
|
$1,000,000 per occurrence
$2,000,000 general aggregate
|
Covering bodily injury, personal injury, property damage, including without limitation, all contractual liability for such injury or damage assumed by Emmaus under this Agreement.
|
Worker’s Compensation
|
Statutory
|
In accordance with all federal, state, and local requirements.
|
Employers Liability
|
$100,000 each accident
$100,000 disease/policy limit
$100,000 disease/each employee
|
Covering bodily injury by accident or disease (including death).
|
Automobile Liability
|
$1,000,000 combined single limit
|
Covering bodily injury (including death), and property damage for all vehicles that Emmaus owns, hires or leases.
|
Umbrella Liability
|
$3,000,000 combined single limit per occurrence/aggregate
|
ARES TRADING S.A.
|
EMMAUS MEDICAL, INC.
|
|||||
By: |
/s/ Olaf Krager
|
By: |
/s/ Yutaka Niihara
|
|||
Name: |
Olaf Krager
|
Name: |
Yutaka Niihara
|
|||
Title: |
Director
|
Title: |
President & CEO
|
By: |
/s/ Laurent Foetisch
|
By: |
/s/ Daniel R. Kimbell
|
|||
Name: |
Laurent Foetisch
|
Name: |
Daniel R. Kimbell
|
|||
Title: |
Director
|
Title: |
COO
|
1.1
|
“AFFILIATE” shall mean any corporation, partnership or other business organization which either party directly or indirectly controls or any company by which either party is controlled or is under common control with. For the purpose of this Agreement, “control” shall mean the holding of more than fifty percent (50%) of the voting stock or other ownership interest of the corporation or business entity involved.
|
1.2
|
“CELLSEED PATENTS” shall mean the patents and patent applications listed in an applicable INDIVIDUAL AGREEMENT and made a part thereof and any and all patents that may be issued from said patent applications, and all other patent applications and patents in the TERRITORY which CELLSEED presently or hereafter owns which pertain in any way to the manufacture, development, use or sale of the PRODUCTS including any and all divisions, continuations, continuations-in-part, extensions, substitutions, renewals, registrations, revalidations, reissues or additions of or to any of the aforementioned patents and patent applications.
|
1.3
|
“CONFIDENTIAL INFORMATION” shall mean any and all data and information proprietary or confidential nature that are owned or controlled by either party hereto and that is exchanged between EMMAUS and CELLSEED pursuant to this Agreement or an INDIVIDUAL AGREEMENT, or that are directly or indirectly related to a PRODUCT, or the manufacture, use or sale thereof, including, but without limitation to, KNOW-HOW, clinical or nonclinical data, compositions, production information, technical reports and specifications.
|
1.4
|
“DATA” has the meaning set forth in Article 9.5.
|
1.5
|
“INDIVIDUAL AGREEMENT” shall mean an agreement separately executed between the parties to determine the details, including, but not limited to, the work, and/or timeline, of the PROJECT. If any provision of this Agreement conflicts with that of an INDIVIDUAL AGREEMENT, the provision of the INDIVIDUAL AGREEMENT shall prevail.
|
1.6
|
“INTELLECTUAL PROPERTY RIGHT” has the meaning set forth in Article 9.1.
|
1.7
|
“JDC” has the meaning set forth in Article 4.1.
|
1.8
|
“JMC” has the meaning set forth in Article 4.2.
|
1.9
|
“KNOW-HOW” shall mean technical and scientific information and knowledge concerning any product of CELLSEED, including, but not limited to, information concerning the PRODUCTS, or any relevant information and knowledge for development, registration and marketing of any product of CELLSEED, including, but not limited to, physico-chemical and manufacturing data, specifications, quality control, and galenical, toxicological and pharmacological properties, available from CELLSEED.
|
1.10
|
“MARKETING APPROVAL” means the marketing authorization of the PRODUCTS granted by the competent authorities such as but not limited to the U.S. Food and Drug Administration.
|
1.11
|
“PRODUCTS” shall mean the regenerative medicines developed by CELLSEED and/or CELLSEED jointly with EMMAUS that are specified in the respective INDIVIDUAL AGREEMENT.
|
1.12
|
“PROJECT” shall mean a project and/or a task which is conducted under this Agreement and is identified in an INDIVIDUAL AGREEMENT.
|
1.13
|
“SPECIFICATIONS” shall mean the specifications and quality control requirements for the respective PRODUCTS as approved by the competent authorities in the TERRITORY, and modified from time to time following prior approval by the competent authorities in the TERRITORY.
|
1.14
|
“SUBSTRATES” shall mean CELLSEED temperature responsive cell culture substrates.
|
1.15
|
“TERRITORY” shall mean the United States of America.
|
1.16
|
The use herein of the plural shall include the singular, and the use of the masculine shall include the feminine and vice versa.
|
4.1
|
For the purpose of successful development of PRODUCTS in the TERRITORY, a Joint Development Committee (“JDC”) comprised of an equal number of representatives from EMMAUS and CELLSEED shall be established. JDC will discuss and determine such matters as selection of clinical sites, developing key opinion leaders’ meeting, to obtain MARKETING APPROVAL in the TERRITORY for the PRODUCTS. Decisions regarding development and the conduct of JDC activities shall be made as follows:
|
|
(a)
|
The JDC shall be co-chaired by a representative from EMMAUS and CELLSEED. The JDC shall meet when either party has the need to do so; provided, however, the JDC shall meet at least twice (2) per year.
|
|
(b)
|
The JDC shall discuss and decide such items including, but not limited to, the structure and design of any additional clinical study if required for the purpose of obtaining MARKETING APPROVAL concerning PRODUCTS in the TERRITORY.
