U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
☑
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2017.
☐
For the transition
period from to .
Commission File Number 0-8092
GT BIOPHARMA, INC.
(Exact name of small business issuer as specified in its
charter)
Delaware
(State or other jurisdiction of
incorporation
or organization)
|
94-1620407
(I.R.S. employer
identification
number)
|
100 South Ashley Drive, Suite 600
Tampa, FL 33602
(Address of principal executive offices and zip
code)
(800) 304-9888
(Registrant’s telephone number, including area
code)
|
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
☑
No
☐
Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was
required to submit and post such files).
Yes
☑
No
☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer ☐
|
Accelerated
filer ☐
|
Non-accelerated
filer ☐ (Do not check if a smaller reporting
company)
|
Smaller
reporting company ☑
|
|
|
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange
Act).Yes
☐·
No
☑
At
August 11, 2017, the issuer had outstanding the indicated number of
shares of common stock: 496,441.
GT BIOPHARMA, INC. AND SUBSIDIARIES
FORM 10-Q
For the Six Months Ended June 30, 2017
Table of Contents
PART
I FINANCIAL INFORMATION
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Page
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Item
1.
Financial
Statements
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3
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Consolidated
Balance Sheets as of June 30, 2017 (Unaudited) and December 31,
2016
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3
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Consolidated
Statements of Operations for the three and six months ended June
30, 2017 and 2016 (Unaudited)
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4
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Consolidated
Statements of Cash Flows for the six months ended June 30, 2017 and
2016 (Unaudited)
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5
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Condensed Notes to
Consolidated Financial Statements
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6
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Item
2.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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15
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Item
3.
Quantitative and
Qualitative Disclosures About Market Risk
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20
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Item
4.
Controls and
Procedures
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20
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PART
II OTHER INFORMATION
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Item
1.
Legal
Proceedings
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22
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Item
1A.
Risk
Factors
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22
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Item
2.
Unregistered Sales
of Securities and Use of Proceeds
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22
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Item
3.
Defaults Upon
Senior Securities
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23
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Item
4.
Mine Safety
Disclosures
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23
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Item
5.
Other
Information
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23
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Item
6.
Exhibits
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23
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SIGNATURES
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24
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GT Biopharma, Inc. and Subsidiaries
as of June 30,2017 and December 31, 2016
Consolidated Balance Sheets
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ASSETS
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Current
Assets:
|
|
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Cash
and cash equivalents
|
$
39,000
|
$
19,000
|
Prepaid
expenses
|
-
|
2,000
|
Total
Current Assets
|
39,000
|
21,000
|
Fixed
assets, net
|
3,000
|
4,000
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Total
Other Assets
|
3,000
|
4,000
|
TOTAL
ASSETS
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$
42,000
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$
25,000
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
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|
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Current
Liabilities:
|
|
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Accounts
payable
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$
2,347,000
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$
2,100,000
|
Accrued
interest
|
4,339,000
|
3,800,000
|
Accrued
expenses
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57,000
|
219,000
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Line
of credit
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31,000
|
31,000
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Warrant
liability
|
964,000
|
417,000
|
Settlement
note payable
|
691,000
|
691,000
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Demand
notes payable
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190,000
|
452,000
|
Convertible
debentures, net of discount of $215,000 and $794,000, current
portion
|
10,663,000
|
10,350,000
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Convertible
debentures
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844,000
|
889,000
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Total
Current Liabilities
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20,126,000
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18,949,000
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|
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Stockholders’
Deficit:
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|
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Convertible
preferred stock - $0.001 par value; 15,000,000 shares
authorized:
|
|
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Series
C - 96,230 and 96,230 shares issued and outstanding at June 30,
2017 and December 31, 2016, respectively
|
1,000
|
1,000
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Series
H – 25,000 and 25,000 shares issued and outstanding at June
30, 2017 and December 31, 2016, respectively
|
—
|
—
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Series
I – 1,666,667 shares issued and outstanding at June 30, 2017
and December 31, 2016, respectively
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2,000
|
2,000
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Common
stock - $0.001 par value; 750,000,000 shares authorized; and
496,441 and 104,218 shares issued and outstanding at June 30, 2017
and December 31, 2016, respectively
|
0
|
0
|
Additional
paid-in capital
|
109,876,000
|
105,891,000
|
Accumulated
deficit
|
(129,794,000
)
|
(124,649,000
)
|
Noncontrolling
interest
|
(169,000
)
|
(169,000
)
|
Total
Stockholders’ Deficit
|
(20,084,000
)
|
(18,924,000
)
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$
42,000
|
$
25,000
|
The accompanying notes are an integral part of these consolidated
financial statements.
GT BIOPHARMA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Six Months Ended June 30, 2017 and 2016
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Three Months
Ended June 30,
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Six Months Ended
June 30,
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|
|
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|
|
|
|
|
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Product
revenues
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$
-
|
$
-
|
$
-
|
$
-
|
License
revenue
|
-
|
-
|
-
|
-
|
Total
revenue
|
-
|
-
|
-
|
-
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Cost of product
revenue
|
-
|
-
|
-
|
-
|
Gross
profit
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-
|
-
|
-
|
-
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Operating
expenses
|
|
|
|
|
Research and
development
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241,000
|
250,000
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385,000
|
475,000
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Selling, general
and administrative expenses
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1,044,000
|
1,871,000
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2,438,000
|
5,547,000
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Total operating
expenses
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1,285,000
|
2,121,000
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2,823,000
|
6,022,000
|
Loss from
operations
|
(1,285,000
)
|
(2,121,000
)
|
(2,823,000
)
|
(6,022,000
)
|
Other income
(expense)
|
|
|
|
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Change in value of
warrant and derivative liabilities
|
(367,000
)
|
5,263,000
|
2,376,000
|
36,759,000
|
Interest
expense
|
(1,178,000
)
|
(1,599,000
)
|
(4,698,000
)
|
(3,245,000
)
|
Total other income
(expense)
|
(1,545,000
)
|
3,664,000
|
(2,322,000
)
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33,514,000
|
Income (loss)
before minority interest and
provision for
income taxes
|
(2,830,000
)
|
1,543,000
|
(5,145,000
)
|
27,492,000
|
Plus: net (income)
loss attributable to the noncontrolling interest
|
-
|
-
|
-
|
-
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Income before
provision for income taxes
|
(2,830,000
)
|
1,543,000
|
(5,145,000
)
|
27,492,000
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Provision for
income tax
|
-
|
-
|
-
|
-
|
Net income
(loss)
|
(2,830,000
)
|
1,543,000
|
(5,145,000
)
|
27,492,000
|
Weighted average
common shares outstanding – basis and diluted
|
|
|
|
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Basic
|
479,053
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77,785
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335,450
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67,918
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Diluted
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479,053
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84,690
|
335,450
|
67,918
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Net income (loss)
per share
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|
|
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Basic
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$
(5.91
)
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$
19.84
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$
(15.34
)
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$
404.78
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Diluted
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$
(5.91
)
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$
18.22
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$
(15.34
)
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$
404.78
|
The accompanying condensed notes are an integral part of these
consolidated financial statements.
GT BIOPHARMA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2017 and 2016
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CASH
FLOWS FROM OPERATING ACTIVITIES:
|
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Net
(loss)/income
|
$
( 5,145,000
)
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$
27,492,000
|
Adjustments
to reconcile net (loss)/income to net cash used in operating
activities:
|
|
|
Depreciation
|
1,000
|
-
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Stock
compensation expense for options and warrants issued to
employees and non-employees
|
1,524,000
|
4,051,000
|
Amortization
of debt discounts
|
1,376,000
|
972,000
|
Note
allonge
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100,000
|
-
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Non-cash
interest expense
|
2,197,000
|
1,504,000
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Change
in value of warrant and derivative liabilities
|
( 2,376,000
)
|
( 36,759,000
)
|
Changes
in operating assets and liabilities:
|
|
|
Other
assets
|
-
|
0
|
Accounts
payable and accrued liabilities
|
1,282,000
|
1,508,000
|
Net
cash used in operating activities
|
( 1,041,000
)
|
( 1,232,000
)
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CASH
FLOWS FROM INVESTING ACTIVITIES:
|
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Acquisition
of fixed assets
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0
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0
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Net
cash used by investing activities
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0
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0
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CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
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Proceeds
from notes payable
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1,061,000
|
1,540,000
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Repayment
of note payable
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-
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-
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Net
cash provided by financing activities
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1,061,000
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1,540,000
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Minority
interest
|
-
|
-
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
20,000
|
308,000
|
CASH
AND CASH EQUIVALENTS - Beginning of period
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19,000
|
47,000
|
CASH
AND CASH EQUIVALENTS - End of period
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$
39,000
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$
355,000
|
|
|
|
Supplemental
disclosures:
|
|
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Interest
paid
|
$
-
|
$
-
|
Income
taxes paid
|
$
-
|
$
-
|
|
|
|
Supplemental
disclosures:
|
|
|
Issuance
of common stock upon conversion of convertible notes
|
$
2,025,000
|
$
1,429,000
|
Issuance
of common stock upon conversion of accrued interest
|
$
486,000
|
$
270,000
|
|
|
|
The accompanying condensed notes are an integral part of these
consolidated financial statements.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
1.
The Company and Summary of Significant Accounting
Policies
GT Biopharma, Inc. (collectively, “OXIS” or the
“Company”) is engaged in discovering, developing
and commercializing novel therapeutics from our proprietary product
platform in a broad range of disease
areas. Currently, OXIS develops innovative drugs focused
on the treatment of cancer. OXIS' lead drug candidate,
OXS-2175, is a small molecule therapeutic candidate targeting the
treatment of triple-negative breast cancer.
In
in
vitro
and
in
vivo
models of TNBC,
OXS-2175 demonstrated the ability to inhibit metastasis.
OXIS' lead drug candidate, OXS-4235, also a small molecule
therapeutic candidate, targets the treatment of multiple myeloma
and associated osteolytic lesions.
In
in
vitro
and
in
vivo
models of
multiple myeloma, OXS-4235 demonstrated the ability to kill
multiple myeloma cells, and decrease osteolytic lesions in bone.
OXIS' lead drug candidate, OXS-1550, is a bispecific scFv
recombinant fusion protein-drug conjugate composed of the variable
regions of the heavy and light chains of anti-CD19 and anti-CD22
antibodies and a modified form of diphtheria toxin as its cytotoxic
drug payload. OXS-1550 has demonstrated success in early human
clinical trials in patients with relapsed/refractory B-cell
lymphoma or leukemia.
In 1965, the corporate predecessor of OXIS, Diagnostic Data, Inc.
was incorporated in the State of California. Diagnostic Data
changed its incorporation to the State of Delaware in 1972; and
changed its name to DDI Pharmaceuticals, Inc. in 1985. In 1994, DDI
Pharmaceuticals merged with International BioClinical, Inc. and
Bioxytech S.A. and changed its name to OXIS International, Inc. In
July 2017, the Company changed its name to GT Biopharma,
Inc.
Going Concern
As
shown in the accompanying consolidated financial statements, the
Company has incurred an accumulated deficit of $129,794,000 through
June 30, 2017
. On a
consolidated basis, the Company had cash and cash equivalents of
$39,000 at
June 30, 2017
.
The Company's plan is to raise
additional capital until such time that the Company generates
sufficient revenues to cover its cash flow needs and/or it achieves
profitability. However, the Company cannot assure that it will
accomplish this task and there are many factors that may prevent
the Company from reaching its goal of
profitability.
The
current rate of cash usage raises substantial doubt about the
Company’s ability to continue as a going concern, absent any
sources of significant cash flows. In an effort to
mitigate this near-term concern the Company intends to seek
additional equity or debt financing to obtain sufficient funds to
sustain operations. However, the Company cannot provide
assurance that it will successfully obtain equity or debt or other
financing, if any, sufficient to finance its goals or that the
Company will generate future product related
revenues. The Company’s financial statements do
not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event
that the Company cannot continue in existence.
Use of Estimates
The financial statements and notes are representations of the
Company's management, which is responsible for their integrity and
objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America, and
have been consistently applied in the preparation of the financial
statements. The preparation of financial statements requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities revenues and expenses and
disclosures of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those
estimates.
Basis of Consolidation and Comprehensive Income
The accompanying consolidated financial statements include the
accounts of GT Biopharma, Inc. and its subsidiaries. All
intercompany balances and transactions have been eliminated. The
Company's financial statements are prepared using the accrual
method of accounting.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the U.S. (“U.S. GAAP”)
and the rules and regulations of the U.S. Securities and Exchange
Commission (“SEC”). Certain information and disclosures
required by U.S. GAAP for complete consolidated financial
statements have been condensed or omitted herein. The interim
condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and
notes thereto included in the Company's Form 10-K for the year
ended December 31, 2016. The unaudited interim condensed
consolidated financial information presented herein reflects all
normal adjustments that are, in the opinion of management,
necessary for a fair statement of the financial position, results
of operations and cash flows for the periods presented. The Company
is responsible for the unaudited interim consolidated financial
statements included in this report. The results of operations of
any interim period are not necessarily indicative of the results
for the full year.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash
equivalents.
Concentrations of Credit Risk
The Company's cash and cash equivalents, marketable securities and
accounts receivable are monitored for exposure to concentrations of
credit risk. The Company maintains substantially all of its cash
balances in a limited number of financial institutions. The
balances are each insured by the Federal Deposit Insurance
Corporation up to $250,000. The Company does not have balances in
excess of this limit at June 30, 2017.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash,
accounts receivable, inventory, accounts payable and accrued
expenses approximate fair value because of the short-term nature of
these instruments. The fair value of debt is based upon current
interest rates for debt instruments with comparable maturities and
characteristics and approximates the carrying amount.
Stock Based Compensation to Employees
The
Company accounts for its stock-based compensation for employees in
accordance with Accounting Standards Codification
(“ASC”) 718. The Company recognizes in the
statement of operations the grant-date fair value of stock options
and other equity-based compensation issued to employees and
non-employees over the related vesting period.
The
Company granted no stock options during the six months ended June
30, 2017 and 2016, respectively
Recent Accounting Pronouncement
In July
2017, The Financial Accounting Standards Board issued Accounting
Standards Update 2017-11 “Earnings per Share (Topic 260),
Distinguishing Liabilities from Equity (Topic 480), Derivatives and
Hedging (Topic 815)” (“ASU 2017-11”) to address
narrow issues identified as a result of the complexity associated
with applying generally accepted accounting principles (GAAP) for
certain financial instruments with characteristics of liabilities
and equity. Part I of the amendment change the classification
analysis of certain equity-linked financial instruments (or
embedded features) with down round features. The amendments also
clarify existing disclosure requirements for equity-classified
instruments. Part II of the update recharacterize
the indefinite deferral
of
certain provisions of
Topic 480 that now are presented as pending content in the
Codification, to a scope exception. Those amendments do not have an
accounting effect. Part I of ASU 2017-11 is effective for public
business entities for fiscal years, and interim period within those
fiscal years, beginning after December 15, 2018, with early
adoption permitted. The Company has a number of equity linked
financial instruments with down round provisions and is currently
evaluating the impact of adopting ASU-2017-11.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
Impairment of Long Lived Assets
The Company's long-lived assets currently consist of capitalized
patents. The Company evaluates its long-lived assets for impairment
whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. If any of
the Company's long-lived assets are considered to be impaired, the
amount of impairment to be recognized is equal to the excess of the
carrying amount of the assets over the fair value of the
assets.
Income Taxes
The Company accounts for income taxes using the asset and liability
approach, whereby deferred income tax assets and liabilities are
recognized for the estimated future tax effects, based on current
enacted tax laws, of temporary differences between financial and
tax reporting for current and prior periods. Deferred tax assets
are reduced, if necessary, by a valuation allowance if the
corresponding future tax benefits may not be realized.
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing the net
loss for the period by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per share
is computed by dividing the net loss for the period by the weighted
average number of common shares outstanding during the period, plus
the potential dilutive effect of common shares issuable upon
exercise or conversion of outstanding stock options and warrants
during the period. The weighted average number of potentially
dilutive common shares excluded from the calculation of net income
(loss) per share totaled
in 1,030,951 and 43,002 as of June
30, 2017 and 2016, respectively.
Patents
Acquired patents are capitalized at their acquisition cost or fair
value. The legal costs, patent registration fees and models and
drawings required for filing patent applications are capitalized if
they relate to commercially viable technologies. Commercially
viable technologies are those technologies that are projected to
generate future positive cash flows in the near term. Legal costs
associated with patent applications that are not determined to be
commercially viable are expensed as incurred. All research and
development costs incurred in developing the patentable idea are
expensed as incurred. Legal fees from the costs incurred in
successful defense to the extent of an evident increase in the
value of the patents are capitalized.
Capitalized cost for pending patents are amortized on a
straight-line basis over the remaining twenty year legal life of
each patent after the costs have been incurred. Once each patent is
issued, capitalized costs are amortized on a straight-line basis
over the shorter of the patent's remaining statutory life,
estimated economic life or ten years.
Fixed Assets
Fixed assets is stated at cost. Depreciation is computed on a
straight-line basis over the estimated useful lives of the assets,
which are 3 to 10 years for machinery and equipment and the
shorter of the lease term or estimated economic life for leasehold
improvements.
Fair Value
The carrying amounts reported in the balance sheets for receivables
and current liabilities each qualify as financial instruments and
are a reasonable estimate of fair value because of the short period
of time between the origination of such instruments and their
expected realization and their current market rate of
interest. The three levels are defined as
follows:
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
●
Level 1 inputs to
the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets. The
Company’s Level 1 assets include cash equivalents, primarily
institutional money market funds, whose carrying value represents
fair value because of their short-term maturities of the
investments held by these funds.
●
Level 2 inputs to
the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial instrument. The
Company’s Level 2 liabilities consist of liabilities arising
from the issuance of convertible securities and in accordance with
ASC 815-40: a warrant liability for detachable warrants, as well as
an accrued derivative liability for the beneficial conversion
feature. These liabilities are remeasured each reporting period.
Fair value is determined using the Black-Scholes valuation model
based on observable market inputs, such as share price data and a
discount rate consistent with that of a government-issued security
of a similar maturity.
●
Level 3 inputs to
the valuation methodology are unobservable and significant to the
fair value measurement.
The following table represents the Company’s assets and
liabilities by level measured at fair value on a recurring basis at
June 30, 2017.
Description
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
$
—
|
$
—
|
$
—
|
Liabilities
|
|
|
|
Warrant
liability
|
—
|
964,000
|
—
|
Research and Development
Research and development costs are expensed as incurred and
reported as research and development expense. Research and
development costs totaling $385,000 and $475,000 for the six months
ended June 30, 2017 and 2016, respectively.
Revenue Recognition
License Revenue
License
arrangements may consist of non-refundable upfront license fees,
exclusive licensed rights to patented or patent pending technology,
and various performance or sales milestones and future product
royalty payments. Some of these arrangements are multiple element
arrangements.