|
|
(c)
|
Decisions regarding development and the conduct of JDC activities shall be made by the unanimous vote of the JDC, with each company having one vote. Each party’s members in the JDC will reasonably consider the adoption of the other party’s suggestions and will accept as many of such suggestions as are reasonable.
|
|
(d)
|
If the JDC is unable to reach agreement on any decisions required of it, the issue shall be submitted for consideration in the case of EMMAUS to a designee of the Head of the Pharma Division of EMMAUS and in the case of CELLSEED to a designee of the Head of the Pharma Division of CELLSEED. If they are unable to agree, then the issue shall be resolved by the Head of the Pharma Division of CELLSEED.
|
|
(e)
|
A party may change any of its appointments to the JDC at any time upon giving written notice to the other party.
|
|
(f)
|
The JDC does not itself have the authority to amend this Agreement and/or any INDIVIDUAL AGREEMENT in any manner.
|
4.2
|
In order to guide the successful commercialization of PRODUCTS in the TERRITORY, a Joint Marketing Committee (“JMC”) will be established between the parties with the main purpose to oversee and approve all strategic marketing issues such as marketing objectives, marketing strategies, implementation and feedback. The authority of the JMC shall be limited to the TERRITORY.
|
|
(a)
|
The JMC shall be chaired by a representative from EMMAUS. The JMC shall meet when either party has the need to do so; provided, however, the JDC shall meet at least twice (2) per year.
|
|
(b)
|
Decisions regarding the marketing of the PRODUCTS shall be made by unanimous vote of the JMC with each company having one vote. Each party’s members of the JMC will reasonably consider the adoption of the other party’s suggestions and will accept as many of such suggestions as are reasonable.
|
|
(c)
|
If the JMC is unable to reach agreement on a decision required of it, the issue shall be submitted for consideration in the case of EMMAUS to a designee of the Head of the Pharma Division and in the case of CELLSEED to a designee of the Head of the Pharma Division. If they are unable to agree, then the issue shall be resolved by the Head of the Pharma Division of EMMAUS.
|
5.1
|
Both parties shall comply with all relevant laws and regulations including but not limited to U.S. Food and Drug Administration Good Laboratory Practice and/or Good Manufacturing Practices.
|
6.1
|
CELLSEED shall transfer the cell sheet engineering technology and provide scientific and engineering support, training, and KNOW-HOW as agreed in the INDIVIDUAL AGREEMENT to EMMAUS so that EMMAUS may perform its obligation under this Agreement and relevant INDIVIDUAL AGREEMENT in effect.
|
7.1
|
Both parties recognize that quick development and registration of the PRODUCTS as well as adequate promotional efforts to exploit the commercial potential of the PRODUCTS in an optimal way are in the mutual interest of both parties.
|
8.1
|
CELLSEED shall defend and hold harmless EMMAUS against any suit, damage claim or demand based on actual or alleged infringements of any intellectual property of a third party resulting from the exercise or use of any right or license granted herein or under an INDIVIDUAL AGREEMENT which arises from the use, or sale, or the manufacture of the PRODUCTS within the TERRITORY. The cost of such defense shall be borne by CELLSEED. CELLSEED may not settle any such third party claim without the consent of EMMAUS, which shall not be unreasonably withheld. Any suit, damage claim or demand based on actual or alleged infringements in the TERRITORY of any intellectual property of a third party resulting from changes to the PRODUCTS or the process by which they are made in the course of the joint development efforts by the parties shall be defended by the parties jointly. The parties shall negotiate to determine which party shall lead the defense and how the costs of defense should be allocated. Neither party may settle any such third party claim without the consent of the other party.
|
8.2
|
Each party shall promptly notify the other party of any suit, damage claim or demand based on any possible infringement of third party intellectual property arising from making, using or selling of the PRODUCTS.
|
8.3
|
In the event that either party becomes aware of a product made, used or sold in the TERRITORY which it believes to infringe a valid claim of issued CELLSEED PATENTS, each party shall promptly notify the other party, whereupon the parties shall consult with each other to determine which party, if any, should take action. Neither party may settle such claim or action without the consent of the other party. The parties shall also discuss how the expenses and any recoveries from such action should be treated. If one party does not agree to participate in such action, the other can take action at its own expense and shall be entitled to receive all recoveries.
|
8.4
|
CELLSEED shall be solely responsible for the prosecution and maintenance of the CELLSEED PATENTS relating to PRODUCTS (including, but not limited to, the PRODUCTS, manufacturing process and/or use thereof) in the TERRITORY during the term of this Agreement. CELLSEED shall grant, pursuant to the terms and conditions set
|
8.5
|
CELLSEED shall notify EMMAUS of the issuance of each CELLSEED PATENT relevant to the PRODUCTS subject to any INDIVIDUAL AGREEMENT then effective, giving the date of issue and CELLSEED PATENT number for each such CELLSEED PATENT.
|
9.1
|
All intellectual property rights in inventions and/or discoveries created in the course of this Agreement and each INDIVIDUAL AGREEMENT (the “INTELLECTUAL PROPERTY RIGHT”) shall be owned by both EMMAUS and CELLSEED jointly, under the terms and conditions that will be defined by EMMAUS and CELLSEED in a separate agreement, which shall also state which party shall be responsible for and shall pay the costs of applying for and prosecuting the patent application(s), and subsequent maintenance of the patent(s). Such jointly owned inventions and/or discoveries and related INTELLECTUAL PROPERTY RIGHT shall include those made jointly by the employee(s) of EMMAUS and CELLSEED, or solely made by the employee(s) of either party based on CONFIDENTIAL INFORMATION, INTELLECTUAL PROPERTY RIGHT and/or RIGHTS (as defined below) of the other party. CELLSEED and EMMAUS shall execute any documents required to perfect such joint ownership.