Non-refundable,
up-front fees that are not contingent on any future performance by
us, and require no consequential continuing involvement on our
part, are recognized as revenue when the license term commences and
the licensed data, technology and/or compound is
delivered. We defer recognition of non-refundable
upfront fees if we have continuing performance obligations without
which the technology, right, product or service conveyed in
conjunction with the non-refundable fee has no utility to the
licensee that is separate and independent of our performance under
the other elements of the arrangement. In addition, if we have
continuing involvement through research and development services
that are required because our know-how and expertise related to the
technology is proprietary to us, or can only be performed by us,
then such up-front fees are deferred and recognized over the period
of continuing involvement.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
Payments
related to substantive, performance-based milestones in a research
and development arrangement are recognized as revenue upon the
achievement of the milestones as specified in the underlying
agreements when they represent the culmination of the earnings
process.
Senior secured convertible debentures
On
October 25, 2006, the Company entered into a securities purchase
agreement (“2006 Purchase Agreement”) with four
accredited investors (the “2006 Purchasers”). In
conjunction with the signing of the 2006 Purchase Agreement, the
Company issued secured convertible debentures (“2006
Debentures”) and Series A, B, C, D, and E common stock
warrants (“2006 Warrants”) to the 2006 Purchasers, and
the parties also entered into a security agreement (the “2006
Security Agreement”) pursuant to which the Company agreed to
grant the 2006 Purchasers, pari passu, a security interest in
substantially all of the Company’s assets.
Pursuant
to the terms of the 2006 Purchase Agreement, the Company issued the
2006 Debentures in an aggregate principal amount of $1,694,250 to
the 2006 Purchasers. The 2006 Debentures are subject to an original
issue discount of 20.318% resulting in proceeds to the Company of
$1,350,000 from the transaction. The 2006 Debentures were due on
October 25, 2008. The 2006 Debentures are convertible, at the
option of the 2006 Purchasers, at any time prior to payment in
full, into shares of common stock of the Company. As a result of
the full ratchet anti-dilution provision the current conversion
price is the lesser of $120.00 or 60% of the average of the lowest
three trading prices occurring at any time during the 20 trading
days preceding conversion (the “2006 Conversion
Price”). Beginning on the first of the month beginning
February 1, 2007, the Company was required to amortize the 2006
Debentures in equal installments on a monthly basis resulting in a
complete repayment by the maturity date (the “Monthly
Redemption Amounts”). The Monthly Redemption Amounts could
have been paid in cash or in shares, subject to certain
restrictions. If the Company chose to make any Monthly Redemption
Amount payment in shares of common stock, the price per share would
have been the lesser of the Conversion Price then in effect and 85%
of the weighted average price for the 10-trading days prior to the
due date of the Monthly Redemption Amount. The Company did not make
any of the required monthly redemption payments.
Pursuant
to the provisions of the 2006 Debentures, such non-payment was an
event of default and penalty interest has accrued on the unpaid
redemption balance at an interest rate equal to the lower of 18%
per annum and the maximum rate permitted by applicable law. In
addition, each of the 2006 Purchasers has the right to accelerate
the cash repayment of at least 130% of the outstanding principal
amount of the 2006 Debenture (plus accrued but unpaid liquidated
damages and interest) and to sell substantially all of the
Company’s assets pursuant to the provisions of the 2006
Security Agreement to satisfy any such unpaid balance.
The
Company and Bristol entered into a Forbearance Agreement on
December 3, 2015, pursuant to which Bristol agreed to refrain and
forbear from exercising certain rights and remedies with respect
the 2006 Debentures for three months. In exchange for the
Forbearance Agreement, the Company issued an allonge in the amount
of $350,000 increasing the principal amount of the 2006
Debentures.
During the six months ended June 30, 2017 the Company converted a
total of $45,000 of the 2006 Debentures into common stock of the
Company. As of June 30, 2017, the balance of the 2006
Debentures is $844,000.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
Convertible debentures
From
October 2009 to September 2016, the Company has entered into
multiple convertible debenture arrangements with several accredited
investors (“Convertible Debentures”). Interest on the
Convertible Debentures ranges for 0% to 18% with a default rate of
18%. The Convertible Debentures are either two year or six month
notes.
The
conversion price of the Convertible Debentures is subject to full
ratchet anti-dilution adjustment in the event that the Company
thereafter issues common stock or common stock equivalents at a
price per share less than the conversion price or the exercise
price, respectively, and to other normal and customary
anti-dilution adjustment upon certain other events. As a result of
the full ratchet anti-dilution provision, the current conversion
price is the lesser of (i) $15.00 or (ii) the average of the three
(3) lowest intra-day trading prices of the Common Stock during the
20 Trading Days immediately prior to the date on which the Notice
of Conversion is delivered to the Company and the default
conversion price is 65% of the average of the lowest three trading
prices occurring at any time during the 20 trading days preceding
conversion.
The
holders of the Convertible Debentures have contractually agreed to
restrict their ability to convert their Convertible Debentures and
receive shares of our common stock such that the number of shares
of the Company common stock held by holders and its affiliates
after such conversion or exercise does not exceed 4.9% or 9.9% of
the Company’s then issued and outstanding shares of common
stock.
Note
Agreement
|
|
Balance
at
December
31,
2016
|
|
|
|
2009
Debentures
|
$
305,000
|
$
305,000
|
June 2011
Debentures
|
45,000
|
64,000
|
November 2011
Debentures
|
125,000
|
125,000
|
March 2012
Debentures
|
40,000
|
140,000
|
May 2012
Debentures
|
95,000
|
225,000
|
December 2012
Debentures
|
390,000
|
425,000
|
November 2013
Debentures
|
149,000
|
172,000
|
July 2014
Debentures
|
2,590,000
|
3,140,000
|
October 2014
Debentures
|
1,221,000
|
1,250,000
|
March 2015
Debentures
|
1,689,000
|
2,175,000
|
July 2015
Debentures
|
500,000
|
500,000
|
October 2015
Debentures
|
300,000
|
330,000
|
November 2015
Debentures
|
150,000
|
190,000
|
December 2015
Debentures
|
200,000
|
200,000
|
January 2016
Debentures
|
-
|
150,000
|
May 2016
Debentures
|
1,503,000
|
1,503,000
|
September 2016
Debentures
|
225,000
|
250,000
|
January 2017
Debentures
|
924,000
|
-
|
March 2017
Debentures
|
232,000
|
|
April 2017
Debentures
|
195,000
|
-
|
|
|
|
Total convertible
debentures
|
$
10,878,000
|
$
11,144,000
|
Less:
discount
|
(215,000
)
|
(794,000
)
|
Total convertible
debentures, net of discount
|
$
10,663,000
|
$
10,350,000
|
|
|
|
Total short term
convertible debentures, net of discount
|
$
10,663,000
|
$
10,350,000
|
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
Settlement Note Payable
On
August 8, 2012, a Settlement Agreement and Mutual General Release
("Agreement") was made by and between OXIS and Bristol Investment
Fund, Ltd., in order to settle certain claims regarding certain
convertible debentures held by Bristol.
Pursuant
to the Agreement, OXIS shall pay Bristol (half of which payment
would redound to Theorem Capital LLC (“Theorem”)) a
total of $1,119,778 as payment in full for the losses suffered and
all costs incurred by Bristol in connection with the Transaction.
Payment of such $1,119,778 shall be made as follows: OXIS shall
issue restricted common stock to each of Bristol and Theorem, in an
amount such that each Bristol and Theorem shall hold no more than
9.99% of the outstanding shares of OXIS (including any shares that
each may hold as of the date of issuance). The shares so issued
represent $417,475.65 of the $1,119,778 payment (371 shares at
$1,125.00 per share, of which 122 will be retained by Bristol and
249 will be issued to Theorem). The remaining balance of the
payment shall be made in the form of two convertible promissory
notes in the respective amounts of $422,357.75 for Bristol and
$279,944.60 for Theorem (collectively, the “Notes”)
with a maturity of December 1, 2017 having an 8% annual interest
rate, with interest only accruing until January 1, 2013, and then
level payments of $3,750 each beginning January 1, 2013 until paid
in full on December 1, 2017. In the event a default in the monthly
payments on the Notes has occurred and is continuing each holder of
the Notes shall be permitted to convert the unpaid principal and
interest of the Notes into shares of OXIS at $15 per share. In the
absence of such continuing default no conversion of the Notes will
be permitted. OXIS will have the right to repay the Notes in full
at any time without penalty. This settlement note payable is
currently in default and has a balance of $691,000 as of June 30,
2017.
Demand Notes
On
February 7, 2011 the Company entered into a convertible demand
promissory note with Bristol pursuant to which Bristol purchased an
aggregate principal amount of $31,375 of convertible demand
promissory notes for an aggregate purchase price of $25,000 (the
“February 2011 Bristol Note”). The February 2011
Bristol Note is convertible into shares of common stock of the
Company at a price equal to the lesser of (i) $15.00 or (ii) the
average of the three (3) lowest intra-day trading prices of the
Common Stock during the 20 Trading Days immediately prior to the
date on which the Notice of Conversion is delivered to the Company.
During the
quarter ended March 31, 2017 the Company converted the entire
balance of $31,375 into common stock of the
Company.
On
March 4, 2011 the Company entered into a convertible demand
promissory note with Bristol pursuant to which Bristol purchased an
aggregate principal amount of $31,375 of convertible demand
promissory notes for an aggregate purchase price of $25,000 (the
“March 2011 Bristol Note”). The March 2011 Bristol Note
is convertible at the option of the holder at any time into shares
of common stock, at a price equal to the lesser of (i) $15.00 or
(ii) the average of the three (3) lowest intra-day trading prices
of the Common Stock during the 20 Trading Days immediately prior to
the date on which the Notice of Conversion is delivered to the
Company.
During the quarter
ended March 31, 2017 the Company converted the entire balance of
$31,375 into common stock of the Company.
On
October 26, 2011 the Company entered into a convertible demand
promissory note with Theorem pursuant to which Theorem purchased an
aggregate principal amount of $200,000 of convertible demand
promissory notes for an aggregate purchase price of $157,217 (the
“October 2011 Theorem Note”). The October 2011 Theorem
Note is convertible into shares of common stock of the Company, at
a price equal to the lesser of (i) $15.00 or (ii) the average of
the three (3) lowest intra-day trading prices of the Common Stock
during the 20 Trading Days immediately prior to the date on which
the Notice of Conversion is delivered to the Company.
During the quarter
ended March 31, 2017 the Company converted the entire balance of
$200,000 into common stock of the
Company.
In
December, 2013, the Company entered into a convertible demand
promissory note with an initial principal balance of $189,662
convertible at a price equal to the lesser of (i) $15.00 or (ii)
the average of the three (3) lowest intra-day trading prices of the
Common Stock during the 20 Trading Days immediately prior to the
date on which the Notice of Conversion is delivered to the
Company.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
Financing Agreement
On
November 8, 2010, the Company entered into a financing arrangement
with Gemini Pharmaceuticals, Inc., a product development and
manufacturing partner of the Company, pursuant to which Gemini
Pharmaceuticals made a $250,000 strategic equity investment in the
Company and agreed to make a $750,000 purchase order line of credit
facility available to the Company. The outstanding principal of all
Advances under the Line of Credit will bear interest at the rate of
interest of prime plus 2 percent per annum. There is $31,000 due on
this credit line at June 30, 2017.
Common Stock
During the six months ended June 30, 2017 the Registrant has issued
a total of 418,448 shares of common stock to a total of eleven
entities or individuals in exchange for the cancellation of debt in
the total amount of $2,025,000 and interest in the total amount of
$486,000.
The Registrant also issued 1,944 shares of common stock to one
entity upon the exercise of warrants on a cashless
basis.
Preferred Stock
On January 8, 2016, the Company entered into an Exchange Agreement
with certain investors together holding 25,000 shares of Series H
Preferred Stock and 1,666,667 shares of Series I Preferred Stock
have agreed to convert all such shares of Preferred Stock into an
aggregate of 4.9% of the fully diluted shares of Common Stock upon
successful completion by the Company of a $6 million
financing.
4.
Stock Options and Warrants
Stock Options
Following is a summary of the stock option activity:
|
|
Weighted Average
Exercise Price
|
Outstanding as of
December 31, 2016
|
1,246
|
$
1,428.12
|
Granted
|
-
|
-
|
Forfeited
|
-
|
-
|
Exercised
|
-
|
-
|
Outstanding as of
June 30, 2017
|
1,246
|
$
1,428.12
|
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2017
(UNAUDITED)
Warrants
Following is a summary of the warrant activity:
|
|
Weighted Average
Exercise Price
|
Outstanding as of
December 31, 2016
|
15,550
|
$
15.00
|
Granted
|
175,968
|
15.00
|
Forfeited
|
-
|
-
|
Exercised
|
(1,944
)
|
15.00
|
Outstanding as of
June 30, 2017
|
189,574
|
$
15.00
|
Convertible Notes
In July
2017, the Company entered into a securities purchase agreement with
three accredited investors to sell 10% convertible debentures with
an exercise price of the lesser of (i) $15.00 or (ii) the average
of the three (3) lowest intra-day trading prices of the Common
Stock during the 20 Trading Days immediately prior to the date on
which the Notice of Conversion is delivered to the Company, with an
initial principal balance of $650,000 and warrants to acquire up to
43,333 shares of the Company's common stock at an exercise price of
$15.00 per share.
Stock Split
In July 2017, the Company approved a one for three hundred reverse
stock split. The Company has reported the effect of the split
retroactively for all periods presented.
Common Shares
In July 2017, the Company amended its articles of incorporation to
change the number of authorized common shares to 750,000,000 shares
of $.001 par value stock.
Agreements
Oxis International, Inc. has engaged EMLL Group, LLC to provide
public relations/investor relations services to Oxis for a six
month period beginning on July 17, 2017. EMLL Group, LLC will
provide exposure and communications of Oxis corporate plans and
developments to current and potential investors.
Item
2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in the Form 10-Q are forward-looking
statements about what may happen in the future. Forward-looking
statements include statements regarding our current beliefs, goals,
and expectations about matters such as our expected financial
position and operating results, our business strategy, and our
financing plans. The forward-looking statements in the Form 10-Q
are not based on historical facts, but rather reflect the current
expectations of our management concerning future results and
events. The forward-looking statements generally can be
identified by the use of terms such as “believe,”
“expect,” “anticipate,”
“intend,” “plan,” “foresee,”
“likely” or other similar words or phrases. Similarly,
statements that describe our objectives, plans or goals are or may
be forward-looking statements. Forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause our actual results, performance or achievements to be
different from any future results, performance and achievements
expressed or implied by these statements. We cannot
guarantee that our forward-looking statements will turn out to be
correct or that our beliefs and goals will not change. Our actual
results could be very different from and worse than our
expectations for various reasons. You should review carefully all
information, including the discussion of risk factors under
“Item 1A: Risk Factors” and “Item 7:
Management’s Discussion and Analysis of Financial Condition
and Results of Operations” of the Form 10-K for the year
ended December 31, 2016. Any forward-looking statements
in the Form 10-Q are made only as of the date hereof and, except as
may be required by law, we do not have any obligation to publicly
update any forward-looking statements contained in this Form 10-Q
to reflect subsequent events or circumstances.
Throughout this Quarterly Report on Form 10-Q, the terms
“OXIS,” “we,”
“us,” “our,” “the company”
and “our company” refer to GT Biopharma, Inc., a
Delaware corporation formerly known as DDI Pharmaceuticals, Inc.,
Diagnostic Data, Inc and Oxis International, Inc, together with our
subsidiaries.
Overview
GT Biopharma, Inc., through its wholly owned subsidiary Oxis
Biotech, Inc,
is an
immuno-oncology company with a robust technology platform
consisting of bispecific and trispecific scFv constructs,
full-length antibodies, proprietary drug payloads, proprietary
antibody-drug linkers, dual-drug payload antibody-drug conjugates
(ADCs), bispecific targeted ADCs, and NK cell and T-cell antibody
directed cell-mediated cytotoxic (ADDCs)
agents.
OXS-1550
OXS-1550 is a bispecific scFv recombinant fusion protein-drug
conjugate composed of the variable regions of the heavy and light
chains of anti-CD19 and anti-CD22 antibodies and a modified form of
diphtheria toxin as its cytotoxic drug payload. CD19 is a
membrane glycoprotein present on the surface of all stages of
B-lymphocyte development, and is also expressed on most B-cell
mature lymphoma cells and leukemia cells. CD22 is a
glycoprotein expressed on B-lineage lymphoid precursors, including
precursor acute lymphoblastic leukemia, and often is co-expressed
with CD19 on mature B-cell malignancies such as
lymphoma.
OXS-1550 targets cancer cells expressing the CD19 receptor or CD22
receptor or both receptors. When OXS-1550 binds to cancer
cells, the cancer cells internalize OXS-1550, and are killed due to
the action of drug's cytotoxic diphtheria toxin payload.
OXS-1550 has demonstrated success in a Phase 1 human clinical trial
in patients with relapsed/refractory B-cell lymphoma or
leukemia.
Oxis began enrolling patients in a Phase 1/Phase 2 trial of
OXS-1550 during the second quarter of 2016. The FDA-approved
clinical trial is being conducted at the University of Minnesota's
Masonic Cancer Center. There are currently 32 patients who have
participated in the clinical trial. The six new patients bring to
32 the number of patients who have participated in the clinical
trial. All the new patients are given an approved increased dosage
of OXS-1550.
Oxis began enrolling patients in Phase 2 trial of OXS-1550 during
the first quarter of 2017. at the University of Minnesota's Masonic
Cancer Center. The first patient began dosing in April
2017.
OXS-4235, p62/SQSTM1 (Sequestosome-1) Inhibitor Drug Development
Program
In humans, the p62/SQSTM1 protein is encoded by the SQSTM1
gene. The p62/SQSTM1 protein is a multifunctional
protein involved in autophagy, cell signaling, tumorigenesis, and
plays an important role at the crossroad between autophagy and
cancer. Cell-cell interactions between multiple myeloma
cells and bone marrow stromal cells activate signaling pathways
that result in enhanced multiple myeloma cell growth, osteoclast
formation, and inhibition of osteoblast
differentiation.
Multiple myeloma remains an incurable malignancy with systematic
morbidity and a median survival of 3-5 years. Multiple
myeloma is characterized by aberrant proliferation of terminally
differentiated plasma cells and impairment in apoptosis
capacity. Due to the interactions between myeloma cells
and cells of the bone marrow microenvironment, the osteolytic bone
disease associated with myeloma is inextricably linked with tumor
progression. High incidence of bone metastasis in
multiple myeloma patients is frequently associated with severe bone
pain and pathological bone fracture. Activated
osteoclast levels and suppressed osteoblast levels are thought to
play a role in multiple myeloma associated osteolytic bone
disease.
While a diverse spectrum of novel agents has shown therapeutic
potential for the treatment of multiple myeloma including
bortezomib, lenalidomide and arsenic trioxide, high relapse rates
and drug resistance continue to plague these
therapies. Thus, novel targets and new therapeutics for
the treatment of multiple myeloma are of critical importance for
improved patient outcomes.
It has been demonstrated that the ZZ domain of the p62/SQSTM1
protein is responsible for increased multiple myeloma cell growth
and associated osteoclast mediated bone disease. Dr.
Xiang-Qun Xie and colleagues at ID4 Pharma LLC have developed novel
chemical compounds (e.g., OXS-4235) which inhibit osteoclastic bone
destruction in multiple myeloma. Oxis Biotech has
exclusively licensed rights to OXS-4235 and other compounds for the
treatment of multiple myeloma and associated osteolytic bone
disease.
U.S. Patent and Trademark Office approved and issued Patent No.
9,580,382 for drug candidate OXIS-4235 for the treatment of myeloma
in July 2017.
OXS-2175, Triple-Negative Breast Cancer Drug Development
Program
OXS-2175 is a small molecule therapeutic candidate which has shown
promise in early-stage preclinical
in vitro
and
in vivo
models of triple-negative breast
cancer. Oxis Biotech is investigating OXS-2175
formulated as an ADC therapy for the treatment of triple-negative
breast cancer.
Therapeutic Antibody-Drug Conjugates Drug Development
Program
Antibody-drug conjugates (ADCs) are a new class of highly potent
biopharmaceutical drugs designed as a targeted therapy for the
treatment of cancer. By combining the unique targeting
capabilities of monoclonal antibodies with the cancer-killing
ability of cytotoxic drugs, antibody-drug conjugates allow
sensitive discrimination between healthy and diseased
tissue.
Recent Developments
TriKE Agreements
In March 2017, we entered a new one-year Sponsored Research
Agreement with the University of Minnesota. The purpose of this
agreement is to determine toxicities and in vivo behavior in
our
Trispecific Killer
Engager (TriKE) technology licensed by Oxis from the University of
Minnesota.
In June
2017,
we entered into a
co-development partnership agreement with Altor BioScience Corp. in
which the companies will collaborate exclusively in the clinical
development of a novel 161533 TriKE fusion protein for cancer
therapies using Oxis' trispecific killer engager (TriKE)
technology.
Financing
In
January 2017, the Company entered into a securities purchase
agreement with eight accredited investors to sell 10% convertible
debentures with and an exercise price
of the lesser of (i)
$15.00 or (ii) the average of the three (3) lowest intra-day
trading prices of the Common Stock during the 20 Trading Days
immediately prior to the date on which the Notice of Conversion is
delivered to the Company,
with an initial principal balance
of $633,593 and warrants to acquire up to 42,239 shares of the
Company's common stock at an exercise price of $15.00 per
share.
In
March 2017, the Company entered into a securities purchase
agreement with two accredited investors to sell 10% convertible
debentures with and an exercise price
of the lesser of (i)
$15.00 or (ii) the average of the three (3) lowest intra-day
trading prices of the Common Stock during the 20 Trading Days
immediately prior to the date on which the Notice of Conversion is
delivered to the Company,
with an initial principal balance
of $232,313 and warrants to acquire up to 15,487 shares of the
Company's common stock at an exercise price of $15.00 per
share.
In
April 2017, the Company entered into a securities purchase
agreement with two accredited investors to sell 10% convertible
debentures with and an exercise price of the lesser of (i) $15.00
or (ii) the average of the three (3) lowest intra-day trading
prices of the Common Stock during the 20 Trading Days immediately
prior to the date on which the Notice of Conversion is delivered to
the Company, with an initial principal balance of $70,000 and
warrants to acquire up to 4,666 shares of the Company's common
stock at an exercise price of $15.00 per share.
In May
2017, the Company entered into a securities purchase agreement with
two accredited investors to sell 10% convertible debentures with
and an exercise price of the lesser of (i) $15.00 or (ii) the
average of the three (3) lowest intra-day trading prices of the
Common Stock during the 20 Trading Days immediately prior to the
date on which the Notice of Conversion is delivered to the Company,
with an initial principal balance of $125,000 and warrants to
acquire up to 8,333 shares of the Company's common stock at an
exercise price of $15.00 per share.
In July
2017, the Company entered into a securities purchase agreement with
three accredited investors to sell 10% convertible debentures with
and an exercise price of the lesser of (i) $15.00 or (ii) the
average of the three (3) lowest intra-day trading prices of the
Common Stock during the 20 Trading Days immediately prior to the
date on which the Notice of Conversion is delivered to the Company,
with an initial principal balance of $650,000 and warrants to
acquire up to 43,333 shares of the Company's common stock at an
exercise price of $15.00 per share.
Letter of Intent
In July 2017 the Company announced that the it agreed to acquire
Georgetown Translational Pharmaceuticals, Inc. (GTP) and hire a new
Chief Executive Officer and Chief Medical Officer. The Company has
agreed to pay 33 percent of its outstanding shares to GTP to
complete the transaction, which is expected to close on or before
90 days as per the agreement. GTP is a privately-owned
biotechnology company focused on acquiring or discovering and
patenting late-stage, de-risked, and close-to-market improved
treatments for CNS disease (Neurology and Pain) and shepherding the
products through the FDA approval process to the NDA. GTP products
currently include treatment for neuropathic pain, refractory
epilepsies, the symptoms of myasthenia gravis, and motion
sickness.
Results of Operations
Comparison of the Three Months Ended June 30, 2017 and
2016
Research and Development Expenses
During the three months ended June 30, 2017 and 2016, we incurred
$241,000 and $250,000 of research and development
expenses.
Selling, general and administrative expenses
During the three months ended June 30, 2017 and 2016, we incurred
$1,044,000 and $1,871,000 of selling, general and administrative
expenses. The decrease in selling, general and
administrative expenses is primarily attributable to an decrease in
professional fees and stock compensation.
Change in value of warrant and derivative liabilities
During the three months ended June 30, 2017, we recorded a loss as
a result of an increase in the fair market value of outstanding
warrants and beneficial conversion features of
$367,000, compared to a gain of $5,263,000 during the three
months ended June 31, 2016. We recorded a loss as a result of an
increase in the fair market value of outstanding debt and equity
securities accounted for as derivative liabilities.
Interest Expense
Interest expense was $1,178,000 and $1,599,000 for the three months
ended June 30, 2017 and 2016 respectively. The increase
is primarily due to an increase in the non-cash amortization of the
debt issuance costs associated with the convertible debentures and
demand notes payable.
Comparison of the Six Months Ended June 30, 2017 and
2016
Research and Development Expenses
During the six months ended June 30, 2017 and 2016, we incurred
$385,000 and $475,000 of research and development
expenses.
Selling, general and administrative expenses
During the six months ended June 30, 2017 and 2016, we incurred
$2,438,000 and $5,547,000 of selling, general and administrative
expenses. The decrease in selling, general and
administrative expenses is primarily attributable to an decrease in
professional fees and stock compensation.
Change in value of warrant and derivative liabilities
During the six months ended June 30, 2017, we recorded a gain as a
result of a decrease in the fair market value of outstanding
warrants and beneficial conversion features of
$2,376,000, compared to a gain of $36,759,000 during the six
months ended June 31, 2016. We recorded a gain as a result of a
decrease in the fair market value of outstanding debt and equity
securities accounted for as derivative liabilities.
Interest Expense
Interest expense was $4,698,000 and $3,245,000 for the six months
ended June 30, 2017 and 2016 respectively. The increase
is primarily due to an increase in the non-cash amortization of the
debt issuance costs associated with the convertible debentures and
demand notes payable.
Liquidity and Capital
Resources
As of
June 30, 2017, we had cash and cash equivalents of $39,000. This
cash and cash equivalents is in part the result of the proceeds
from borrowings in 2017. On the same day we had total current
assets of $39,000, and a working capital deficit of $20,087,000.
B
ased upon
the cash position, it is necessary to raise additional capital by
the end of the next quarter in order to continue to fund current
operations. The Company is pursuing several alternatives to address
this situation, including the raising of additional funding through
equity or debt financings. In order to finance existing operations
and pay current liabilities over the next twelve months, the
Company will need to raise approximately $4-5 million of
capital.
During the six months ending June 30, 2017, the Company entered
into convertible debentures totaling $1,351,000.
Critical Accounting Policies
We consider the following accounting policies to be critical given
they involve estimates and judgments made by management and are
important for our investors’ understanding of our operating
results and financial condition.
Basis of Consolidation
The consolidated financial statements contained in this report
include the accounts of GT Biopharma, Inc. and its
subsidiaries. All intercompany balances and transactions
have been eliminated.
Revenue Recognition
Product Revenue
The Company manufactures, or has manufactured on a contract basis,
fine chemicals and nutraceutical products, which are its primary
products to be sold to customers. Revenue from the sale of its
products, including shipping fees, will be recognized when title to
the products is transferred to the customer which usually occurs
upon shipment or delivery, depending upon the terms of the sales
order and when collectability is reasonably assured. Revenue from
sales to distributors of its products will be recognized, net of
allowances, upon delivery of product to the distributors. According
to the terms of individual distributor contracts, a distributor may
return product up to a maximum amount and under certain conditions
contained in its contract. Allowances are calculated based upon
historical data, current economic conditions and the underlying
contractual terms.
License Revenue
License arrangements may consist of non-refundable upfront license
fees and various performance or sales milestones and future product
royalty payments. Some of these arrangements are
multiple element arrangements. Non-refundable, up-front
fees that are not contingent on any future performance by us, and
require no consequential continuing involvement on our part, are
recognized as revenue when the license term commences and the
licensed data, technology and/or compound is
delivered. We defer recognition of non-refundable
upfront fees if we have continuing performance obligations without
which the technology, right, product or service conveyed in
conjunction with the non-refundable fee has no utility to the
licensee that is separate and independent of our performance under
the other elements of the arrangement. In addition, if
we have continuing involvement through research and development
services that are required because our know-how and expertise
related to the technology is proprietary to us, or can only be
performed by us, then such up-front fees are deferred and
recognized over the period of continuing involvement.
Long-Lived Assets
Our long-lived assets include property, plant and equipment,
capitalized costs of filing patent applications and goodwill and
other assets. We evaluate our long-lived assets for
impairment in accordance with ASC 360, whenever events or changes
in circumstances indicate that the carrying amount of such assets
may not be recoverable. Estimates of future cash flows
and timing of events for evaluating long-lived assets for
impairment are based upon management’s
judgment. If any of our intangible or long-lived assets
are considered to be impaired, the amount of impairment to be
recognized is the excess of the carrying amount of the assets over
its fair value.
Applicable long-lived assets are amortized or depreciated over the
shorter of their estimated useful lives, the estimated period that
the assets will generate revenue, or the statutory or contractual
term in the case of patents. Estimates of useful lives
and periods of expected revenue generation are reviewed
periodically for appropriateness and are based upon
management’s judgment. Goodwill and other assets
are not amortized.
Certain Expenses and Liabilities
On an ongoing basis, management evaluates its estimates related to
certain expenses and accrued liabilities. We base our
estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the
carrying values of liabilities that are not readily apparent from
other sources. Actual results may differ materially from
these estimates under different assumptions or
conditions.
Derivative Financial Instruments
During the normal course of business, from time to time, we issue
warrants as part of a debt or equity financing. We do not enter
into any derivative contracts for speculative purposes. We
recognize all derivatives as assets or liabilities measured at fair
value with changes in fair value of derivatives reflected as
current period income or loss unless the derivatives qualify for
hedge accounting and are accounted for as such. During the six
months ended June 30, 2017 and 2016, we issued warrants to purchase
175,968 and 11,584 shares of common stock, respectively, in
connection with equity transactions. In accordance with ASC Topic
815-40, “Derivatives and Hedging — Contracts in
Entity’s Own Stock” (“ASC 815-40”), the
value of these warrants is required to be recorded as a liability,
as the holders have an option to put the warrants back to us in
certain events, as defined.
Inflation
We believe that inflation has not had a material adverse impact on
our business or operating results during the periods
presented.
Off-balance Sheet Arrangements
We have no off-balance sheet arrangements as of June 30,
2017.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
This company qualifies as a smaller reporting company, as defined
in 17 C.F.R. §229.10(f) (1) and is not required to provide
information by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer
evaluated the effectiveness of our “disclosure controls and
procedures” (as such term is defined in Rules 13a-15(e) and
15d-15(e) of the United States Securities Exchange Act of 1934, as
amended), as of June 30, 2017. Based on that evaluation
we have concluded that our disclosure controls and procedures were
not effective as of June 30, 2017.
Management’s Report on Internal Control over Financial
Reporting
Management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal
control over financial reporting is defined in Rule 13a-15(f) or
15d-15(f) promulgated under the Securities Exchange Act of 1934, as
amended, as a process designed by, or under the supervision of, a
company’s principal executive and principal financial
officers and effected by a company’s board of directors,
management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and
includes those policies and procedures that:
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●
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Pertain
to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets
of the company;
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●
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Provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company;
and
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●
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Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s
assets that could have a material effect on the financial
statements.
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All internal control systems, no matter how well designed, have
inherent limitations and can provide only reasonable, not absolute,
assurance that the objectives of the control system are
met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any,
within our company have been detected. Therefore, even
those systems determined to be effective can provide only
reasonable assurance with respect to financial statement
preparation and presentation.
As of June 30, 2017, management of the company conducted an
assessment of the effectiveness of the company’s internal
control over financial reporting. In making this
assessment, it used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control—Integrated Framework. In the
course of the assessment, material weaknesses were identified in
the company’s internal control over financial
reporting.
A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented
or detected on a timely basis.
Management determined that fundamental elements of an effective
control environment were missing or inadequate as of June 30,
2017. The most significant issues identified were: 1)
lack of segregation of duties due to very small staff and
significant reliance on outside consultants, and 2) risks of
executive override also due to lack of established policies, and
small employee staff. Based on the material weaknesses
identified above, management has concluded that internal control
over financial reporting was not effective as of June 30,
2017. As the company’s operations increase, the
company intends to hire additional employees in its accounting
department.
Changes in Internal Control over Financial Reporting
Other than as described above, no changes in our internal control
over financial reporting were made during our most recent fiscal
quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In May, 2015, Aaion Partners Inc, a consulting firm, filed a breach
of contract action against the Company in the Superior Court of
California County of Los Angeles, Case No: BC581098. The
lawsuit sought payment under a consulting agreement. In July,
2015, the Company filed a cross-claim against Aaion Partners Inc.
for breach of contract and tort claims. In December 2015, we
settled this claim for $150,000 to be made in three cash payments
and 11,429 shares of restricted common stock.
The Company paid $50,000 of the cash due and
issued the stock owed. The remaining two payments were not made
timely but settlement was finally and fully resolved upon payment
by the Company of an additional $132,231. The case was then
dismissed in January 2017.
On June 23, 2016, the Company was served with a complaint filed in
the Circuit Court of the 13
th
Judicial Circuit in and for Hillsborough
County, FL, Case No. 16-CA-004791. Suit was brought against the
Company by Lippert/Heilshorn and Associates, Inc. who is alleging
they are owed compensation for consulting services provided to the
company. They are seeking payment of $73,898. The Company has
engaged legal counsel to answer the complaint.
On or immediately before February 15, 2017, MultiCell
Immunotherapeutics filed an arbitration proceeding against the
Company with the American Health Lawyers Association, Claim
#3821. In its statement of claim, MultiCell is seeking
$207,783 plus interest and costs of arbitration pursuant to alleged
contract rights against the Company under a research agreement
between the parties. The Company has entered its appearance
and is preparing its answer to the statement of
claim.
Item 1A. Risk Factors
This company qualifies as a “smaller reporting company”
as defined in 17 C.F.R. §229.10(f)(1), and is not required to
provide information by this Item.
Item 2. Unregistered Sales of Securities and Use of
Proceeds
In
January 2017, the Company entered into a securities purchase
agreement with eight accredited investors to sell 10% convertible
debentures with and an exercise price
of the lesser of (i)
$15.00 or (ii) the average of the three (3) lowest intra-day
trading prices of the Common Stock during the 20 Trading Days
immediately prior to the date on which the Notice of Conversion is
delivered to the Company,
with an initial principal balance
of $633,593 and warrants to acquire up to 42,240 shares of the
Company's common stock at an exercise price of $15.00 per
share.
In
March 2017, the Company entered into a securities purchase
agreement with two accredited investors to sell 10% convertible
debentures with and an exercise price
of the lesser of (i)
$15.00 or (ii) the average of the three (3) lowest intra-day
trading prices of the Common Stock during the 20 Trading Days
immediately prior to the date on which the Notice of Conversion is
delivered to the Company,
with an initial principal balance
of $232,313 and warrants to acquire up to 15,487 shares of the
Company's common stock at an exercise price of $15.00 per
share.
In
April 2017, the Company entered into a securities purchase
agreement with two accredited investors to sell 10% convertible
debentures with and an exercise price of the lesser of (i) $15.00
or (ii) the average of the three (3) lowest intra-day trading
prices of the Common Stock during the 20 Trading Days immediately
prior to the date on which the Notice of Conversion is delivered to
the Company, with an initial principal balance of $70,000 and
warrants to acquire up to 46,666 shares of the Company's common
stock at an exercise price of $15.00 per share.
In May
2017, the Company entered into a securities purchase agreement with
two accredited investors to sell 10% convertible debentures with
and an exercise price of the lesser of (i) $15.00 or (ii) the
average of the three (3) lowest intra-day trading prices of the
Common Stock during the 20 Trading Days immediately prior to the
date on which the Notice of Conversion is delivered to the Company,
with an initial principal balance of $125,000 and warrants to
acquire up to 8,333 shares of the Company's common stock at an
exercise price of $15.00 per share.
In July
2017, the Company entered into a securities purchase agreement with
one accredited investors to sell 10% convertible debentures with
and an exercise price of the lesser of (i) $15.00 or (ii) the
average of the three (3) lowest intra-day trading prices of the
Common Stock during the 20 Trading Days immediately prior to the
date on which the Notice of Conversion is delivered to the Company,
with an initial principal balance of $650,000 and warrants to
acquire up to 43,333 shares of the Company's common stock at an
exercise price of $15.00 per share.
These convertible debentures were also exempt from the registration
requirements of Section 5 of the Act pursuant to Section 4(2) of
the Act since the shares were also issued to persons closely
associated with the Company and there was no public offering of the
shares.
Item 3. Defaults Upon Senior Securities.
There have been no material changes from the disclosure provided in
Part I, Item 7 of our Annual Report on Form 10-K for the year ended
December 31, 2016.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information.
None.
Item 6. Exhibits
Exhibit Number
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Description of Exhibit
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Certification of
Principal Executive Officer pursuant to Rule 13a-14 and Rule
15d-14(a), promulgated under the Securities and Exchange Act of
1934, as amended.
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Certification of
Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d
14(a), promulgated under the Securities and Exchange Act of 1934,
as amended.
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Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer).
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Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (Chief Financial
Officer).
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License Agreement with ID4 Pharma LLC
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License Agreement with MultiCell Immunotherapeutics,
Inc.
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License Agreement with the University of
Minnesota
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License Agreement
with Daniel A. Vallera, Ph.D.
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101.INS
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XBRL
Instance Document
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101.SCH
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XBRL
Taxonomy Extension Schema
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101.CAL
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XBRL
Taxonomy Extension Calculation Linkbase
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101.DEF
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XBRL
Taxonomy Extension Definition Linkbase
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101.LAB
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XBRL
Taxonomy Extension Label Linkbase
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101.PRE
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XBRL
Extension Presentation Linkbase
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SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
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GT Biopharma, Inc.
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Dated:
August 11, 2017
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By:
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/s/ Anthony
J. Cataldo
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Anthony
J. Cataldo
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Chief
Executive Officer and Chairman of the Board
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Pursuant
to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates
indicated.