|
9.2
|
For intellectual property relating to the PRODUCTS under this Agreement or INDIVIDUAL AGREEMENT and made independently from CONFIDENTIAL INFORMATION, INTELLECTUAL PROPERTY RIGHT and/or RIGHTS of the other party and solely by employee(s) of one of the parties, the ownership of such intellectual property (“SOLELY OWNED INVENTION”) are held by the party whose employee(s) made the invention (“LICENSOR”) when LICENSOR obtains written confirmation of the other party that such SOLELY OWNED INVENTION does not include any of CONFIDENTIAL INFORMATION, INTELLECTUAL PROPERTY RIGHT and/or RIGHTS of the other party. Pursuant to the terms and conditions of this Agreement and respective INDIVIDUAL AGREEMENT(S), LICENSOR will grant a worldwide, perpetual, irrevocable, non-exclusive, royalty free, fully paid up, sub-licensable, transferable, license of rights (“LICENSE”) to the other party (“LICENSEE”) to make, use, sell, have made, offer for sale, have sold products incorporating or made using such SOLELY OWNED INVENTION and all other rights with regard thereto. In case LICENSEE desires the LICENSE to be exclusive, LICENSOR shall firstly discuss in good faith with LICENSEE the terms and conditions to such exclusive license.
|
9.3
|
Notwithstanding the provision in Article 9.1 through 9.2 above, any and all INTELLECTUAL PROPERTY RIGHTS in connection with SUBSTRATES shall solely
|
9.4.1
|
EMMAUS agrees to disclose promptly to CELLSEED any inventions, discoveries, improvements, works of authorship, copyrights, trade secrets, know-how and any equivalents thereof relating to the PRODUCTS (“EMMAUS INVENTIONS”) when arising.
|
9.4.2
|
Except for any inventions, discoveries or improvements in connection with SUBSTRATES, CELLSEED agrees to disclose promptly to EMMAUS any inventions, discoveries, improvements, works of authorship, copyrights, trade secrets, know-how and any equivalents thereof relating to the PRODUCTS (“CELLSEED INVENTIONS”) when arising.
|
9.4.3
|
Both parties acknowledge that EMMAUS INVENTION and CELLSEED INVENTION shall be deemed as CONFIDENTIAL INFORMATION and agree to treat them in compliance with Article 10 hereof.
|
9.5
|
Subject to the obligation of confidentiality under Article 10 hereof and the publication under Article 11 hereof, all data and results that are created in the course of this Agreement and/or each INDIVIDUAL AGREEMENT, excluding the INTELLECTUAL PROPERTY RIGHT (“DATA”) relating to the PRODUCTS, shall be owned by both EMMAUS and CELLSEED. CELLSEED may use DATA at its sole discretion for its research and business purpose outside the TERRITORY subject to the restrictions in the Article 11.2 below.
|
9.6
|
Each party shall retain all right, title and interest (collectively, “RIGHTS”) in any patent, patent application, trade secret, know-how and other intellectual property that was owned by such party prior to the date of this Agreement, or developed independently of this Agreement, and except for the licenses and rights granted herein and in a given INDIVIDUAL AGREEMENT with respect to the RIGHTS, no license grant or assignment, express or implied, by estoppel or otherwise with respect to the RIGHTS of a party, is intended by, or shall be inferred from, this Agreement.
|
10.1
|
Each party shall act diligently so as to prevent that any CONFIDENTIAL INFORMATION, received from the other, might be revealed or disclosed to a non-authorized third party. The obligation undertaken under this Article 10.1 shall survive for ten (10) years beyond the termination of the last INDIVIDUAL AGREEMENT executed under this Agreement. The receiving party may disclose CONFIDENTIAL INFORMATION to its AFFILIATE, provided that the receiving party shall impose the same degree of confidentiality on the AFFILIATE. Neither party shall use CONFIDENTIAL INFORMATION of the other party for any purpose other than to perform the obligations under this Agreement and/or any INDIVIDUAL AGREEMENT.
|
10.2
|
The obligations undertaken by the parties hereto pursuant to Article 10.1 shall not, in any event, apply to any information which
|
|
a)
|
at the time of disclosure is or thereafter becomes available to the public in published literature or otherwise through no fault of the receiving party;
|
|
b)
|
was known to, or otherwise in the possession of the receiving party prior to the receipt of such information from the other party as evidenced by the written records of the receiving party;
|
|
c)
|
is obtained by the receiving party from a third party who would not be breaching a commitment of confidentiality by disclosing such information;
|
|
d)
|
was independently developed by the receiving party’s employee who did not have access to the disclosed information; and,
|
|
e)
|
was disclosed in accordance with Article 11.
|
10.3
|
Each party recognizes that the other party may have in its possession or control information in respect of which it is bound by confidentiality obligations to a third party. For the avoidance of doubt, neither party shall be under any obligation to disclose to the other information in respect of which it is or reasonably considers itself to be bound by any such obligation.
|
10.4
|
The parties agree to co-operate in good faith to set up and maintain such organizational structures, safeguards and procedures as may be required to prevent disclosure by one party to the other, whether accidentally or otherwise, of any such information as is referred to in Article 10.3 above.
|
11.1
|
CELLSEED and EMMAUS agree not to disclose any press release or other public statement disclosing the existence of or relating to this Agreement without the prior written consent of the other party, provided, however, that neither party shall be prevented from complying with any duty of disclosure (including SEC filing) it may have pursuant to securities or other applicable law and/or applicable regulation of stock exchanges.