Name
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Position
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Date
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/s/
Anthony J. Cataldo
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Chairman
of the Board, Chief Executive Officer and President of Oxis
Biotech
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August
11, 2017
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Anthony
J. Cataldo
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/s/
Steven Weldon
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Chief
Financial Officer (Principal Accounting Officer), President and
Director
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August
11, 2017
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Steven
Weldon
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Exhibit 10.1
LICENSE
AGREEMENT
THIS
LICENSE AGREEMENT (the “Agreement”) dated as of
December 31, 2014 (the “Effective Date”), is entered
into between ID4 Pharma, LLC (“ID4”), a having a place
of business at 1654 Settlers Drive, Sewickley, PA 15143, and Oxis
Biotech, Inc., a Delaware corporation (“Company”),
having a place of business at
1402
North Beverly Drive, Beverly Hills, CA 90210
.
WHEREAS, ID4 owns
or has rights in the Technology (as defined below).
WHEREAS, Company
desires to obtain an exclusive license under ID4’s rights in
the Technology on the terms and conditions set forth
below.
WHEREAS, Xiangqun
Xie, Ph.D. and Company have entered into a Consulting Agreement
dated December 31, 2014 (attached hereto as Schedule
C).
WHEREAS, Xiangqun
Xie, Ph.D. and Company have entered into a Confidentiality
Agreement dated December 31, 2014 (attached hereto as Schedule
D).
NOW,
THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereby agree as
follows:
For
purposes of this Agreement, the terms defined in this
Section 1 shall have the respective meanings set forth
below:
1.1
“
Affiliate
” shall mean,
with respect to any Person, any other Person which directly or
indirectly controls, is controlled by, or is under common control
with, such Person. A Person shall be regarded as in control of
another Person if it owns, or directly or indirectly controls, at
least fifty percent (50%) of the voting stock or other ownership
interest of the other Person, or if it directly or indirectly
possesses the power to direct or cause the direction of the
management and policies of the other Person by any means
whatsoever.
1.2
“
Competent Authority(ies)
”
or “
Competent
Regulatory Authority(ies)
” shall mean, collectively,
(a) the governmental entities in each country or supranational
organization that is responsible for the regulation of any Product
intended for use in the Field or the establishment, maintenance
and/or protection of rights related to the Licensed IP Rights
(including the FDA, the EMEA and the MHLW), or (b) any other
applicable regulatory or administrative agency in any country or
supranational organization that is comparable to, or a counterpart
of, the foregoing.
1.3
“
EMEA
” shall mean the
European Agency for the Evaluation of Medicinal Products of the
European Union, or the successor thereto.
1.4
“
FDA
” shall mean the Food
and Drug Administration of the United States, or the successor
thereto.
1.5
“
Field
” shall mean
compounds and methods for detection, diagnosis, prognosis,
monitoring or predisposition testing of any disease, state or
condition in humans or other animals..
1.6
“
First
Commercial Sale
” shall mean, with respect to any
Product, the first sale of such Product after all applicable
marketing and pricing approvals (if any) have been granted by the
applicable governing health authority of such country.
1.7
“
Licensed IP Rights
” shall
mean, collectively, the Licensed Patent Rights and the Licensed
Know-How Rights.
1.8
“
Licensed Know-How Rights
”
shall mean all trade secret and other know-how rights in and to all
data, information, compositions and other technology (including,
but not limited to, formulae, procedures, protocols, techniques and
results of experimentation and testing) which are necessary or
useful for Company to make, use, develop, sell or seek regulatory
approval to market a composition, or to practice any method or
process, at any time claimed or disclosed in any issued patent or
pending patent application within the Licensed Patent Rights or
which otherwise relates to the Technology.
1.9
“
Licensed Patent Rights
”
shall mean (a) the patents and patent applications listed on
Schedule A hereto, (b) all patents and patent applications in
any country of the world that claim or cover the Technology in
which ID4 heretofore or hereafter has an ownership or
(sub)licensable interest, (c) all divisions, continuations,
continuations-in-part, that claim priority to, or common priority
with, the patent applications listed in clauses (a) - (b) above or
the patent applications that resulted in the patents described in
clauses (a) - (b) above, and (d) all patents that have issued
or in the future issue from any of the foregoing patent
applications, including utility, model and design patents and
certificates of invention, together with any reissues, renewals,
extensions or additions thereto.
1.10
“
NDA
”
shall mean a New Drug Application, or similar application for
marketing approval of a Product for use in the Field submitted to
the FDA, or its foreign equivalent.
1.11
“
Net
Sales
” shall mean, with respect to any Product, the
gross sales price of such Product invoiced by Company or its
Affiliate to customers who are not Affiliates (or are Affiliates
but are the end users of such Product) less, to the extent actually
paid or accrued by Company or its Affiliate (as applicable),
(a) credits, allowances, discounts and rebates to, and
chargebacks from the account of, such customers for nonconforming,
damaged, out-dated and returned Product; (b) freight and
insurance costs incurred by Company or its Affiliate (as
applicable) in transporting such Product to such customers;
(c) cash, quantity and trade discounts, rebates and other
price reductions for such Product given to such customers under
price reduction programs; (d) sales, use, value-added and
other direct taxes incurred on the sale of such Product to such
customers; (e) customs duties, tariffs, surcharges and other
governmental charges incurred in exporting or importing such
Product to such customers; (f) sales commissions incurred on
the sale of such Product to such customers; and (g) an
allowance for uncollectible or bad debts determined in accordance
with generally accepted accounting principles.
1.12
“
Net
Sublicensing Revenues
” shall mean, with respect to any
Product, the aggregate cash consideration received by Company or
its Affiliates in consideration for the sublicense under the
Licensed Patent Rights or Licensed Know-How Rights by Company or
its Affiliates to a Third Party sublicensee with respect to such
Product (including royalties received by Company or its Affiliates
based on sales of such Product by such sublicensee, but excluding
amounts received to reimburse Company’ or its
Affiliates’ cost to perform research, development or similar
services conducted for such Product after signing the agreement
with the Third Party, in reimbursement of patent or other
out-of-pocket expenses relating to such Product, or in
consideration for the purchase of any debt or securities of Company
or its Affiliates).
1.13
“
Person
”
shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
1.14
“
Phase I
Clinical Trial
” shall mean a human clinical trial that
is intended to initially evaluate the safety and/or pharmacological
effect of a Product in subjects or that would otherwise satisfy
requirements of 21 C.F.R. 312.21(a), or its foreign
equivalent.
1.15
“
Phase II
Clinical Trial
” shall mean a human clinical trial in
any country that is intended to initially evaluate the
effectiveness of a Product for a particular indication or
indications in patients with the disease or indication under study
or would otherwise satisfy requirements of
21 CFR 312.21(b), or its foreign equivalent.
1.16
“
Phase IIa
Clinical Trial
” shall mean a Phase II Clinical
Trial that is solely intended to make a preliminary determination
of the effectiveness of a Product for a particular indication or
indications in patients with the disease or indication under
study.
1.17
“
Phase IIb
Clinical Trial
” shall mean a Phase II Clinical
Trial, other than one that is solely intended to make a preliminary
determination of the effectiveness of a Product for a particular
indication or indications in patients with the disease or
indication under study.
1.18
“
Phase III
Clinical Trial
” shall mean a human clinical trial in
any country, the results of which could be used to establish safety
and efficacy of a Product as a basis for an NDA or would otherwise
satisfy requirements of 21 CFR 312.21(c), or its foreign
equivalent.
1.19
“
Product(s)
”
shall mean any product for use in the Field that if made, used,
sold, offered for sale or imported absent the license granted
hereunder would infringe a Valid Claim, or that otherwise uses or
incorporates the Licensed Know-How Rights.
1.20
“
Registration(s)
”
shall mean any and all permits, licenses, authorizations,
registrations or regulatory approvals (including NDAs) required
and/or granted by any Competent Authority as a prerequisite to the
development, manufacturing, packaging, marketing and selling of any
product.
1.21
“
Royalty
Term
” shall mean, with respect to each Product in each
country, the term for which a Valid Claim remains in effect and
would be infringed but for the license granted by this Agreement,
by the use, offer for sale, sale or import of such Product in such
country.
1.22
“
Technology
”
shall mean compounds and uses for treating p62 mediated diseases as
described in the Licensed IP Rights.
1.23
“
Territory
”
shall mean worldwide.
1.24
“
Third
Party
” shall mean any Person other than ID4, Company
and their respective Affiliates.
1.25
“
Valid
Claim
” shall mean a claim of an issued and unexpired
patent included within the Licensed Patent Rights, which has not
been held permanently revoked, unenforceable or invalid by a
decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or
otherwise.
2.
REPRESENTATIONS
AND WARRANTIES
2.1
Mutual Representations and
Warranties
. Each party hereby represents and warrants to the
other party as follows:
2.1.1
Such
party is an individual or corporation duly organized, validly
existing and in good standing under the laws of the state in which
it is incorporated.
2.1.2
Such
party (a) has the power and authority and the legal right to
enter into this Agreement and to perform its obligations hereunder,
and (b) has taken all necessary action on its part to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been
duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against
such party in accordance with its terms.
2.1.3
All
necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained
by such party in connection with this Agreement have been
obtained.
2.1.4
The
execution and delivery of this Agreement and the performance of
such party’s obligations hereunder (a) do not conflict with
or violate any requirement of applicable laws or regulations, and
(b) do not conflict with, or constitute a default under, any
contractual obligation of it.
2.2
ID4 Representations and
Warranties
. ID4 hereby represents and warrants to Company as
follows:
2.2.1
ID4
(a) is the owner or exclusive licensee of the Licensed IP
Rights and has the sole right to execute this Agreement on behalf
of the other co-owner/inventors as evidenced by Schedule B, and has
not granted to any Third Party any license or other interest in the
Licensed IP Rights, (b) is not aware of any Third Party
patent, patent application or other intellectual property rights
that would be infringed (i) by practicing any process or
method or by making, using or selling any composition which is
claimed or disclosed in the Licensed Patent Rights or which
constitutes Licensed Know-How Rights, or (ii) by making, using
or selling Products, and (c) is not aware of any infringement
or misappropriation by a Third Party of the Licensed IP
Rights.
3.
LICENSE
GRANT
3.1
Licensed IP Rights
. ID4 hereby
grants to Company an exclusive license (with the right to grant
sublicenses) under the Licensed IP Rights to conduct research and
to develop, make, have made, use, offer for sale, sell and import
Products in the Territory for use in the Field.
3.2
Sublicenses
. ID4 grants to
Company the right to grant sublicenses to third parties, provided
that (i) the Sublicensee agrees to abide by all the terms and
provisions of this Agreement; (ii) Company remains fully liable for
the performance of its and its Sublicensee’s obligations
hereunder; and (iii) Company notifies ID4 of any grant of a
sublicense and provide to ID4 upon ID4 request a copy of any
sublicense agreement.
3.3
Availability of the Licensed IP
Rights
. ID4 shall provide Company with a copy of all
information available to ID4 relating to the Licensed IP Rights,
Products or Technology, including without limitation:
(a) regulatory submissions, (b) communications with the
Competent Authorities (including the minutes of any meetings),
(c) trial master files, including case report forms,
(d) listings and tables of results from the clinical trials,
(e) treatment-related serious adverse event reports from the
clinical trials, (f) storage of and access permission to any
retained samples of materials used in clinical trials, and
(g) access to CROs involved in the clinical
trials.
3.4
Registrations
. ID4 acknowledges
and agrees that Company shall own all Registrations for Products
for use in the Field in each country in the Territory.
Additionally, ID4 acknowledges and agrees that Company shall have
the right to conduct pre-clinical and clinical development
activities outside of the Territory. ID4 hereby grants to Company a
free-of-charge right to reference and use and have full access to
all other Registrations and all other regulatory documents that
relate to the Licensed IP Rights, Products or Technology, including
INDs, BLAs, NDAs and DMFs (whether as an independent document or as
part of any NDA, and all chemistry, manufacturing and controls
information), and any supplements, amendments or updates to the
foregoing (for the purposes of this Section, the “Right of
Reference”). Company shall have the right to (sub)license the
Right of Reference to its sublicensees and Affiliates.
3.5
Access to Manufacturers
. ID4
shall use his commercially reasonable efforts to provide access to
Company to any suppliers of the API form of any Product for use in
the Field on terms and conditions no less favorable than those
terms and conditions between ID4 and such supplier.
4.
FINANCIAL
CONSIDERATIONS
4.1.1
Royalty Rate
. During the
applicable Royalty Term for a Product, subject to the terms and
conditions of this Agreement, Company shall pay to ID4 royalties,
with respect to each Product, equal to (a) THREE percent (3%)
of Net Sales of such Product by Company and its Affiliates, and
(b) TWENTY-FIVE percent (25%) of Net Sublicensing
Revenues for such Product. Only one royalty shall be owing for a
Product regardless of how many Valid Claims cover such Product for
the life of the last to expire Patent in a country having Valid
Claim.
4.1.2
Third Party Royalties
. If
Company, its Affiliates or sublicensees is required to pay
royalties to any Third Party in order to exercise its rights
hereunder to make, have made, use, sell, offer to sale or import
any Product, then Company shall have the right to credit one
percent (1%) of such Third Party royalty payments against the
royalties owing to ID4 under Section 4.1.1 above with respect
to sales of such Product in such country; provided, however, that
Company shall not reduce the amount of the royalties paid to ID4
under Section 4.1.1 above by reason of this
Section 4.1.2, with respect to sales of such Product in such
country, to less than one percent (1%) of Net Sales of such Product
in such country. In consideration of the right to sublicense third
parties granted under Section 3.2, Company shall pay to ID4 ten
percent (10%) of all royalties received by Company from its
Sublicensees if the sublicense is executed on or before the first
anniversary of the Effective Date of the License Agreement signed
between the parties, and ten percent (10%) of all royalties
received by Company from its Sublicensees if the Sublicense is
executed thereafter. In no event, however, shall Company pay ID4
less than the amount which would have been due under Section 4.1.2
of this Agreement in the absence of a sublicense.
4.2
Diligence Fee
. A good faith
diligence fee of TWENTY FIVE THOUSAND dollars ($25,000.00) paid
upon the execution of the Letter of Intent (Schedule C). Said good
faith diligence fee shall be credited against any monies owed by
Company to ID4 as a result of the parties executing this License
Agreement.
4.3
License Fee
. Company shall pay
ID4 a non-refundable license fee of SEVENTY FIVE THOUSAND dollars
($75,000.00) which shall be payable upon execution of this
Agreement.
4.4
Milestones
. Company shall pay
to ID4 the following milestone payment within thirty (30) days
following the first achievement of the applicable
milestone:
(i)
FIFTY THOUSAND
dollars ($50,000.00) due upon filing of an investigational new drug
application with a competent regulatory authority anywhere in the
world.
(ii)
FIFTY THUOSAND
dollars ($50,000.00) due upon initiation of the first Phase 1 human
clinical trial anywhere in the world.
(iii)
ONE HUNDRED
THOUSAND dollars ($100,000.00) due upon initiation of the first
Phase 2 human clinical trial anywhere in the world.
(iv)
TWO HUNDRED FIFTY
THOUSAND dollars ($250,000.00) due upon initiation of the first
Phase 3 human clinical trial anywhere in the world.
(v)
TWO HUNDRED FIFTY
THOUSAND dollars ($250,000.00) due upon receipt of the first
marketing approval from a competent regulatory authority anywhere
in the world.
5.
ROYALTY REPORTS AND
ACCOUNTING
5.1
Royalty Reports
. Within sixty
(60) days after the end of each calendar quarter during the term of
this Agreement following first to occur of the First Commercial
Sale of a Product and the receipt by Company or its Affiliates of
Net Sublicensing Revenues, Company shall furnish to ID4 a quarterly
written report showing in reasonably specific detail (a) the
calculation of Net Sales during such calendar quarter; (b) the
calculation of Net Sublicensing Revenues for such quarter;
(c) the calculation of the royalties, if any, that shall have
accrued based upon such Net Sales and Net Sublicensing Revenues;
(d) the withholding taxes, if any, required by law to be
deducted with respect to such sales; and (e) the exchange
rates, if any, used in determining the amount of United States
dollars. With respect to sales of Products invoiced in United
States dollars, the gross sales, Net Sales and royalties payable
shall be expressed in United States dollars. With respect to
(i) Net Sales invoiced in a currency other than United States
dollars and (ii) cash consideration paid in a currency other
than United States dollars by Company’s sublicensees
hereunder, all such amounts shall be expressed both in the currency
in which the distribution is invoiced and in the United States
dollar equivalent. The United States dollar equivalent shall be
calculated using the average of the exchange rate (local currency
per US$1) published in
The
Wall Street Journal
, Western Edition, under the heading
“Currency Trading” on the last business day of each
month during the applicable calendar quarter.
5.2.1
Upon
the written request of ID4 and not more than once in each calendar
year, Company shall permit an independent certified public
accounting firm of nationally recognized standing selected by ID4
and reasonably acceptable to Company, at ID4’s expense, to
have access during normal business hours to such of the financial
records of Company as may be reasonably necessary to verify the
accuracy of the payment reports hereunder for the eight (8)
calendar quarters immediately prior to the date of such request
(other than records for which ID4 has already conducted an audit
under this Section.
5.2.2
If
such accounting firm concludes that additional amounts were owed
during the audited period, Company shall pay such additional
amounts within thirty (30) days after the date ID4 delivers to
Company such accounting firm’s written report so concluding.
The fees charged by such accounting firm shall be paid by ID4;
provided, however, if the audit discloses that the royalties
payable by Company for such period are more than one hundred ten
percent (110%) of the royalties actually paid for such period, then
Company shall pay the reasonable fees and expenses charged by such
accounting firm.
5.2.3
ID4
shall cause its accounting firm to retain all financial information
subject to review under this Section 5.2 in strict confidence;
provided, however, that Company shall have the right to require
that such accounting firm, prior to conducting such audit, enter
into an appropriate non-disclosure agreement with Company regarding
such financial information. The accounting firm shall disclose to
ID4 only whether the reports are correct or not and the amount of
any discrepancy. No other information shall be shared. ID4 shall
treat all such financial information as Company’ Confidential
Information.
6.
PAYMENTS
6.1
Payment Terms
. Royalties shown
to have accrued by each royalty report provided for under
Section 5 above shall be due on the date such royalty report
is due. Payment of royalties in whole or in part may be made in
advance of such due date.
6.2
Exchange Control
. If at any
time legal restrictions prevent the prompt remittance of part or
all royalties with respect to any country in the Territory where
the Product is sold, Company shall have the right, in its sole
discretion, to make such payments by depositing the amount thereof
in local currency to ID4’s account in a bank or other
depository institution in such country. If the royalty rate
specified in this Agreement should exceed the permissible rate
established in any country, the royalty rate for sales in such
country shall be adjusted to the highest legally permissible or
government-approved rate.