|
11.2
|
If each party wishes to publish or present information generated in the course of performance of this Agreement and/or respective INDIVIDUAL AGREEMENT relating to the PRODUCTS in a scientific journal or conference proceeding, it shall furnish a copy of the proposed manuscript or presentation outline to the other party as soon as practicable, but in no event less than ninety (90) days before manuscript submission or the presentation date, to permit for the protection of such information, e.g. by filing of a patent application prior to such proposed disclosure.
|
12.1
|
CELLSEED shall indemnify and hold EMMAUS, its AFFILIATES, and the officers, directors and employees of each of them, harmless from any and all liability, including liability for death or personal injury and reasonable attorney’s fees, which results:
|
|
a)
|
from the negligence or willful misconduct of CELLSEED;
|
|
b)
|
from the manufacture and/or packaging of PRODUCTS by CELLSEED.
|
|
c)
|
from the breach by CELLSEED of any covenant, representation or warranty contained in this Agreement and/or each INDIVIDUAL AGREEMENT, and if applicable; or,
|
|
d)
|
from CELLSEED’s or its assigned third party’s failure to manufacture the PRODUCTS in accordance with the SPECIFICATIONS.
|
12.2
|
EMMAUS shall indemnify and hold CELLSEED, its AFFILIATES and the officers, directors and employees of each of them, harmless from any and all liability, including liability for death or personal injury and reasonable attorney’s fees, which results:
|
|
a)
|
from the negligence or willful misconduct of EMMAUS with regard to the use of, and/or delivery and supply of, promotion, marketing, sale and distribution of the PRODUCTS;
|
|
b)
|
from the manufacture and/or packaging of PRODUCTS by EMMAUS if EMMAUS deviated from the applicable SPECIFICATIONS and instructions from CELLSEED;
|
|
c)
|
from the breach by EMMAUS of any covenant, representation or warranty contained in this Agreement and/or each INDIVIDUAL AGREEMENT and if applicable; or,
|
|
d)
|
from EMMAUS’s or its assigned third party’s failure to manufacture the PRODUCTS in accordance with the applicable SPECIFICATIONS.
|
12.3
|
The obligations of the indemnifying party under Article 12.1 and 12.2 are conditioned upon the prompt written notification to the indemnifying party of any of the aforementioned suits or claims. The indemnifying party shall have the right to assume the defense of any such suit or claim if it has assumed responsibility for the suit or claim, in writing; however, if in the reasonable judgment of the indemnified party, such suit or claim involves an issue or matter which could have a materially adverse effect on the business, operations or assets of the indemnified party, the indemnified party may control the defense or settlement thereof without waiving its right to seek indemnity for such claim. If the indemnified party defends the claim, the indemnified party may participate in the defense of such suit or claim at its sole cost and expense. There shall be no indemnification liability against a party as to any suit or claim for which settlement or compromise or an offer of settlement or compromise is made without the prior written consent of the indemnifying party.
|
12.4
|
Both parties shall carry policies of comprehensive general commercial liability and product liability insurance with respect to their obligations under this Agreement and/or each INDIVIDUAL AGREEMENT under ordinary terms and conditions, as well as under standard limits within the pharmaceutical industry. The existence of such policies shall be confirmed by either party upon request of the other party.
|
14.1
|
This Agreement shall come into effect on the Effective Date and shall be valid until the date of the last to expire or terminated INDIVIDUAL AGREEMENT, unless earlier terminated by a party subject to the provisions of Article 15 hereunder. In case that neither party notifies the other party of its intention of non-renewal ninety (90) days prior to the expiration, this Agreement shall automatically be renewed for successive one (1) year terms.
|
14.2
|
If this Agreement is terminated, CELLSEED shall forthwith regain the right to sell PRODUCTS under its own trademark within the TERRITORY.
|
14.3
|
Article 8: INTELLECTUAL PROPERTY AND INFRINGEMENT, Article 9: OWNERSHIP, Article 10 CONFIDENTIALITY, Article 12: INDEMNIFICATION, Article 13: ASSIGNMENT, Article 16: GOVERNING LAW AND ARBITRATION, Article 18 : ENTIRE AGREEMENT; SEVERABILITY, Article 22: BINDING AGREEMENT shall survive the termination or expiration of this Agreement or the last INDIVIDUAL AGREEMENT.
|
15.1
|
A party shall have a right to terminate this Agreement and/or INDIVIDUAL AGREEMENT(s) in effect by written notice to the other party upon the occurrence of any of the following events:
|
|
(a)
|
Breach by the other party of any material term or condition of this Agreement and/or INDIVIDUAL AGREEMENT(s) in effect, provided that the party in breach shall be notified in writing by the non-breaching party of such alleged breach, and shall have a period of sixty (60) days within which to rectify such breach.
|
|
(b)
|
In the event the other party is declared bankrupt or insolvent, or make an assignment for the benefit of its creditors, or if a receiver is appointed or any proceedings are commenced, voluntary or involuntary, by or against either party under any bankruptcy or similar law, and such status is not cured within thirty (30) days from its occurrence.
|
15.2
|
CELLSEED has the right to terminate this Agreement and/or INDIVIDUAL AGREEMENT(s) in effect, if during the term of this Agreement or INDIVIDUAL AGREEMENT (i) EMMAUS commercializes a regenerative product other than PRODUCTS which compete with PRODUCTS without express prior permission by CELLSEED, or (ii) besides (i) above, EMMAUS enters into partnership with one of the
|
16.1
|
This Agreement and/or respective INDIVIDUAL AGREEMENT shall be governed by and construed in accordance with the laws of the state of New York, exclusive of the choice of law rules thereof.
|
16.2
|
Other than matters within the responsibility of the JDC and JMC, for which the procedure of amicable settlement is described in the relevant articles, each party hereto agrees to settle any dispute and differences arising out of or in connection with this Agreement and/or respective INDIVIDUAL AGREEMENT, or the breach thereof, through good faith negotiation in an amicable manner. In the event a consensus cannot be obtained with regard to such dispute or breach, the Head of Pharma Division of CELLSEED and the Head of Pharma Division of EMMAUS shall discuss the matter and attempt to solve it. In case a mutually acceptable solution to such dispute or breach cannot be found, such dispute or breach shall be finally settled by arbitration pursuant to the Rules Conciliation and Arbitration of the International Chamber of Commerce as hereinafter provided by three (3) arbitrators appointed in the Rules and the decision of the arbitrators shall be final. Such arbitration shall take place in Wilmington, Delaware.
|
18.1
|
This Agreement sets forth the entire agreement of the parties with respect to subject matter contained herein and supersedes and replaces any and all previous agreement between the parties on the subject matter. This Agreement may not be modified or amended except as expressly stated herein or by a written agreement duly executed by both parties hereto.
|
18.2
|
CELLSEED and EMMAUS hereby expressly state that it is the intention of neither party to violate any rule, law or regulation. If any of the provisions of this Agreement are held to be void or unenforceable with regard to the TERRITORY, then such void or unenforceable provisions shall be replaced with valid and enforceable provisions which will achieve as far as possible the economic business intentions of the parties.
|
Emmaus Medical, Inc.
Signed
/s/ Yutaka Niihara
Name Yutaka Niihara
Title President and CEO
Date
April 8, 2011
|
CellSeed Inc.
Signed
/s/ Yukio Hasegawa
Name Yukio Hasegawa
Title President and CEO
Date
April 8, 2011
|
1.1
|
“CAOMECS” shall mean the Cultured Autologous Oral Mucosal Epithelial Cell-Sheets for generated medicine of cornea developed by CELLSEED or by CELLSEED jointly with EMMAUS (pursuant to this INDIVIDUAL AGREEMENT or the MASTER AGREEMENT) or otherwise under the CELLSEED PATENTS and/or KNOW-HOW owned by CELLSEED.
|
1.2
|
“cGMP” shall mean current good manufacturing practice which is issued by the U.S. Drug and Food Administration and which is applicable in the TERRITORY.
|
1.3
|
“MAA” shall mean a Marketing Authorization Application in the TERRITORY.
|
1.4
|
“MANUFACTURING COSTS” shall mean the costs borne by EMMAUS to manufacture the CAOMECS that is composed of the following cost elements:
|
|
a)
|
idle or excess capacity in case EMMAUS has established its own facility to manufacture CAOMECS;
|
|
b)
|
non-manufacturing overhead costs which do not specifically relate to the management of the manufacturing unit in which CAOMECS is manufactured, and overhead costs attributable to general corporate activities including, for example, executive management, investors relations, business development, legal affairs and finance;
|
|
c)
|
yield losses and NON-CONFORMING PRODUCT, to the extent such yield losses and NON-CONFORMING PRODUCT are resulting from failure or negligence of EMMAUS or its assigned manufacturer (for example due to identifiable errors of manufacturing);
|
|
d)
|
expired products; and,
|
|
e)
|
royalties payable to third parties in relation with the manufacturing, formulation, filling, use or sale of a CAOMECS.
|
1.5
|
“MARKETING APPROVAL” shall mean the marketing authorization of the CAOMECS granted by the U.S. Food and Drug Administration.
|
1.6
|
“NET SALES” shall mean the amount resulting from the total number of units of CAOMECS sold by EMMAUS in the TERRITORY to third parties multiplied by the PRICE less (i) deductions of returns (including withdrawals and recalls) allowed or credited, (ii) discounts (including volume–quantity discounts) and rebates (price reductions including chargebacks) granted at the time of invoicing and (iii) sales, excise (including Value Added Tax) and other taxes and governmental duties and charges (actual or retroactive) levied on the invoiced amount. The amount of such NET SALES shall be converted into USD at the average monthly rate of exchange at the time.
|
1.7
|
“NON CONFORMING PRODUCT’ shall mean CAOMECS that:
|
|
a)
|
does not meet the SPECIFICATIONS;
|
|
b)
|
was not manufactured or tested in accordance with the manufacturing procedures registered with the respective authorities; or,
|
|
c)
|
was not manufactured in accordance with cGMPs.
|
1.8
|
“PRICE” shall mean the net hospital price (to be paid by hospitals) per unit of CAOMECS in the TERRITORY.
|
1.9
|
“PRODUCT MARK” means any trademark, service mark, trade name, domain name and logo used on or in connection with the identification or marketing of CAOMECS.
|
1.10
|
“PROFIT” shall mean the net profit earned by EMMAUS computed by deducting MANUFACTURING COSTS from NET SALES of CAOMECS in the TERRITORY.
|
1.11
|
“PROJECT’ shall mean the commercialization of CAOMECS in the TERRITORY, under this INDIVIDUAL AGREEMENT.
|
1.12
|
“TERRITORY” shall mean the United States of America.
|
1.13
|
“TREATMENT IND” means treatment Investigational New Drug Application authorized by competent authority (a) when used for a patient suffering from a chronic, severe or life-threatening disease for which no satisfactory authorized alternative therapy exists or (b) when otherwise approved for use by a competent regulatory authority for use for an individual under a doctor’s care but prior to the receipt of marketing approval of the product for any use.
|
1.14
|
“USD” shall mean United States Dollars.
|
1.15
|
The use herein of the plural shall include the singular, and the use of the masculine shall include the feminine and vice versa.