6.3
Withholding Taxes
. Company
shall be entitled to deduct the amount of any withholding taxes,
value-added taxes or other taxes, levies or charges with respect to
such amounts, other than United States taxes, payable by Company,
its Affiliates or sublicensees, or any taxes required to be
withheld by Company, its Affiliates or sublicensees, to the extent
Company, its Affiliates or sublicensees pay to the appropriate
governmental authority on behalf of ID4 such taxes, levies or
charges. Company shall use reasonable efforts to minimize any such
taxes, levies or charges required to be withheld on behalf of ID4
by Company, its Affiliates or sublicensees. Company promptly shall
deliver to ID4 proof of payment of all such taxes, levies and other
charges, together with copies of all communications from or with
such governmental authority with respect thereto.
7.
RESEARCH
AND DEVELOPMENT OBLIGATIONS
7.1
Research and Development
Efforts
. Company shall use its commercially reasonable
efforts to conduct such research, development and preclinical and
human clinical trials as Company determines are necessary or
desirable to obtain regulatory approval to manufacture and market
such Products as Company determines are commercially feasible in
the Territory, and shall use its commercially reasonable efforts to
obtain regulatory approval to market, and following approval to
commence marketing and market each such Product in such countries
in the Territory as Company determines are commercially
feasible.
7.2
Consulting Agreement
. ID4 shall
use his reasonable efforts in performing the services identified in
the Consulting Agreement executed between ID4 and Company on
December __, 2014 and attached hereto as Schedule C.
7.3
Records
. ID4 and Company shall
maintain records, in sufficient detail and in good scientific
manner, which shall reflect all work done and results achieved in
the performance of its research and development regarding the
Products.
7.4
Reports
. Within ninety (90)
days following the end of each calendar year during the term of
this Agreement, ID4 shall prepare and deliver to Company a written
summary report which shall describe (a) the research performed
to date employing the Licensed IP Rights, (b) the progress of
the development, and testing of Products in clinical trials, and
(c) the status of obtaining regulatory approvals to market
Products.
8.1
Confidential Information
.
Nothing contained in this Agreement shall supersede the
confidentiality requirements set forth in the Consulting Agreement
and Confidentiality Agreement signed by the parties; each agreement
dated December __, 2014 attached hereto as Schedule C and Schedule
D, respectively. Said Consulting Agreement and Confidentiality
Agreement shall both remain in full force and effect.
9.1
Patent Prosecution and
Maintenance
. Company shall have the right to control, at its
sole cost, the preparation, filing, prosecution and maintenance of
all patents and patent applications within the Licensed Patent
Rights. Company shall give ID4 an opportunity to review and comment
on the text of each patent application subject to this
Section 9.1 before filing, and shall supply ID4 with a copy of
such patent application as filed, together with notice of its
filing date and serial number. ID4 shall cooperate with Company,
execute all lawful papers and instruments and make all rightful
oaths and declarations as may be necessary in the preparation,
prosecution and maintenance of all patents and other filings
referred to in this Section 9.1. If Company, in its sole
discretion, decides to abandon the preparation, filing, prosecution
or maintenance of any patent or patent application in the Licensed
Patent Rights, then Company shall notify ID4 in writing thereof and
following the date of such notice (a) ID4 shall be responsible
for and shall control, at its sole cost, the preparation, filing,
prosecution and maintenance of such patents and patent
applications, and (b) Company shall thereafter have no license
under this Agreement to such patent or patent
application.
9.2
Notification of Infringement
.
Each party shall notify the other party of any substantial
infringement in the Territory known to such party of any Licensed
Patent Rights and shall provide the other party with the available
evidence, if any, of such infringement.
9.3
Enforcement of Patent Rights
.
Company, at its sole expense, shall have the right to determine the
appropriate course of action to enforce Licensed Patent Rights or
otherwise abate the infringement thereof, to take (or refrain from
taking) appropriate action to enforce Licensed Patent Rights, to
defend any declaratory judgments seeking to invalidate or hold the
Licensed Patent Rights unenforceable, to control any litigation or
other enforcement action and to enter into, or permit, the
settlement of any such litigation, declaratory judgments or other
enforcement action with respect to Licensed Patent Rights, in each
case in Company’s own name and, if necessary for standing
purposes, in the name of ID4 and shall consider, in good faith, the
interests of ID4 in so doing. If Company does not, within one
hundred twenty (120) days of receipt of notice from ID4, abate the
infringement or file suit to enforce the Licensed Patent Rights
against at least one infringing party in the Territory, ID4 shall
have the right to take whatever action it deems appropriate to
enforce the Licensed Patent Rights; provided, however, that, within
thirty (30) days after receipt of notice of ID4’s intent to
file such suit, Company shall have the right to jointly prosecute
such suit and to fund up to one-half (½) the costs of such
suit. The party controlling any such enforcement action shall not
settle the action or otherwise consent to an adverse judgment in
such action that diminishes the rights or interests of the
non-controlling party without the prior written consent of the
other party. All monies recovered upon the final judgment or
settlement of any such suit to enforce the Licensed Patent Rights
shall be shared, after reimbursement of expenses, in relation to
the damages suffered by each party. If Company does not receive
sufficient monies from a final judgment or settlement to cover its
expenses for such suit, Company shall have the right to credit up
to fifty percent (50%) of such expenses against any royalties or
other fees owing by Company pursuant to Section 4
above.
9.4
Cooperation
. In any suit to
enforce and/or defend the License Patent Rights pursuant to this
Section 9, the party not in control of such suit shall, at the
request and expense of the controlling party, reasonably cooperate
and, to the extent possible, have its employees testify when
requested and make available relevant records, papers, information,
samples, specimens, and the like.
10.1
Expiration
.
Subject to Sections 10.2 and 10.3 below, this Agreement shall
expire on the expiration of Company’ obligation to pay
royalties to ID4 under Section 4.1 above. The license grant
under Section 3.1 shall be effective at all times prior to
such expiration and following such expiration of this Agreement
(a) Company shall have a fully paid-up, non-exclusive license
under the Licensed Know-How Rights to conduct research and to
develop, make, have made, use, sell, offer for sale and import
Products in the Territory for use in the Field, and
(b) Sections 3.5 and 3.6 shall survive.
10.2
Termination by Company
. Company
may terminate this Agreement, in its sole discretion, upon thirty
(30) days prior written notice to ID4. This includes and is not
limited to the failure to revive U.S. Patent Application Serial No.
14/237,494 from abandoned status.
10.3
Termination for Cause
. Except
as otherwise provided in Section 12, ID4 may terminate this
Agreement upon or after the breach of any material provision of
this Agreement by Company if Company has not cured such breach
within ninety (90) days after receipt of express written notice
thereof by ID4; provided, however, if any default is not capable of
being cured within such ninety (90) day period and Company is
diligently undertaking to cure such default as soon as commercially
feasible thereafter under the circumstances, ID4 shall have no
right to terminate this Agreement.
10.4
Effect
of Expiration or Termination
. Expiration or termination of
this Agreement shall not relieve the parties of any obligation
accruing prior to such expiration or termination, and the
provisions of Sections 8, 9, 10, 11 and 13 shall survive the
expiration or termination of this Agreement. Upon any termination
of this Agreement, ID4 shall grant a direct license to any
sublicense of Company hereunder having the same scope as such
sublicense and on terms and conditions no less favorable to such
sublicensee than the terms and conditions of this Agreement,
provided that such sublicensee is not in default of any applicable
obligations under this Agreement and agrees in writing to be bound
by the terms and conditions of such direct license.
11.1
Indemnification
.
Company shall defend, indemnify and hold ID4 harmless from all
losses, liabilities, damages and expenses (including
attorneys’ fees and costs) incurred as a result of any claim,
demand, action or proceeding arising out of any breach of this
Agreement by Company, or the gross negligence or willful misconduct
of Company in the performance of its obligations under this
Agreement, except in each case to the extent arising from the gross
negligence or willful misconduct of ID4 or the breach of this
Agreement by ID4.
11.2
Procedure
.
ID4 promptly shall notify Company of any liability or action in
respect of which ID4 intends to claim such indemnification, and
Company shall have the right to assume the defense thereof with
counsel selected by Company. The indemnity agreement in this
Section 11 shall not apply to amounts paid in settlement of
any loss, claim, damage, liability or action if such settlement is
effected without the consent of Company, which consent shall not be
withheld unreasonably. The failure to deliver notice to Company
within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve
Company of any liability to ID4 under this Section 11, but the
omission so to deliver notice to Company will not relieve it of any
liability that it may have to ID4 otherwise than under this
Section 11. ID4 under this Section 11, its employees and
agents, shall cooperate fully with Company and its legal
representatives in the investigation and defense of any action,
claim or liability covered by this indemnification.
11.3
Insurance
.
Company shall maintain product liability insurance with respect to
the research, development, manufacture and sales of Products by
Company in such amount as Company customarily maintains with
respect to the research, development, manufacture and sales of its
similar products. Company shall maintain such insurance for so long
as it continues to research, develop, manufacture or sell any
Products, and thereafter for so long as Company customarily
maintains insurance covering the research, development, manufacture
or sale of its similar products.
Neither
party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this
Agreement to the extent, and for so long as, such failure or delay
is caused by or results from causes beyond the reasonable control
of the affected party including but not limited to fire, floods,
embargoes, war, acts of war (whether war be declared or not), acts
of terrorism, insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority or the
other party.
13.1
Notices
.
Any consent, notice or report required or permitted to be given or
made under this Agreement by one of the parties hereto to the other
party shall be in writing, delivered by any lawful means to such
other party at its address indicated below, or to such other
address as the addressee shall have last furnished in writing to
the addressor and (except as otherwise provided in this Agreement)
shall be effective upon receipt by the addressee.
ID4:
Dr. Xiangqun Xie, Ph.D.
1654
Settlers Drive
Sewickley, PA
15143
Company:
Anthony Cataldo
Chairman &
CEO
Oxis
Biotech, Inc.
1402
North Beverly Drive
Beverly
Hills, CA 90210
with a
copy
to:
DLA Piper US
4365
Executive Drive, Suite 1100
San
Diego, California 92130
Attention: Lisa A.
Haile
13.2
Governing
Law
. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard
to the conflicts of law principles thereof.
13.3
Arbitration
.
Any dispute, controversy or claim initiated by either party arising
out of, resulting from or relating to this Agreement, or the
performance by either party of its obligations under this Agreement
(other than (a) any dispute, controversy or claim regarding
the validity, enforceability, claim construction or infringement of
any patent rights, or defenses to any of the foregoing, or
(b) any bona fide third party action or proceeding filed or
instituted in an action or proceeding by a Third Party against a
party to this Agreement), whether before or after termination of
this Agreement, shall be finally resolved by binding arbitration.
Whenever a party shall decide to institute arbitration proceedings,
it shall give written notice to that effect to the other party. Any
such arbitration shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association by a
panel of three arbitrators appointed in accordance with such rules.
Any such arbitration shall be held in Los Angeles, California. The
method and manner of discovery in any such arbitration proceeding
shall be governed by California Code of Civil Procedure § 1282
et seq. (including without limitation California Code of Civil
Procedure § 1283.05). The arbitrators shall have the authority
to grant specific performance and to allocate between the parties
the costs of arbitration in such equitable manner as they
determine. Judgment upon the award so rendered may be entered in
any court having jurisdiction or application may be made to such
court for judicial acceptance of any award and an order of
enforcement, as the case may be. In no event shall a demand for
arbitration be made after the date when institution of a legal or
equitable proceeding based upon such claim, dispute or other matter
in question would be barred by the applicable statute of
limitations. Notwithstanding the foregoing, either party shall have
the right, without waiving any right or remedy available to such
party under this Agreement or otherwise, to seek and obtain from
any court of competent jurisdiction any interim or provisional
relief that is necessary or desirable to protect the rights or
property of such party, pending the selection of the arbitrators
hereunder or pending the arbitrators’ determination of any
dispute, controversy or claim hereunder.
13.4
Assignment
.
Company shall not assign its rights or obligations under this
Agreement without the prior written consent of ID4; provided,
however, that Company may, without such consent, assign this
Agreement and its rights and obligations hereunder (a) to any
Affiliate, or (b) in connection with the transfer or sale of
all or substantially all of its business to which this Agreement
relates, or in the event of its merger, consolidation, change in
control or similar transaction. Any permitted assignee shall assume
all obligations of its assignor under this Agreement.
13.5
Waivers
and Amendments
. No change, modification, extension,
termination or waiver of this Agreement, or any of the provisions
herein contained, shall be valid unless made in writing and signed
by duly authorized representatives of the parties
hereto.
13.6
Entire
Agreement
. This Agreement embodies the entire agreement
between the parties and supersedes any prior representations,
understandings and agreements between the parties regarding the
subject matter hereof. There are no representations, understandings
or agreements, oral or written, between the parties regarding the
subject matter hereof that are not fully expressed
herein.
13.7
Severability
.
Any of the provisions of this Agreement which are determined to be
invalid or unenforceable in any jurisdiction shall be ineffective
to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or unenforceable the
remaining provisions hereof and without affecting the validity or
enforceability of any of the terms of this Agreement in any other
jurisdiction.
13.8
Waiver
.
The waiver by either party hereto of any right hereunder or the
failure to perform or of a breach by the other party shall not be
deemed a waiver of any other right hereunder or of any other breach
or failure by said other party whether of a similar nature or
otherwise.
13.9
Counterparts
.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN
WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.
LICENSOR:
ID4
By:
/s/ Xiang-Qun
Xie
Name:
Xiang-Qun Xie,
Ph.D.
Title
Managing
Member
LICENSEE: Oxis
Biotech, Inc.
By:
/s/ Anthony
Cataldo
Name:
Anthony
Cataldo
Title:
Chairman &
CEO
SCHEDULE
A
LICENSED PATENT RIGHTS
1.
PCT/US2012/049911
(WO2013022919A1)
4.
Chinese Patent
Application No. 201280048718; Pre-grant Publ. No.
103930166
SCHEDULE
B
ASSIGNMENT
DOCUMENTS
1.
Assignment document
from University of Pittsburgh to inventors (Patent family of USSN
14/237,494).
2.
Assignment document
from Inventors to Dr. Xiang-Qun Xie (Patent family of USSN
14/237,494) .
3.
Assignment document
from Dr. Xiang-Qun Xie to ID4Pharma, LLC (Patent family of USSN
14/237,494).
SCHEDULE
C
CONSULTING
AGREEMENT
SCHEDULE
D
CONFIDENTIALITY
AGREEMENT
Exhibit 10.2
LICENSE AGREEMENT
THIS
LICENSE AGREEMENT (the “
Agreement
”), effective as
of March 10, 2015 (the “
Effective Date
”), is made
by and between Oxis Biotech, Inc., a Delaware corporation, having a
place of business at 1407 North Beverly Drive, Beverly Hills, CA
90210 (“
OXIS
”) and MultiCell
Immunotherapeutics, Inc., a Delaware
corporation, having a place of business at 68
Cumberland Street, Suite 301, Woonsocket, RI 02895 (hereinafter
“
MCIT
”)
.
WHEREAS, MCIT owns
technology and patent rights in the field of antibody-drug
conjugates;
WHEREAS, OXIS
desires to obtain a license under MCIT’s rights in the field
of antibody-drug conjugates on the terms and conditions set forth
below; and,
WHEREAS, MCIT and
OXIS have entered into a Research Agreement (“RA”),
effective March 10, 2015, to which this License Agreement is an
Exhibit.
NOW,
THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereby agree as
follows:
1. DEFINITIONS
For
purposes of this Agreement, the terms defined in this Section 1
shall have the respective meanings set forth below:
1.1 “Affiliate”
shall mean, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under
common control with, such Person. A Person shall be regarded as in
control of another Person if it owns, or directly or indirectly
controls, at least fifty percent (50%) of the voting stock or other
ownership interest of the other Person, or if it directly or
indirectly possesses the power to direct or cause the direction of
the management and policies of the other Person by any means
whatsoever.
1.2 “Competent
Authority(ies)” shall mean, collectively, (a) the
governmental entities in each country or supranational organization
that is responsible for the regulation of any Licensed Human
Therapeutic Product intended for use in the Exclusive Field or the
establishment, maintenance and/or protection of rights related to
the Licensed IP Rights (including the FDA, the EMEA and the MHLW),
or (b) any other applicable regulatory or administrative agency in
any country or supranational organization that is comparable to, or
a counterpart of, the foregoing.
1.3 “Deliverables”
shall means the Anti-FZD7mAb/O-1663, anti-FZD7mAb/O-1663/Taxol, and
anti-FZD7mAb/XIE3-P62 antibody-drug conjugates delivered by MCIT
pursuant to the RA.
1.4 “EMEA”
shall mean the European Medicines Agency which is responsible for
evaluation of human medicinal products for the European Union, or
the successor thereto.
1.5 “Exclusive
Field” shall mean the use of Licensed Human Therapeutic
Products for
in vivo
treatment of triple negative breast cancer or multiple
myeloma/secondary osteoporosis in humans.
1.6 “FDA”
shall mean the Food and Drug Administration of the United States,
or the successor thereto.
1.7 “MCIT
IP Rights” shall mean, collectively, the MCIT Patent Rights
and the MCIT Technology Know-How Rights.
1.8 “MCIT
Technology Know-How Rights” shall mean all MCIT trade secret
and other know-how rights in and to all data, information,
compositions and other technology (including, but not limited to,
formulae, procedures, protocols, techniques and results of
experimentation and testing arising from the Developed Results
under the RA, as defined therein) which are necessary or useful for
OXIS to make, have made, use, have used, develop, sell, have sold,
or seek regulatory approval to market Licensed Human Therapeutic
Products, or to practice any method or process, at any time claimed
or disclosed in any issued patent or pending patent application
within the Licensed Patent Rights or which otherwise relates to the
Technology.
1.9 “MCIT
Patent Rights” shall mean MCIT’s patent application
listed in Appendix A hereto including all issues, reissues,
renewals, extensions, continuations, continuations-in-part,
divisions and foreign counterparts.
1.10 “Licensed
Human Therapeutic Product” shall mean a Licensed Product that
is synthesized for and intended for
in vivo
therapeutic use in
humans.
1.11 “Licensed
Product” shall mean an antibody-drug conjugate therapeutic
product containing FZD7 monoclonal antibody and either (a)
2-(4-phenylcyclohexyl)-5-(1’,1’-dimethylheptyl)-resorcinol
(“O-1663”) or (b)
2-((3,4-bis(benzyloxy)benzyl)amino)ethan-1-ol (“XRK3”
or “XIE3-P62”) or (c) O-1663 and Taxol, that if made,
used, sold, offered for sale or imported by OXIS or its Affiliate
absent the license granted hereunder would infringe a Valid Claim
of the Licensed Patent Rights, or otherwise use or incorporate the
Licensed Technology Know-How Rights. For convenience, the chemical
structures and alternative names for O-1663, XIE3-P62 and Taxol as
shown in Appendix 2 attached hereto.
1.12 “Licensed
Research Product” shall mean a Licensed Product that is
synthesized for and intended for research use only in preclinical
studies and IND enabling studies
in
vitro and
in vivo
in mammals, other than
humans.
1.13 “NDA”
shall mean a New Drug Application, or a Biological License
Application (“BLA”), or similar application for
marketing approval of a Licensed Human Therapeutic Product
submitted to the FDA, or its foreign equivalent.