|
2.1
|
Subject to all relevant terms and conditions of this INDIVIDUAL AGREEMENT, during the term of this INDIVIDUAL AGREEMENT, CELLSEED hereby grants EMMAUS an exclusive license and right to manufacture, sell, market and distribute CAOMECS under the CELLSEED PATENTS, RIGHTS, KNOW-HOW and other intellectual property held by CELLSEED in the TERRITORY.
|
2.2
|
In addition to the Article 2.1, only for the purpose to perform. the obligations under this INDIVIDUAL AGREEMENT, during the term of this INDIVIDUAL AGREEMENT, CELLSEED shall disclose and grant to EMMAUS the right to use the CELLSEED’s accumulated information package (“PACKAGE”), which is deemed necessary for the foundation of joint development of CAOMECS between the parties. Except to US Food and Drug Administration or competent government agency, EMMAUS shall not disclose and/or provide the entire and/or certain part of PACKAGE to any third party.
|
2.3
|
Except with respect to Japan and the areas where CELLSEED establishes any contractual relationship with any third party to manufacture, sell, market, and/or distribute CAOMECS, both parties shall discuss in good faith separately and determine the commercialization of CAOMECS outside the TERRITORY.
|
3.1
|
In consideration for the disclosure of the PACKAGE to EMMAUS as set forth in Article 2.2, EMMAUS shall pay to CELLSEED an amount of USD 1,500,000 in total. The payment shall be made by EMMAUS within thirty (30) days of the delivery of the PACKAGE.
|
3.2
|
EMMAUS may use, without any charge, CELLSEED PATENTS and other intellectual property held by CELLSEED for the development of CAOMECS as set forth in this INDIVIDUAL AGREEMENT. For the avoidance of doubt, EMMAUS shall not use CELLSEED PATENTS and other intellectual property held by CELLSEED for any purpose other than to perform its obligations under this or any other applicable INDIVIDUAL AGREEMENT.
|
3.3
|
The payment set out in Article 3.1 shall not be refundable in any cases.
|
4.1
|
In consideration for the rights granted to EMMAUS as set forth in Article 2.1, and for the right to use the PACKAGE as provided in Article 2.2, EMMAUS shall pay to CELLSEED royalty to be separately agreed by both parties. Both parties agree to discuss and determine the PROFIT sharing rate, which is equal to the percentage of PROFIT to be allocated to each of CELLSEED and EMMAUS taking into consideration the cost borne by each party through the phases provided in the Article 5 and of CELLSEED for research and development of CAOMECS outside the TERRITORY.
|
4.2
|
EMMAUS shall send a bi-annual sales report within thirty (30) days from the end of January and the end of June each year which shall set forth the budgeted NET SALES, the actual NET SALES, budgeted MANUFACTURING COST, the actual MANUFACTURING COST, budgeted PROFIT and the actual PROFIT and the amount of royalty thereon for the period for which royalty payment are made and deduction taken
|
|
in computing the PROFIT. The report shall be submitted even if no royalty payment is due.
|
4.3
|
The NET SALES used for determining applicable royalty formula shall be computed by the cumulative sales of CAOMECS from January 1
st
until December 31
st
of each calendar year.
|
4.4
|
Any discrepancy in the amount of royalty payable shall be settled in the next royalty settlement.
|
4.5
|
EMMAUS shall make royalty payment within sixty (60) days from receipt of invoice issued by CELLSEED.
|
4.6
|
The PRICE shall be established through discussion by both parties no later than sixty (60) days prior to the date of the inception of commercial sales of the CAOMECS in the TERRITORY and end of September in each year following the first year.
|
4.7
|
All royalty payments shall be payable in Japanese YEN to CELLSEED or its designee and shall be made by wire transfer of immediately available funds to financial institution designated by CELLSEED. Any bank charges imposed on the royalty payments shall be borne by EMMAUS, though EMMAUS shall not be held liable for any bank charges levied by the CELLSEED’s bank as the result of such payments.
|
4.8
|
Both parties agree to discuss in good faith and determine the terms and conditions to be submitted in TREATMENT IND of the CAOMECS.
|
5.1
|
CELLSEED shall transfer its cell sheet engineering technology and provide scientific and engineering support, training and KNOW-HOW as agreed between the parties to EMMAUS so that EMMAUS may perform its obligation under this INDIVIDUAL AGREEMENT.
|
5.2
|
Commercialization
|
5.2.1
|
Marketing Approval
|
5.2.2
|
Development
|
5.2.3
|
Clinical Trial
|
5.2.4
|
(a) CELLSEED will provide, free of charge to EMMAUS, UpCell-Inserts necessary for the technology transfer and development phase.
|
5.2.5
|
EMMAUS shall notify CELLSEED of the MARKETING APPROVAL for the CAOMECS in the TERRITORY. Such notice shall be given promptly, but in any event not later than ten (10) days after such grant or approval.
|
5.3
|
Both parties agree to separately execute the statement of works to determine the details, including, but not limited to, the work, and/or timeline, of the each phase provided in this Article 5 and manufacturing provided in Article 7.
|
5.4
|
All CELLSEED PATENTS relating to the manufacture, use and/or sale of CAOMECS in the TERRITORY shall be included on Appendix 1 to this INDIVIDUAL AGREEMENT. CELLSEED warrants that the list in this INDIVIDUAL AGREEMENT is a complete list of all such patents and patents applications for CAOMECS as of the Effective Date. From time to time during the term of this INDIVIDUAL AGREEMENT, CELLSEED will provide to EMMAUS, upon request, an updated version of such list.