1.14 “Net
Sales” shall mean, with respect to any Licensed Human
Therapeutic Product, the gross sales price of such Licensed Human
Therapeutic Product invoiced by OXIS or its Affiliate to customers
who are not Affiliates (or are Affiliates but are the end users of
such Licensed Human Therapeutic Product) less, to the extent
actually paid or accrued by OXIS or its Affiliate (as applicable),
(a) credits, allowances, discounts and rebates to, and chargebacks
from the account of, such customers for nonconforming, damaged, out
dated and returned Licensed Human Therapeutic Product; (b) freight
and insurance costs incurred by OXIS or its Affiliate (as
applicable) in transporting such Licensed Human Therapeutic Product
to such customers; (c) cash, quantity and trade discounts, rebates
and other price reductions for such Licensed Human Therapeutic
Product given to such customers under price reduction programs,
provided that all such discounts shall not exceed 3% of gross sales
price on an annual basis; (d) sales, use, value-added and other
direct taxes incurred on the sale of such Licensed Human
Therapeutic Product to such customers; and (e) customs duties,
tariffs, surcharges and other governmental charges incurred in
exporting or importing such Licensed Human Therapeutic Product to
such customers.
1.15 “Net
Sublicensing Revenues” shall mean, with respect to any
Licensed Human Therapeutic Product, the aggregate cash
consideration received by OXIS or its Affiliates in consideration
for the sublicense under the Licensed Patent Rights or Licensed
Know-How Rights by OXIS or its Affiliates to a Third Party
sub-licensee with respect to such Licensed Human Therapeutic
Product including royalties received by OXIS or its Affiliates
based on sales of such Licensed Human Therapeutic Product by such
sub-licensee, but excluding amounts received to reimburse
OXIS’ or its Affiliates’ cost to perform research,
development or similar services conducted for such Licensed Human
Therapeutic Product after signing the agreement with the Third
Party, in reimbursement of patent or other out-of-pocket expenses
relating to such Licensed Human Therapeutic Product, or in
consideration for the purchase of any debt or securities of OXIS or
its Affiliates.
1.16 “Person”
shall mean an individual, corporation, partnership, limited
liability company (LLC), trust, business trust, association, joint
stock company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
1.17 “Phase
I Clinical Trial” shall mean a human clinical trial that is
intended to initially evaluate the safety and/or pharmacological
effect of a Licensed Human Therapeutic Product in subjects or that
would otherwise satisfy requirements of 21 C.F.R. 312.21(a), or its
foreign equivalent.
1.18 “Phase
II Clinical Trial” shall mean a human clinical trial in any
country that is intended to initially evaluate the effectiveness of
a Licensed Human Therapeutic Product for a particular indication or
indications in patients with the disease or indication under study
or would otherwise satisfy requirements of 21 CFR 312.21(b), or its
foreign equivalent.
1.19 “Phase
III Clinical Trial” shall mean a human clinical trial in any
country, the results of which could be used to establish safety and
efficacy of a Licensed Human Therapeutic Product as a basis for an
NDA or would otherwise satisfy requirements of 21 CFR 312.21(c), or
its foreign equivalent.
1.20
“Registration(s)” shall mean any and all permits,
licenses, authorizations, registrations or regulatory approvals
including an NDA required or granted by any Competent Authority as
a prerequisite to the development, manufacturing, packaging,
marketing and selling of any product.
1.21 “Research
Field” shall mean the use of Licensed Research Products to
conduct pre-clinical and IND enabling studies
in
vitro and
in vivo
in mammals, other than humans,
to target and treat triple negative breast cancer or multiple
myeloma/secondary osteoporosis.
1.22 “Royalty
Term” shall mean, with respect to each Licensed Human
Therapeutic Product in each country, the longer of (i) the term for
which a Valid Claim remains in effect and would be infringed but
for the license granted by this Agreement, by the use, offer for
sale, sale or import of such Licensed Human Therapeutic Product in
such country; or (ii) the term during which Licensed Human
Therapeutic Products made with, using or incorporating the Licensed
Technology Know-How Rights are offered for sale, sold or imported
in such country.
1.23 “Successful
Completion” means with respect to a specified human clinical
trial the achievement as determined by the sponsor of such trial of
the primary clinical endpoint identified in the protocol for such
trial.
1.24
“Territory” shall mean worldwide.
1.25 “Third
Party” shall mean any Person other than MCIT, OXIS and their
respective Affiliates
1.26 “Valid
Claim” shall mean a claim of an issued and unexpired patent
included within the Licensed Patent Rights, which has not been held
permanently revoked, unenforceable or invalid by a decision of a
court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and
which has not been admitted to be invalid or unenforceable through
reissue or disclaimer or otherwise.
2. Representations
and Warranties
2.1 Each
party hereby represents and warrants to the other party as
follows:
2.1.1 Such
party is a corporation duly organized, validly existing and in good
standing under the laws of the state in which it is
incorporated.
2.1.2 Such
party (a) has the corporate power and authority and the legal right
to enter into this Agreement and to perform its obligations
hereunder, and (b) has taken all necessary corporate action on its
part to authorize the execution and delivery of this Agreement and
the performance of its obligations hereunder. This Agreement has
been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against
such party in accordance with its terms.
2.1.3 All
necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained
by such party in connection with this Agreement have been
obtained.
2.1.4 The
execution and delivery of this Agreement and the performance of
such party’s obligations hereunder (a) do not conflict with
or violate any requirement of applicable laws or regulations, and
(b) do not conflict with, or constitute a default under, any
contractual obligation of it.
2.2 MCIT
Representations and Warranties. MCIT hereby represents, warrants
and covenants on its and its Affiliates’ behalf
that:
2.2.1 To
its knowledge, (i) the inventors identified in the Licensed Patent
Rights represent all the inventors of the Licensor Patent Rights in
accordance with United States patent law; and (ii) the inventors
have assigned their full right, title and interest in the MCIT
Patent Rights to MCIT;
2.2.2 MCIT
is the sole owner of the MCIT Patent Rights and the MCIT Technology
Know-How Rights;
2.2.3 The
execution and delivery of this Agreement and its performance by
MCIT will not result in any breach or violation of, or constitute a
default under, any agreement, instrument, judgment or order to
which MCIT is bound.
2.2.5 There
are no invention disclosures, patent applications, or issued
patents other than MCIT Patent Rights in which MCIT has an
ownership interest which discloses or claims any inventions which
are reasonably necessary for the use, manufacture and sale of
Licensed Human Therapeutic Products.
2.2.6 To
its knowledge, sale, offer for sale or importation of any Licensed
Human Therapeutic Product, or the practice of any MCIT Patent
Rights or use of any MCIT Technology Know-How does not infringe or
misappropriate any Third Party patent or other intellectual
property rights, it being acknowledged and agreed by OXIS that
neither MCIT nor OXIS has engaged outside patent counsel to conduct
a freedom to operate search with respect to any MCIT Patent Rights
or any MCIT Technology Know-How.
2.2.7 MCIT
has not received any claim in writing from any Third Party
contesting the validity, enforceability, licensability, use or
ownership of any MCIT Patent Rights or MCIT Technology
Know-How.
2.2.8 There
are no pending declaratory judgment actions, interferences,
oppositions, reissue proceedings or re-examinations involving the
MCIT Patent Rights or MCIT Technology Know-How.
2.3 OXIS
Representations and Warranties. OXIS hereby represents, warrants
and covenants on its and its Affiliates’ behalf
that:
2.3.1 Neither
OXIS nor its Affiliates shall use MCIT Patent Rights or MCIT
Technology Know-How other than as expressly set forth herein and
neither OXIS nor its Affiliates shall misappropriate MCIT Patent
Rights or MCIT Technology Know-How at any time.
2.3.2 OXIS
and its Affiliates shall comply with the intellectual property,
confidentiality and non-use provisions set forth
herein.
2.3.3 OXIS
and its Affiliates shall not attempt to reverse engineer MCIT
Technology Know-How or any Licensed Products manufactured by or on
behalf of MCIT.
2.3.4 The
execution and delivery of this Agreement and its performance by
OXIS will not result in any breach or violation of, or constitute a
default under, any agreement, instrument, judgment or order to
which OXIS is bound.
2.4 EXCEPT
AS SET FORTH IN SECTION 2.2, MCIT MAKES NO GUARANTEES OR
WARRANTIES, EITHER EXPRESS OR IMPLIED, TO OXIS AND SPECIFICALLY
EXCLUDES, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OR USE WITH RESPECT TO MCIT
PATENT RIGHTS OR MCIT TECHNOLOGY KNOW-HOW AND ANY INFORMATION OR
DATA FURNISHED HEREUNDER OR UNDER THE RA, AND NOTHING IN THIS
AGREEMENT SHALL BE CONSTRUED AS:
(I) A
WARRANTY OR REPRESENTATION THAT ANYTHING MADE, USED, SOLD OR
OTHERWISE DISPOSED OF UNDER ANY LICENSE UNDER THIS AGREEMENT IS OR
WILL BE FREE FROM INFRINGEMENT OF VALID, ISSUED PATENTS OF THIRD
PARTIES;
(II) A
REQUIREMENT THAT MCIT SHALL FILE ANY PATENT APPLICATION, SECURE ANY
PATENT OR MAINTAIN OR DEFEND ANY PATENT OR PATENT APPLICATION IN
FORCE;
(III) GRANTING
BY IMPLICATION, ESTOPPEL OR OTHERWISE, ANY LICENSES OR RIGHTS UNDER
PATENTS OF MCIT, REGARDLESS OF WHETHER SUCH OTHER PATENTS ARE
DOMINANT OF OR SUBORDINATE TO ANY OTHER PATENTS;
(IV) AN
OBLIGATION TO BRING OR PROSECUTE ACTIONS OR SUITS AGAINST THIRD
PARTIES FOR INFRINGEMENT; OR
(V) CONFERRING
A RIGHT TO USE IN ADVERTISING, PUBLICITY, OR OTHERWISE ANY
TRADEMARK OR TRADENAME OF MCIT.
2.5 MCIT
MAKES NO REPRESENTATION OR WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED, AND ASSUMES NO RESPONSIBILITIES WHATSOEVER WITH RESPECT
TO MANUFACTURE, USE, SALE, OFFER FOR SALE, IMPORT, TRANSFER, OR
OTHER DISPOSITION OF LICENSED PRODUCTS.
2.6 NOTHING
HEREIN WILL BE CONSTRUED AS A WARRANTY AND/OR REPRESENTATION AS TO
THE SCOPE AND/OR VALIDITY OF ANY CLAIM OF ANY MCIT PATENT RIGHTS OR
THAT ANY MCIT PATENT RIGHT IS ENFORCEABLE.
3. License
Grant.
3.1 Subject
to all terms of this Agreement, MCIT hereby grants
OXIS:
(i) a
fee-bearing, terminable, indivisible, non-transferable, right and
license, with the right to grant sublicenses, to use and consume
the Deliverables solely as necessary to conduct studies within the
Research Field; and
(ii) a
fee-bearing, royalty-bearing, terminable, indivisible,
non-transferable, exclusive right and license, with the right to
grant sublicenses, to sell Licensed Human Therapeutic Products in
the Territory within the Exclusive Field. MCIT shall not assert any
MCIT Patent Rights against OXIS or any permitted sublicensee so
long as such parties exercise the rights in the preceding sentence
as permitted. Nothing contained in this Agreement shall grant OXIS
any interest in MCIT Patent Rights or MCIT Technology Know-How or,
until exercise of the option under Section 4.4 and payment of all
amounts due thereunder, any license to use any of the MCIT Patent
Rights or MCIT Technology Know-How.
3.2 OXIS’
right to grant sublicenses of license in Section 3.1 above to its
Affiliates and to third parties is contingent upon (i) the
sublicensee agreeing to abide by all the terms and provisions of
this Agreement; (ii) OXIS remains fully liable for the performance
of its and its sublicensee’s obligations hereunder; and (iii)
OXIS notifying MCIT of any grant of a sublicense and providing to
MCIT upon MCIT request a copy of any sublicense
agreement.
3.3 Subject
to all terms of this Agreement, and effective only upon exercise of
the Option under Section 4.4 and payment of all amounts due
thereunder, MCIT shall additionally grant to OXIS a fee-bearing,
royalty-bearing, terminable, indivisible, non-transferable,
worldwide right and license, without the right to sublicense, to
use the MCIT Patent Rights and MCIT Technology Know-How solely to
extent required to make or have made Licensed Human Therapeutic
Products for sale and use only in the Exclusive Field in the
Territory.
3.4 For
a period of one (1) year following the date of this Agreement, MCIT
shall provide such technical assistance to OXIS as OXIS reasonably
requests regarding the Licensed Products. OXIS shall pay to MCIT
its documented reasonable out-of-pocket costs of providing such
technical assistance.
3.5 MCIT
acknowledges and agrees that OXIS shall own all Registrations for
Licensed Human Therapeutic Products for sale in the Exclusive Field
in each country in the Territory. Additionally, MCIT acknowledges
and agrees that OXIS shall have the right to conduct pre-clinical
and clinical development activities for Licensed Human Therapeutic
Products in the Territory by using Licensed Research Products
incident to such research activities
in
vitro and
in vivo
in mammals (other than humans)
as permitted in Section 3.1(i) above. For the avoidance of doubt,
OXIS shall have no rights to use any Licensed Research Products to
treat humans
in vivo
. MCIT
hereby grants to OXIS the right to reference, use, and have full
access to all other Registrations and all other regulatory
documents that relate to Licensed Human Therapeutic Products,
including INDs, BLAs, NDAs and DMFs (whether as an independent
document or as part of any NDA, and all chemistry, manufacturing
and controls information), and any supplements, amendments or
updates to the foregoing (for the purposes of this Section, the
“Right of Reference”). OXIS shall have the right to
sub-license the Right of Reference to its sub-licensees and
Affiliates provided said sub-licensees and Affiliates comply fully
with all applicable terms herein. MCIT shall promptly notify OXIS
of any written or oral notices received from, or inspections by any
Competent Authority relating to any such Registrations, and shall
promptly inform OXIS of any responses to such written notices or
inspections and the resolution of any issue raised by such
Competent Authority. OXIS shall be entitled to attend any and all
meetings and participate in telephone calls with the Competent
Authorities, including without limitation any meeting preparation,
meeting co-ordination and preparation of minutes.
3.6 Notwithstanding
anything to the contrary herein, all rights not specifically and
expressly granted in the license above to OXIS shall be reserved
and remain always with MCIT.
4. Financial
Considerations.
4.1 Technology
and License Fees.
4.1.1 As
consideration,
inter alia
,
for the licenses in Section 3.1 herein, OXIS shall pay MCIT a
non-refundable technology and license fee of FIVE HUNDRED THOUSAND
DOLLARS ($500,000) which shall be due and payable according to the
following payment schedule:
(a) TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000) shall be paid to MCIT
immediately upon the Effective Date of this Agreement.
(b) ONE
HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($125,000) shall be paid to
MCIT thirty (30) calendar days after the Effective Date of this
Agreement.
(c) ONE
HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($125,000) shall be paid to
MCIT sixty (60) calendar days after the Effective Date of this
Agreement.
4.2 Royalties.
4.2.1 Subject
to the Royalty Term and the terms and conditions of this Agreement,
OXIS shall pay to MCIT royalties, with respect to each Licensed
Human Therapeutic Product, equal to (a) THREE PERCENT (3.0%) of Net
Sales of such Licensed Human Therapeutic Product by OXIS and its
Affiliates, and (b) THIRTY PERCENT (30%) of Net Sub-licensing
Revenues for such Licensed Human Therapeutic Product.
4.2.2 If
a Licensed Human Therapeutic Product and its components are not
covered by any Valid Claim but are covered by Licensed Technology
Know-How Rights, then OXIS shall pay to MCIT royalties, with
respect to each such Licensed Human Therapeutic Product, equal to
(a) TWO AND ONE-HALF PERCENT (2.5%) of Net Sales of such Licensed
Human Therapeutic Product by OXIS and its Affiliates, and (b)
TWENTY-FIVE PERCENT (25%) of Net Sub-licensing Revenues for such
Licensed Human Therapeutic Product.
4.2.3 Third
Party Royalties. If OXIS, its Affiliates or sub-licensees is
required to pay royalties to any Third Party in order to exercise
its rights hereunder to sell, offer to sale or import any Licensed
Human Therapeutic Product, then OXIS shall have the right to credit
ONE PERCENT (1%) of such Third Party royalty payments against the
royalties owing to MCIT under Section 4.2.1 above with respect to
sales of such Licensed Human Therapeutic Product in such country;
provided, however, that OXIS shall not reduce the amount of the
royalties paid to MCIT under Section 4.2.1 above by reason of this
Section 4.2.2, with respect to sales of such Licensed Human
Therapeutic Product in such country, to less than ONE AND ONE-HALF
PERCENT (1.5%) of Net Sales of such Licensed Human Therapeutic
Product in such country.
4.3 OXIS
shall pay to MCIT the following milestone payments within THIRTY
(30) days following the first achievement of the applicable
milestone:
4.3.1 FIVE
HUNDRED THOUSAND DOLLARS ($500,000) upon dosing of the first
patient in a Phase I clinical trial for each Licensed Human
Therapeutic Product anywhere in the Territory.
4.3.2 SEVEN
HUNDRED FIFTY THOUSAND DOLLARS ($750,000) upon dosing of the first
patient in a Phase II clinical trial for each Licensed Human
Therapeutic Product anywhere in the Territory.
4.3.3 ONE
MILLION THOUSAND DOLLARS ($1,000,000) upon dosing of the first
patient in a Phase III clinical trial for each Licensed Human
Therapeutic Product anywhere in the Territory.
4.3.4 ONE
MILLION DOLLARS ($1,000,000) upon filing of an NDA or equivalent
for each Licensed Human Therapeutic Product anywhere in the
Territory.
4.3.5 ONE
MILLION DOLLARS ($1,000,000) upon the first marketing approval by a
competent regulatory authority for each Licensed Human Therapeutic
Product anywhere in the Territory.
4.4 Manufacturing
Rights to Licensed Human Therapeutic Products.
4.4.1 MCIT
hereby grants to OXIS the option to obtain a worldwide license to
make or have made Licensed Human Therapeutic Products for sale in
the Exclusive Field (“Option”).
4.4.2 The
Option shall expire THREE (3) YEARS from the Effective Date
(“Option Period”) and must be exercised in full prior
to the lapse of the foregoing Option Period.
4.4.3 OXIS
may exercise the Option, during the term of this Agreement, by
delivering to MCIT, prior to the lapse of the Option Period, (i) a
written notice of its election to exercise the Option; and (ii) the
sum of TEN MILLION DOLLARS ($10,000,000). Failure to deliver both
(i) and (ii) in the preceding sentence during the term of this
Agreement and prior to the lapse of the Option Period shall void
the Option.
5. Reports
and Payments.
5.1. On
or before the last business day of January, April, July, and
October of each calendar year of this Agreement, OXIS shall submit
to MCIT a written report with respect to the preceding calendar
quarter (the “Payment Report”) stating:
(i) Net
Sales made by OXIS or any Affiliate during such
quarter;
(ii) In
the case of transfers of Licensed Human Therapeutic Products to an
Affiliate by OXIS for sale, rental, or lease of such Licensed Human
Therapeutic Products by the Affiliate to third parties, Net Sales
by OXIS to the Affiliate and Net Sales by the Affiliate to third
parties during such quarter;
(iii)
Net Sales by sublicensees during such quarter;
(iv)
Amounts accruing to, and received by, OXIS from its sublicensees
during such quarter; and,
(v) A
calculation under Section 4 of the amounts due to LICENSOR, making
reference to the applicable subsection thereof.
5.2.
Within thirty (30)
days of the submission of each Payment Report, OXIS shall make
payments to MCIT of the amounts due for the calendar quarter
covered by the Payment Report. All amounts shall be paid in United
States Dollars. Payments shall be made by OXIS by bank wire
transfer to MCIT’s bank. Payment Reports shall be mailed to
the following address:
MultiCell
Immunotherapeutics, Inc.
68
Cumberland Street, Suite 301
Woonsocket,
RI 02895
Attn:
Chief Executive Officer
6.1 Royalties
shown to have accrued by each royalty report provided for under
Section 5 above shall be due on the date such royalty report is
due. Payment of royalties in whole or in part may be made in
advance of such due date.
6.2 If
at any time legal restrictions prevent the prompt remittance of
part or all royalties with respect to any country in the Territory
where the Licensed Human Therapeutic Product is sold, OXIS shall
have the right, in its sole discretion, to make such payments by
depositing the amount thereof in local currency to MCIT’s
account in a bank or other depository institution in such country.
If the royalty rate specified in this Agreement should exceed the
permissible rate established in any country, the royalty rate for
sales in such country shall be adjusted to the highest legally
permissible or government-approved rate.
6.3 OXIS
shall be entitled to deduct the amount of any withholding taxes,
value-added taxes or other taxes, levies or charges with respect to
such amounts, other than United States taxes, payable by OXIS, its
Affiliates or sub-licensees, or any taxes required to be withheld
by OXIS, its Affiliates or sub-licensees, to the extent OXIS, its
Affiliates or sub-licensees pay to the appropriate governmental
authority on behalf of [Licensor] such taxes, levies or charges.
OXIS shall use reasonable efforts to minimize any such taxes,
levies or charges required to be withheld on behalf of Licensor by
OXIS, its Affiliates or sub-licensees. OXIS promptly shall deliver
to Licensor proof of payment of all such taxes, levies and other
charges, together with copies of all communications from or with
such governmental authority with respect thereto.
7. Research
and Development Obligations.
7.1 OXIS
shall conduct such research, development and preclinical and human
clinical trials as OXIS determines are necessary or desirable to
obtain regulatory approval to manufacture and market such Licensed
Human Therapeutic Products as OXIS determines are commercially
feasible in the Territory and as otherwise required to commence a
Phase I clinical trial for a Licensed Human Therapeutic Product on
or before the 3rd anniversary of the Effective Date, and shall use
its commercially reasonable efforts to obtain regulatory approval
to market, and following approval to commence marketing and market
each such Licensed Human Therapeutic Product in such countries in
the Territory as OXIS determines are commercially
feasible.
7.2
OXIS shall maintain
records, in sufficient detail and in good scientific manner, which
shall reflect all work done and results achieved in the performance
of its research and development regarding the Licensed Human
Therapeutic Products.
7.3 No
less often than every SIX (6) MONTH anniversary after the Effective
Date OXIS shall report in writing to MCIT on progress made toward
the objectives set forth above.
7.4 Notwithstanding
anything else to the contrary, OXIS shall be required to commence a
Phase I clinical trial for a Licensed Human Therapeutic Product
anywhere in the Territory on or before the 3rd anniversary of the
Effective Date.
8. Patents.
8.1 If
OXIS determines that it desires a patent application to be made
covering Licensed Human Therapeutic Products, OXIS will appoint
qualified counsel after reasonable consultation with MCIT and to
whom MCIT has no reasonable objection, and in consultation with
patent counsel appointed by MCIT, OXIS will prepare and prosecute
such application in MCIT’s name and in countries designated
by OXIS. OXIS will handle the filing of the patent applications
with the appropriate patent offices. OXIS shall promptly provide
copies to MCIT of any proposed patent application filing. OXIS
shall in good faith take into consideration the advice and
suggestions of MCIT and its patent counsel with regard to each such
proposed patent application or communication. OXIS will reimburse
MCIT for reasonable expenses it has incurred and will pay
reasonable expenses incurred in the future in so filing and
prosecuting such applications, including attorneys' fees, taxes,
annuities, issue fees, working fees, maintenance fees and renewal
charges. Each party hereto agrees to cooperate with the other party
to execute all lawful papers and instruments, to make all rightful
oaths and declarations and to provide consultation and assistance
as may be necessary in the preparation, prosecution, maintenance,
and reinforcement of all such patent applications and patents. All
such patent applications and any letters patent issued thereupon
shall be added to MCIT Patent Rights and subject to the licenses
herein.
8.2
Each party shall
notify the other party of any substantial infringement in the
Territory known to such party of any MCIT Patent Rights, and shall
provide the other party with the available evidence, if any, of
such infringement.
8.3 MCIT
shall have the right to exclusively determine the appropriate
course of action to enforce MCIT Patent Rights or otherwise abate
the infringement thereof, to take (or refrain from taking)
appropriate action to enforce MCIT Patent Rights, to defend any
declaratory judgments seeking to invalidate or hold the MCIT Patent
Rights unenforceable, to control any litigation or other
enforcement action and to enter into, or permit, the settlement of
any such litigation, declaratory judgments or other enforcement
action with respect to MCIT Patent Rights, in each case in
MCIT’s own name. If MCIT does not, within one hundred twenty
(120) days of receipt of notice from OXIS, abate the infringement
or file suit to enforce the MCIT Patent Rights against at least one
infringing party in the Territory, OXIS shall have the right to
take whatever action it deems appropriate to enforce the MCIT
Patent Rights; provided, however, that, within thirty (30) days
after receipt of notice of OXIS’ intent to file such suit,
MCIT shall have the right to jointly prosecute such suit and to
fund up to one-half (½) the costs of such suit. The party
controlling any such enforcement action shall not settle the action
or otherwise consent to an adverse judgment in such action that
diminishes the rights or interests of the non-controlling party
without the prior written consent of the other party. All monies
recovered upon the final judgment or settlement of any such suit to
enforce the Licensed Patent Rights shall be shared, after
reimbursement of each party’s legal expenses, on a 50%/50%
basis by each party.
8.4 In
any suit to enforce and/or defend the MCIT Patent Rights pursuant
to this Section 8, the party not in control of such suit shall, at
the request and expense of the controlling party, reasonably
cooperate and, to the extent possible, have its employees testify
when requested and make available relevant records, papers,
information, samples, specimens, and the like.
9. Confidentiality.
9.1 During
the term of this Agreement, and for a period of five (5) years
following the expiration or earlier termination hereof, each party
shall maintain in confidence all information of the other party
that is disclosed by the other party and identified as, or
acknowledged to be, confidential at the time of disclosure (the
“Confidential Information”), and shall not use,
disclose or grant the use of the Confidential Information except
(i) with respect to OXIS, as expressly permitted below; and (ii)
with respect to MCIT except on a need-to-know basis to those
directors, officers, affiliates, employees, permitted licensees,
permitted assignees and agents, consultants, clinical investigators
or contractors, to the extent such disclosure is reasonably
necessary in connection MCIT’s performing its obligations or
exercising its rights under this Agreement. To the extent that
disclosure is authorized by this Agreement, prior to disclosure,
each party hereto shall obtain agreement of any such Person to hold
in confidence and not make use of the Confidential Information for
any purpose other than those permitted by this Agreement. Each
party shall notify the other promptly upon discovery of any
unauthorized use or disclosure of the other party’s
Confidential Information.
9.1.1 Notwithstanding
anything else to the contrary herein, any disclosure by OXIS of
Confidential Information to any employee, officer or director of
OXIS is prohibited unless (i) said individual needs to know the
information in order for OXIS to perform its obligations or
exercise its rights under this Agreement; and (ii) said individual
is bound by written obligations of confidentiality, non-use and
intellectual property ownership to OXIS, no less restrictive as the
corresponding obligations binding OXIS hereunder and under the RA;
and
9.1.2 Notwithstanding
anything else to the contrary herein, any disclosure by OXIS of
Confidential Information to any Third Party including but not
limited to consultants, agents, independent contractors, investors,
or business partners is prohibited, except that OXIS is permitted
to disclose portions of Confidential Information to employees of
the California Pacific Medical Center Research Institute or the
University of Pittsburg who have a need to know the information in
order for OXIS to be able to exercise the rights licensed to OXIS
under Section 3.1(i) but only provided the minimum information is
disclosed as required for such purpose; and (ii) each such
recipient is, in each case, bound to OXIS by written obligations of
confidentiality, non-use and intellectual property ownership, no
less restrictive as the corresponding obligations binding OXIS
hereunder and under the RA.
9.2 The
confidentiality obligations contained in Section 9.1 above shall
not apply to the extent that (a) any receiving party (the
“Recipient”) is required (i) to disclose information by
law, regulation or order of a governmental agency or a court of
competent jurisdiction, or (ii) to disclose information to any
governmental agency for purposes of obtaining approval to test or
market a product, provided in either case that the Recipient shall
provide written notice thereof to the other party and sufficient
opportunity to object to any such disclosure or to request
confidential treatment thereof; or (b) the Recipient can
demonstrate that (i) the disclosed information was public
knowledge at the time of such disclosure to the Recipient, or
thereafter became public knowledge, other than as a result of
actions of the Recipient in violation hereof; (ii) the
disclosed information was rightfully known by the Recipient (as
shown by its written records) prior to the date of disclosure to
the Recipient by the other party hereunder; (iii) the
disclosed information was disclosed to the Recipient on an
unrestricted basis from a source unrelated to any party to this
Agreement and not under a duty of confidentiality to the other
party; or (iv) the disclosed information was independently
developed by the Recipient without use of the Confidential
Information disclosed by the other party or breach of this
Agreement.
9.3 Disclosure
of Terms of this Agreement.
9.3.1 Except
as otherwise provided in Section 9.3.2 , MCIT and OXIS shall not
disclose any terms or conditions of this Agreement to any Third
Party without the prior consent of the other party hereto provided,
however, that each party hereto may indicate the existence of this
license with the other party and its terms and conditions in any of
its filings with U.S. Securities Exchange Commission
(“SEC”).
9.3.2 Each
party may issue a press release stating that they have entered into
this Agreement. Said party’s press release must be approved
by the other party in advance of publication, and such approval
will not be unreasonably withheld.
10. Prohibition
Against Use of the Other Party’s Name.
10.1. Neither
party will not use the other party’s the name, insignia,
symbols, or combination thereof, or the name of employee for any
purpose whatsoever without the other party’s prior written
consent, provided, however, that each party hereto may indicate the
existence of this license with the other party in any of its SEC
filings.
11. Compliance
with Governmental Obligations.
11.1 Notwithstanding
any provision in this Agreement, MCIT disclaims any obligation or
liability arising under the license provisions of this Agreement if
OXIS is charged in a governmental action for not complying with or
fails to comply with governmental regulations in the course of
taking steps to bring any Licensed Human Therapeutic Product to a
point of practical application.
11.2. OXIS
shall comply with all governmental requests directed to OXIS or
(upon reasonable notice from MCIT) to LICENSOR and provide all
information and assistance reasonably necessary to comply with
legitimate governmental requests.
11.3 OXIS
shall insure that research, development, and marketing under this
Agreement complies with all government regulations in force and
effect including, but not limited to, Federal, state, and municipal
legislation.
12. Indemnification.
12.1 OXIS
shall defend, indemnify and hold MCIT and its directors, officers,
employees, agents and affiliates harmless from all losses,
liabilities, damages and expenses (including attorneys’ fees
and costs) incurred as a result of any claim, demand, action or
proceeding arising out of (i) any breach of the representations,
warranties and covenants of OXIS in Section 2.2; (ii) any use of
the MCIT Patent Rights and/or MCIT Technology Know-How by OXIS,
whether authorized or not; (iii) any manufacture, storage,
transportation, sale or use or Licensed Human Therapeutic Products;
(iv) the use of any Licensed Research Products
in vivo
in humans; and (v) the
negligence or willful misconduct of OXIS in the performance of its
obligations under this Agreement.
12.2 MCIT
promptly shall notify OXIS of any liability or action in respect of
which MCIT intends to claim such indemnification and OXIS shall
have the right to assume the defense thereof with counsel selected
by OXIS. The indemnity agreement in this Section 12 shall not
apply to amounts paid in settlement of any loss, claim, damage,
liability or action if such settlement is effected without the
consent of OXIS, which consent shall not be withheld unreasonably.
The failure to deliver notice to OXIS within a reasonable time
after the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve OXIS of any liability
to Licensor under this Section 12, but the omission so to
deliver notice to OXIS will not relieve it of any liability that it
may have to Licensor otherwise than under this Section 12.
MCIT under this Section 12, its employees and agents, shall
cooperate fully with OXIS and its legal representatives in the
investigation and defense of any action, claim or liability covered
by this indemnification.
12.3 OXIS
shall maintain product liability insurance with respect to the
research, development, manufacture and sales of Licensed Human
Therapeutic Products by OXIS in such amount as OXIS customarily
maintains with respect to the research, development, manufacture
and sales of its similar products. OXIS shall maintain such
insurance for so long as it continues to research, develop,
manufacture or sell any Licensed Human Therapeutic Products, and
thereafter for so long as OXIS customarily maintains insurance
covering the research, development, manufacture or sale of its
similar products.
12.4 NOTWITHSTANDING
ANYTHING TO THE CONTRARY HEREIN, EXCEPT FOR OXIS’ VIOLATION
OF MCIT’S INTELLECTUAL PROPERTY RIGHTS OR EXCEEDING SCOPE OF
ANY LICENSE RIGHTS HEREIN, NO PARTY SHALL BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES,
WHETHER FORESEEABLE OR NOT, THAT ARE IN ANY WAY RELATED TO THIS
AGREEMENT OR THE BREACH THEREOF, ANY TRANSACTIONS RESULTING FROM
THIS AGREEMENT, LOSS OF GOODWILL OR PROFITS, LOST BUSINESS HOWEVER
CHARACTERIZED AND/OR FROM ANY OTHER CAUSE WHATSOEVER, EVEN THOUGH
THE PARTY MAY HAVE BEEN ADVISED OR MAY OTHERWISE KNOW OF THE
POSSIBILITY OF SUCH DAMAGES.
13. Force
Majeure.
13.1. Neither
party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this
Agreement to the extent, and for so long as, such failure or delay
is caused by or results from causes beyond the reasonable control
of the affected party including but not limited to fire, floods,
embargoes, war, acts of war (whether war be declared or not), acts
of terrorism, insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority or the
other party.
14. Export
Control Laws.
14.1. This
Agreement is made subject to any restrictions concerning the export
of products or technical information from the United States of
America which may be imposed from time to time by the government of
the United States of America. Furthermore, each party hereto agrees
that it will not export or re-export, directly or indirectly, any
technical information acquired from the other under this Agreement
or any products using such technical information to any country for
which the United States government or any agency thereof at the
time of export requires an export license or other governmental
approval, without first obtaining the written consent to do so from
the Department of Commerce or other agency of the United States
government when required by an applicable statute or
regulation.
15. Termination.
15.1 Subject
to Sections 15.2 and 15.3 below, this Agreement shall expire on the
expiration of OXIS’ obligation to pay royalties to MCIT under
Section 4 above. The licenses granted under Section 3.1, and if the
Option is fully exercised as permitted herein, 3.3, shall be
effective at all times prior to such expiration.
15.2 OXIS
may terminate this Agreement, in its sole discretion, upon THIRTY
(30) DAYS prior written notice to MCIT.
15.3. Except
as otherwise provided in Section 13, MCIT may terminate this
Agreement upon or after the breach of any provision of this
Agreement by OXIS if OXIS has not cured such breach within THIRTY
(30) DAYS after receipt of express written notice thereof by
MCIT.
15.4 Expiration
or termination of this Agreement shall not relieve the parties of
any obligation accruing prior to such expiration or termination,
and the provisions of Sections 8, 9, 10, 11, 12, 14, and 15
and any other provisions which, by their terms, survive termination
in order to give effect to their terms, shall survive the
expiration or termination of this Agreement.
16. Miscellaneous.
16.1 Any
consent, notice or report required or permitted to be given or made
under this Agreement by one of the parties hereto to the other
party shall be in writing, delivered by any lawful means to such
other party’s Chief Executive Officer at the address
indicated below, or to such other address as one party shall have
last furnished in writing to the other party, and (except as
otherwise provided in this Agreement) shall be effective upon
receipt by the receiving party.
If
to:
MultiCell
Immunotherapeutics, Inc.
68
Cumberland Street, Suite 301
Woonsocket,
RI 02895
If
to:
Oxis Biotech,
Inc.
1407
North Beverly Drive
Beverly
Hills, CA 90210
16.2 All
payments made to MCIT required or permitted under this Agreement
shall be made as follows by bank wire transfer:
ACCOUNT
NAME:
|
|
ACCOUNT
NUMBER:
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BANK
NAME:
|
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BANK
ADDRESS:
|
|
BANK
WIRE TRANSFER ROUTING NUMBER:
|
|
16.3 Neither
party shall assign its rights or obligations under this Agreement
without the prior written consent of the other party; provided,
however, that either party may, without such consent, assign this
Agreement and its rights and obligations hereunder (a) to any
Affiliate, or (b) in connection with the transfer or sale of
all or substantially all of its business to which this Agreement
relates, or in the event of its merger, consolidation, change in
control or similar transaction. Any permitted assignee shall assume
all obligations of its assignor under this Agreement.
16.3 This
Agreement shall be governed
by and construed in accordance
with the laws of the State of California, without regard to the
conflicts of law principles thereof.
16.4 Any
dispute, controversy or claim initiated by either party arising out
of, resulting from or relating to this Agreement, or the
performance by either party of its obligations under this Agreement
(other than (a) any dispute, controversy or claim regarding
the validity, enforceability, claim construction or infringement of
any patent rights, or defenses to any of the foregoing, or
(b) any bona fide third party action or proceeding filed or
instituted in an action or proceeding by a Third Party against a
party to this Agreement), whether before or after termination of
this Agreement, shall be finally resolved by binding arbitration.
Whenever a party shall decide to institute arbitration proceedings,
it shall give written notice to that effect to the other party. Any
such arbitration shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association by a
panel of three arbitrators appointed in accordance with such rules.
Any such arbitration shall be held in San Francisco, California.
The method and manner of discovery in any such arbitration
proceeding shall be governed by California Code of Civil Procedure
§ 1282 et seq. (including without limitation California Code
of Civil Procedure § 1283.05). The arbitrators shall have the
authority to grant specific performance and to allocate between the
parties the costs of arbitration in such equitable manner as they
determine. Judgment upon the award so rendered may be entered in
any court having jurisdiction or application may be made to such
court for judicial acceptance of any award and an order of
enforcement, as the case may be. In no event shall a demand for
arbitration be made after the date when institution of a legal or
equitable proceeding based upon such claim, dispute or other matter
in question would be barred by the applicable statute of
limitations. Notwithstanding the foregoing, either party shall have
the right, without waiving any right or remedy available to such
party under this Agreement or otherwise, to seek and obtain from
any court of competent jurisdiction any interim or provisional
relief that is necessary or desirable to protect the rights or
property of such party, pending the selection of the arbitrators
hereunder or pending the arbitrators’ determination of any
dispute, controversy or claim hereunder.