|
6.1.1
|
In the TERRITORY, EMMAUS retains the right to create and maintain own brand names/trademarks for CAOMECS. EMMAUS will on all promotional material and packaging acknowledge that the CAOMECS is distributed under a license from CELLSEED.
|
6.1.2
|
In the TERRITORY, EMMAUS, after consultation with CELLSEED, shall develop the marketing strategies, tactics and sales forecasts for the CAOMECS which shall be reviewed by the JMC no less than twice (2) per year.
|
6.1.3
|
EMMAUS and CELLSEED shall jointly develop the training program for EMMAUS’s sales force in the TERRITORY under the guidance of JMC. EMMAUS shall utilize such training program to assure a consistent, focused promotional strategy and message.
|
6.2
|
EMMAUS in the TERRITORY may disseminate only those promotional and advertising materials for the CAOMECS that have been approved by CELLSEED for use in the TERRITORY, such approval shall not be unreasonably withheld. EMMAUS shall not make, and shall cause its employees, representatives and agents not to make, any claims or representations in respect of the CAOMECS in the TERRITORY that have not been approved by CELLSEED.
|
6.3
|
CELLSEED shall assist EMMAUS in the training of sales representatives, and, to the extent reasonable, such other matters as EMMAUS may request to enable EMMAUS to perform its promotion activities.
|
6.4
|
EMMAUS shall communicate with government authorities regarding CAOMECS, including, but not limited to, responding to inquiries about the CAOMECS and reporting adverse events occurred in the TERRITORY.
|
6.5
|
EMMAUS shall have the right to conduct additional clinical study for the CAOMECS in the TERRITORY as a part of the marketing plan for the purpose of promoting the sales of the CAOMECS in the TERRITORY. CELLSEED shall use its best commercial effort to assist such studies; provided, however, the cost for such study(s) shall be solely borne by EMMAUS.
|
6.6
|
Both parties are aware of the importance of timely and proper reporting of adverse events to health authorities as well as to the other party after commercial launch of the CAOMECS in the TERRITORY. In this regard both parties shall discuss and agree on the details of an adverse events reporting procedure soon after MAA has been filed in the TERRITORY, which must be in accordance with applicable law in the TERRITORY. The parties agree that all reports to each other shall be in English language.
|
7.1
|
EMMAUS shall be responsible to obtain biopsy of the patient’s own oral mucosal epithelial cells from the hospital in the TERRITORY for the purpose of manufacturing CAOMECS.
|
7.2
|
EMMAUS shall warrant that all CAOMECS shall be manufactured in accordance with cGMP and that it shall meet all the applicable SPECIFICATIONS. EMMAUS shall be responsible for the CAOMECS being shipped without any impairment of the applicable SPECIFICATIONS. Any shipment of CAOMECS shall include a certificate of analysis which shows full conformance of each CAOMECS with the applicable SPECIFICATIONS.
|
7.3
|
EMMAUS shall be responsible for handling all returns relating to the CAOMECS and all CAOMECS recalls within the TERRITORY.
|
10.1
|
EMMAUS shall maintain books and records of invoices relating to sales of the CAOMECS in the TERRITORY for three (3) years after issuance of the respective EMMAUS invoice to third parties, which are sufficient to enable CELLSEED to verify the NET SALES defined in Article 4.3 and PRICE defined in Article 4.6 of this INDIVIDUAL AGREEMENT.
|
10.2
|
CELLSEED may have an independent accountant reasonably acceptable for EMMAUS review and/or audit the relevant books and records relating to the CAOMECS of EMMAUS upon reasonable notice and not more than once each calendar year.
|
11.1
|
This INDIVIDUAL AGREEMENT shall come into effect on the Effective Date written above and shall be valid until, unless earlier terminated by a party subject to the provisions of Article 15 of the MASTER AGREEMENT, until the CELLSEED PATENTS used for the CAOMECS expires in the TERRITORY.
|
11.2
|
Upon mutual agreement, the parties may extend the term of this INDIVIDUAL AGREEMENT. If the term is not extended, CELLSEED shall have the unlimited right to sell the CAOMECS under its own trademark within the TERRITORY.
|
11.3
|
Notwithstanding anything contrary in this INDIVIDUAL AGREEMENT, in case that EMMAUS fails to use commercially reasonable efforts to meet the PROJECT SCHEDULE, both parties shall discuss in good faith. In case that both parties cannot reach an agreement in a reasonable period through the said discussion, CELLSEED or EMMAUS may terminate this INDIVIDUAL AGREEMENT.
|
11.4
|
Article 8: OWNERSHIP, and Article 9: DATA RETENTION shall survive the termination or expiration of this INDIVIDUAL AGREEMENT. Article 10: MAINTENANCE OF RECORDS shall also survive in the term provided in respective articles.
|
13.1
|
This INDIVIDUAL AGREEMENT shall be governed by and construed in accordance with the laws of the state of New York, exclusive of the choice of law rules thereof.
|
13.2
|
Other than matters within the responsibility of the JDC and JMC, for which the procedure of amicable settlement is described in the relevant articles of the MASTER AGREEMENT, each party hereto agrees to settle any dispute and differences arising out of or in connection with this INDIVIDUAL AGREEMENT, or the breach thereof, through good faith negotiation in an amicable manner. In the event a consensus cannot be obtained with regard to such dispute or breach, the Head of Pharma Division of CELLSEED and the Head of Pharma Division of EMMAUS shall discuss the matter and attempt to solve it. In case a mutually acceptable solution to such dispute or breach cannot be found, such dispute or breach shall be finally settled by arbitration pursuant to the Rules Conciliation and Arbitration of the International Chamber of Commerce as hereinafter provided by three (3) arbitrators appointed in the Rules and the decision of the arbitrators shall be final. Such arbitration shall take place in Wilmington, Delaware.
|
15.1
|
This INDIVIDUAL AGREEMENT and the MASTER AGREEMENT sets forth the entire agreement of the parties with respect to subject matter contained herein and supersedes and replaces any and all previous agreement between the parties on the subject matter. This INDIVIDUAL AGREEMENT may not be modified or amended except as expressly stated herein or by a written agreement duly executed by both parties hereto.
|
15.2
|
CELLSEED and EMMAUS hereby expressly state that it is the intention of neither party to violate any rule, law or regulation. If any of the provisions of this INDIVIDUAL AGREEMENT are held to be void or unenforceable with regard to any country of the TERRITORY, then such void or unenforceable provisions shall be replaced with valid and enforceable provisions which will achieve as far as possible the economic business intentions of the parties.
|
Emmaus Medical, Inc.
Signed
/s/ Yutaka Niihara
Name Yutaka Niihara
Title President and CEO
Date
April 8, 2011
|
CellSeed Inc.
Signed
/s/ Yukio Hasegawa
Name Yukio Hasegawa
Title President and CEO
Date
April 8, 2011
|
|
●
|
IND Open
|
the year of 2012
|
|
●
|
Clinical Trial Completion
|
the year of 2013
|
|
●
|
NDA
|
the year of 2014
|
|
●
|
Marketing Authorization
|
the year of 2015
|
“COMPANY”
|
|||
EMMAUS MEDICAL, INC., a California corporation
|
|||
By:
|
/s/ Willis Lee
|
||
Willis Lee
|
|||
Chief Operating Officer
|
|||
and
|
|||
“EXECUTIVE”
|
|||
By:
|
/s/ Yutaka Niihara
|
||
Yutaka Niihara, MD
|
“COMPANY”
|
|||
EMMAUS MEDICAL, INC., a California corporation
|
|||
By:
|
/s/
Yutaka Niihara
|
||
Yutaka Niihara, MD
|
|||
Chief Executive Officer
|
|||
and
|
|||
“EXECUTIVE”
|
|||
By:
|
/s/ Willis Lee
|
||
Willis Lee
|
“COMPANY”
|
|||
EMMAUS MEDICAL, INC., a California corporation
|
|||
By:
|
/s/
Yutaka Niihara
|
||
Yutaka Niihara, MD
|
|||
Chief Executive Officer
|
|||
and
|
|||
“EXECUTIVE”
|
|||
By:
|
/s/
Lan T. Tran
|
||
Lan T. Tran, MPH
|
“COMPANY”
|
|||
EMMAUS MEDICAL, INC.,
a California corporation
|
|||
By:
|
/s/ Yutaka Niihara
|
||
Yutaka Niihara, MD
|
|||
Chief Executive Officer
|
|||
and
|
|||
“EXECUTIVE”
|
|||
By:
|
/s/ Yasushi Nagasaki
|
||
Yasushi Nagasaki
|
|||
Emmaus Medical, Inc.
|
||||
By:
|
/s/ Daniel R. Kimbell
|
|||
Name:
|
Daniel R. Kimbell
|
|||
Title:
|
Secretary and CEO
|
Lender’s Name:
|
Yutaka Niihara
|
Lender’s Address:
|
24 Covered Wagon Ln.
|
|
RHE, CA 90274
|
Principal Amount:
|
USD $350,000
|
Monthly Interest at 6.5% Per Annum on Loan Amount:
|
$1,895.83
|
Emmaus Medical, Inc.
|
||||
By:
|
/s/ Daniel R. Kimbell
|
|||
Name:
|
Daniel R. Kimbell
|
|||
Title:
|
Secretary and CEO
|
Lender’s Name:
|
Yutaka Niihara
|
Lender’s Address:
|
24 Covered Wagon Ln.
|
|
RHE, CA 90274
|
Principal Amount:
|
USD $80,000
|
Monthly Interest at 6.5% Per Annum on Loan Amount:
|
$433.33
|
Principal Amount: $100,000
|
Date: January 12, 2011
|
Note No.: 11011202
|
Emmaus Medical, Inc.
|
||||
By:
|
/s/ Yutaka Niihara, M.D.
|
|||
Name:
|
Yutaka Niihara, M.D.
|
|||
Title:
|
President and CEO
|
Lender’s Name:
|
Willis C. Lee
|
Lender’s Address:
|
2059 Artesia Blvd. #73
|
|
Torrance, CA 90504
|
Principal Amount:
|
USD $100,000
|
Quarterly Interest at 8% Per Annum on Principal Amount:
|
$2,000
|
Quarterly Interest Due Dates:
|
4/12, 7/12, 10/12, 1/12/11
|
Principal Amount: $200,000
|
Date: January 12, 2011
|
Note No.: 11011201
|
Emmaus Medical, Inc.
|
||||
By:
|
/s/
Willis C. Lee
|
|||
Name:
|
Willis C. Lee
|
|||
Title:
|
CFO
|
Lender’s Name:
|
Hope International Hospice Inc.
|
Lender’s Address:
|
20701 S. Western Ave., #112
|
|
Torrance, CA 90501
|
Principal Amount:
|
USD $200,000
|
Quarterly Interest at 8% Per Annum on Principal Amount:
|
$4,000
|
Quarterly Interest Due Dates:
|
4/12, 7/12, 10/12, 1/12/11
|
Subsidiary Name
|
Country
|
|
Emmaus Medical, Inc. (“Emmaus Medical”)
|
Delaware
|
|
Newfield Nutrition Corporation (1)
|
Delaware
|
|
Emmaus Medical Japan, Inc. (1)
|
Japan
|