16.5 OXIS
will inform MCIT within five (5) business days of any regulatory
approval for a Licensed Human Therapeutic Product, and will assist
MCIT to apply for applicable extension of exclusivity, whether by
patent extension, special protection certificate, data exclusivity,
or the like.
16.6 No
change, modification, extension, termination or waiver of this
Agreement, or any of the provisions herein contained, shall be
valid unless made in writing and signed by duly authorized
representatives of the parties hereto.
16.7 This
Agreement embodies the entire agreement between the parties and
supersedes any prior representations, understandings and agreements
between the parties regarding the subject matter hereof. There are
no representations, understandings or agreements, oral or written,
between the parties regarding the subject matter hereof that are
not fully expressed herein.
16.8 Any
of the provisions of this Agreement which are determined to be
invalid or unenforceable in any jurisdiction shall be ineffective
to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or unenforceable the
remaining provisions hereof and without affecting the validity or
enforceability of any of the terms of this Agreement in any other
jurisdiction.
16.9 The
waiver by either party hereto of any right hereunder or the failure
to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or
failure by said other party whether of a similar nature or
otherwise.
16.10 This
Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN
WITNESS THEREOF, MCIT and OXIS have caused this Agreement to be
executed by their duly authorized representatives as of the day and
year first written above.
For MultiCell Immunotherapeutics, Inc.:
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For Oxis Biotech, Inc.:
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/s/ W.
Gerald Newmin
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/s/
Anthony J. Cataldo
|
W.
Gerald Newmin
|
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Anthony
J. Cataldo
|
Chairman
& Chief Executive Officer
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Chairman
& Chief Executive Officer
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Title
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Title
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Exhibit 10.3
|
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Internal
University Use Only
OTC
Agreement No.:
OTC
Case No.(s):
Document
Revision Date:
|
University of
Minnesota
EXCLUSIVE PATENT LICENSE AGREEMENT
THIS EXCLUSIVE PATENT LICENSE AGREEMENT
(this “Agreement”) is made by and between Regents of
the University of Minnesota, a constitutional corporation under the
laws of the state of Minnesota, having a place of business at 200
Oak Street, SE, Suite 280, Minneapolis, Minnesota 55455 (the
“University”), and the Licensee identified below. The
University and the Licensee agree that:
The
Terms and Conditions of Exclusive Patent License attached hereto as
Exhibit A (the “Terms and Conditions”) are incorporated
herein by reference in their entirety. In the event of a conflict
between provisions of this Agreement and the Terms and Conditions,
the provisions in this Agreement shall govern. Capitalized terms
used in this Agreement without definition shall have the meanings
given to them in the Terms and Conditions. The section numbers used
in the parentheses below correspond to the section numbers in the
Terms and Conditions.
1.
Licensee (§1.8):
Oxis Biotech,
Inc., a corporation under the laws of Delaware, having its
principal offices at
100 South Ashley
Drive, Suite 600
Tampa, FL 33602
2.
Field(s) of Use
(§1.3):
All
3.
Territory (§1.16):
Any country or
territory where unexpired Licensed Patents exist.
4.
Effective Date (§2):
Date of the
last signature of the Agreement.
FORM:
OGC-401
Exclusive
Patent License Agreement
Form
Date: 12.18.01
Revision
Date: 6/19/2016
1
5.
Licensed
Patents and Technical Information:
5.1 Patents(s)
(
§
1.4):
NONE
5.2
Patent Applications
(
§
1.5):
Application
No.
|
Country
|
Filing
Date
|
Title
|
62/237,835
|
USA
|
October
6, 2015
|
Therapeutic
compounds and its uses
|
5.3
Technical
Information:
☒
None
6.
Patent-Related Expenses (§§1.10 &
6.3):
The Licensee shall reimburse the University for
Patent-Related Expenses incurred before and during the Term as
provided in section 6.3 of the attached Terms and
Conditions.
7.
Sublicense Rights (§3.1.2):
[Select
one of the following]
8.
Federal Government Rights (§3.2):
[Select one of the following]
9.
Performance Milestones (§5.1):
The
Licensee shall achieve the following milestones:
➢
Perform First
dosing of first patient in a Phase I clinical trial for the
Licensed Product within 24 months from the Effective
Date;
➢
Perform the first
dosing of a patient in a Phase II clinical trial for the Licensed
Product within 48 months from the Effective Date.
➢
Perform the first
dosing of a patient in a Phase III clinical trial within 84 months
from the Effective Date;
➢
Obtain regulatory
approval for commercial sale of the Licensed Product in the
Territory within 120 months from the Effective Date.
By
March 1 of each year, Licensee will submit a written annual report
to University covering the preceding calendar year. The report will
include information sufficient to enable University to satisfy
reporting requirements of the U.S. Government and for University to
ascertain progress by Licensee toward meeting this
Agreement’s diligence requirement. Each report will describe,
where relevant: Licensee’s progress toward commercialization
of Licensed Product, including work completed, key scientific
discoveries, summary of work-in-progress, current schedule of
anticipated events or milestones, market plans for introduction of
Licensed Product, and significant corporate transactions involving
Licensed Product. Licensee will specifically describe how each
Licensed Product is related to each Licensed Patent.
10.
Commercialization Reports (§5.4):
On each anniversary of the Effective Date, the Licensee shall
deliver written commercialization reports to the University as
provided in section 5.4 of the Terms and Conditions.
11.
Payments (§6.1).
All amounts are
non-refundable, and payable as defined below or as specified in the
University’s invoice.
11.1
Upfront Payment
: $200,000 payable as
follows: $75,000 is payable within 15 calendar days after the
Effective Date. The remaining $125,000 is payable within 6 months
of the Effective Date of the Agreement. For clarification,
Licensee’s obligation to pay the full amount of $200,000
survives any termination by Licensee pursuant to Section 8.2 of the
Terms and Conditions and would be in addition to the early
termination fee set forth in Section 8.2 of the Terms and
Conditions
11.2
License Maintenance Fee
.
➢
$25,000, payable on
the first and second anniversary of the Effective Date
➢
$50,000, payable on
the third and fourth anniversary of the Effective
Date.
➢
$100,000, payable
on the fifth anniversary of the Effective Date an on each
anniversary of the Effective Date thereafter.
11.3
Document Fee
: None.
11.4
Running Royalties on Net Sales
. Licensee
shall pay the University a royalty of four percent (4%) of Net
Sales of Licensed Product, determined and payable as provided in
section 6.4 of the Terms and Conditions. For clarification,
Licensee intends to sponsor research at the University which may
result in additional inventions, for which Licensee will have an
opportunity to negotiate a license. If Licensee develops products
which are covered by a Licensed Patent or Technical Information
under this Agreement and also is covered by the claims in a patent
for any inventions developed by the University, the maximum royalty
for which Licensee will be obligated to pay under a subsequent
license agreement or amendment to this Agreement will not exceed
6%.
11.5
Annual
Minimum.
The annual minimum amount of Royalties owed by the
Licensee under subsection 11.4.1, upon commencement of commercial
sales, shall be $250,000 beginning in Year 2022; $2,000,000,
beginning in year 2025; and $5,000,000 beginning in year 2027
throughout the remainder of the term.).
11.5
Non-Royalty Sublicense
Consideration
:
➢
Licensee shall pay
the University 50% of all Non-Royalty Sublicensee Consideration
received by Licensee prior to the initiation of a Phase I clinical
trial.
➢
Licensee shall pay
the University 25% of all Non-Royalty Sublicensee Consideration
received by Licensee after the initiation of a Phase I clinical
trial but prior to the initiation of a Phase III clinical
trial
➢
Licensee shall pay
the University 15% of all Non-Royalty Sublicensee Consideration
received by Licensee after regulatory approval of the first
Licensed Product for commercial sale in North America, the European
Union, Japan, or Australia.
11.8
Change
of Control Fee
: One hundred fifty thousand dollars
($50,000.00), payable as provided in section 12.5 of the Terms and
Conditions.
11.9
Performance
Milestone Payments:
11.9.1 Clinical
Development Milestones:
➢
$100,000 upon
dosing of the first human subject in a Phase I clinical trial of a
Licensed Product;
➢
$250,000 upon
dosing of a first human subject in a Phase II clinical trial of a
Licensed Product;
➢
$500,000 upon
dosing of a first human subject in a Phase III clinical trial of a
Licensed Product;
➢
$500,000 upon
filing of an BLA with FDA (or EMEA or an equivalent authority in)
in any jurisdiction, for a Licensed Product;
➢
$1,000,000
following the first commercial sale of a Licensed
Product;
➢
$500,000 for the
second commercial sale of a Licensed Product.
➢
$250,000 for the
first commercial sale of a Licensed Product for any non-human
use.
11.9.2 Patent
issuance milestone:
➢
A one-time $50,000
payment due upon issuance of a Licensed Patent in any of Australia,
European Union, Japan, the U.S. or Canada including a valid claim
to a Licensed Product.
11.9.3 Sales
Milestones (one time):
➢
$1,000,000 upon
reaching 250 Million dollars in cumulative gross sales of Licensed
Products.
➢
$5,000,000 upon
reaching 500 Million dollars in cumulative gross sales of Licensed
Products.
11.7 Equity:
None
12.
Licensee’s Address for Notice
(§12.13).
Notices will be sent to the Licensee
at:
Attn:
Anthony J. Cataldo
Chairman &
Chief Executive Officer
Oxis
Biotech, Inc.
4830
West Kennedy Boulevard, Suite 600
Tampa,
Florida 33609
Facsimile No.:
Email:
cataldo14@aol.com
13.
Licensee’s Contact Person for Patent
Prosecution Consultation (§4.2.1)
.
The University will, as set forth
in this Agreement, communicate with the contact person named below
with respect to patent prosecution and maintenance: (Upon ten (10)
days prior written notice to the University, the Licensee may
change the person designated below.)
Lisa A.
Haile, J.D., Ph.D.
DLA
Piper LLP (US)
4365
Executive Drive, Suite 1100
San
Diego, California 92121
858.677.1456
T
858.735.2456
C
858.638.5040
F
lisa.haile@dlapiper.com
IN WITNESS WHEREOF,
the parties hereto
have caused their duly authorized representatives to execute this
Agreement.
Regents
of the University of Minnesota
|
|
Oxis
Biotech, Inc
|
|
|
|
By:
/s/ Jay W.
Schrankler
|
|
By:
/s/ Anthony J.
Cataldo
|
Jay W.
Schrankler
|
|
Anthony J.
Cataldo
|
Executive
Director
|
|
Chairman &
Chief Executive Officer
|
Office for
Technology Commercialization
|
|
|
|
|
|
Date: July 15,
2016
|
|
Date: July 18,
2016
|
|
|
|
University of
Minnesota
EXHIBIT A
Terms and Conditions
Exclusive Patent License Agreement
These
terms and conditions to the Exclusive Patent License Agreement
(“Terms and Conditions”) govern the grant of license by
Regents of the University of Minnesota (“University”)
to the Licensee identified in the Exclusive Patent License
Agreement (the “EPLA”). These Terms and Conditions are
incorporated by reference into the EPLA. All section references in
these Terms and Conditions refer to provisions in these Terms and
Conditions unless explicitly stated otherwise.
1.
Definitions.
For purposes of
interpreting this Agreement, the following terms have the following
meanings:
1.1
“Affiliate”
means an entity that controls the Licensee or the sublicensee, as
the case may be, is controlled by the Licensee or sublicensee, or
along with the Licensee or sublicensee, is under the common control
of a Third Party. An entity shall be deemed to have control of the
controlled entity if it (i) owns, directly or indirectly, fifty
percent (50%) or more of the outstanding voting securities of the
controlled entity, or (ii) has the right, power or authority,
directly or indirectly, to direct or cause the direction of the
policy decisions of the controlled entity, whether by ownership of
securities, by representation on the controlled entity’s
governing body, by contract, or otherwise.
1.2
“Change of
Control” means (A) acquisition of ownership -- either
directly or indirectly. by any person or group -- of the capital
stock of Licensee representing more than 50% of either the
aggregate ordinary voting power or the aggregate equity value
represented by the issued and outstanding capital stock of the
Licensee; and/or (B) the sale of all or substantially all the
Licensee’s assets and/or business in one transaction or in a
series of related transactions.
1.3
"Exclusive" means
that, subject to Sections 3.2 and 3.3, University will not grant
further licenses under the Licensed Patent or Licensed Patent
Applications in the Field of Use in the Territory.
1.3
“Field of
Use” means the field(s) of use described in section 2 of the
EPLA.
1.4
“Licensed
Patent” means the (i) the patent(s) described in section 5.1
and (ii) the patent applications described in Section 5.2 of the
EPLA, along with any issued and unexpired patent(s) issued during
the Term that arose out of and claim priority to such patent
applications, such as for example, continuations, divisionals,
continuation-in-part, or foreign applications. “Licensed
Patent” also means any reissues or reexaminations of a
Licensed Patent that contain one or more valid claims directed to
Licensed Technology. Any claim of an unexpired Licensed Patent is
presumed to be valid unless it has been held to be invalid by a
final judgment of a court of competent jurisdictions from which no
appeal can be or is taken.
1.6
“Licensed
Product(s)” means any product or part of a product in the
Field of Use:
(i)
the making, using,
importing or selling of which, absent this license, infringes,
induces infringement, or contributes to infringement of a Licensed
Patent; or
(ii)
which is made with,
uses, was derived from, identified or validated by, incorporates,
or was developed in whole or in part using any Technical
Information.
1.7
“Licensee”
means the entity identified in section 1 of the EPLA.
1.9 “Net
Sales” means
all
gross derived by Licensee, its Affiliates, or sublicensees, their
distributors or designees from the sale, transfer or other
disposition of Licensed Product to an end user. Net Sales excludes
the following items: (i) all trade, quantity, and cash discounts
actually allowed, (ii) all credits and allowances actually granted
due to rejections, returns, billing errors, and retroactive price
reductions, (iii) applicable duties, and (iv) applicable excise,
sale and use taxes.
1.10 “Nonroyalty
Sublicensing Consideration” means any consideration received
by Licensee from a sublicensee other than (i) royalties on product
sales (royalties on product sales by sublicensees will be treated
as if Licensee made the sale of such product).
1.10
“Patent-Related
Expenses” means costs and expenses (including out-of-pocket
attorneys’ fees, patent agent fees and governmental filing
fees) that the University incurs in prosecuting and maintaining the
Licensed Licensed Patents.
1.11
“Performance
Milestone” means an act or event specified in section 5.1 and
described in section 9 of the EPLA.
1.16
“Territory”
means the geographical area described in section 3 of the
EPLA.
1.17
“Third
Party” means any party other than the University or
Licensee.
1.18
“University
Indemnitees” means University, its respective regents,
officers, employees, students, agents, faculty, representatives,
and volunteers.
2.
Term.
The term of this Agreement
commences on the Effective Date as defined in section 4 of the EPLA
and, unless terminated earlier as provided in section 8, expires on
the date on which both no Licensed Patent is active in the
Territory and no Licensed Patent Application is pending in the
Territory (the “Term”).
3.1
The
Licensee’s Rights.
3.1.1
Licensed Patent.
Subject to the terms and conditions of this Agreement, the
University hereby grants to the Licensee an Exclusive license
(sub-licensable if Section 7 of the EPLA is marked
“Yes”) under the Licensed Patent in the Field of Use to
make, have made, use, import, offer to sell and sell Licensed
Product in the Territory.
3.1.2
Technical
Information (unless “None” is selected in Section 5.3
of the EPLA). Subject to the terms and conditions of this
Agreement, the University hereby grants to the Licensee a
non-exclusive license to use the Technical
Information.
3.1.3
Specific Exclusion.
University does not grant any other rights under this Agreement
except as contained in Section 3.1.1 and 3.1.2. Except as may be
provided under Section 3.1.2, the University does not agree to
furnish to Licensee any technical information. Additionally, the
University has not agreed to provide Licensee with any assistance
under this Agreement.
3.2
The
University’s Retained Rights. The University retains on
behalf of itself and all other non-profit research institutions, to
practice the Licensed Patent for any non-profit purpose, including
research, teaching, and educational purposes. Licensee agrees that,
notwithstanding any other provision of this Agreement, it has no
right to enforce the Licensed Patent against any such institution
using the Licensed Patent for non-profit purposes.
3.3
Right of U.S. Government. [Applicable if Section 5 of the EPLA is
checked “Yes.”] This Agreement is subject to Title 35
Sections 200-204 of the United States Code. Among other things,
these provisions provide the United States Government with
nonexclusive rights in the Licensed Patent. They also impose the
obligation that the Licensed Product sold or produced in the United
States be “manufactured substantially in the United
States.” Licensee will ensure all obligations of these
provisions are met.
4.
Applications
and Patents.
4.1
Pre-EPLA Patent
Filings. The Licensee acknowledges that it has reviewed each
Licensed Patent and each Licensed Patent Application and that it
will not dispute the inventorship, validity, or enforceability of
any of the claims made in a Licensed Patent or a Licensed Patent
Application. The Licensee further represents that as of the
Effective Date, it has not and does not manufacture, have
manufactured, offer to sell, sell, offer to lease, lease, or import
(a) any product or good that infringes (including under the
doctrine of equivalents) a claim in any Licensed Patent or Licensed
Patent Application, or (b) any product or good that is made using a
process or machine that infringes (including under the doctrine of
equivalents) a claim in a Licensed Patent or Licensed Patent
Application.
4.2
Patent Application
Filings during the Term of this Agreement.
4.2.1
The University, in
consultation with the Licensee, shall determine in which countries
patent application(s) will be filed and prosecuted with respect to
the Licensed Technology. The University shall retain counsel of its
choice to file and prosecute such patent applications. The
University will inform the Licensee of the status of the
prosecution of the patent application, including delivering to the
Licensee pertinent notices, written and oral communications with
governmental officials, and documents, and shall consult with the
Licensee on the prosecution of the patent application. The Licensee
shall cooperate with the University in the filing and prosecution
of all patent applications with respect to the Licensed Technology.
In furtherance of the foregoing, the Licensee shall notify the
University, in writing, of the individual whom the Licensee has
designated to consult and cooperate as provided in this subsection
and is identified in section 13 of the EPLA. The Contact Person
shall respond to the University’s request for consultation
and cooperation on a pending matter within five business days or
sooner as may be required under the circumstances. If the Contact
Person fails to respond in such time period, the University,
exercising its own judgment and discretion, may respond to the
matter as it deems appropriate. Except as provided in subsection
4.2.2, the Licensee shall reimburse the University for all
Patent-Related Expenses as provided in section 6.3 and in section 6
of the EPLA.
4.2.2
The grant of
license in section 3.1 and the definition of Territory in section
1.16 shall not extend to or include any country in which Licensee
elects, in writing to the University, not to pay or reimburse the
payment of the cost, in whole or in part, to seek or maintain
intellectual property protection.
4.2.3
No provision of
this Agreement limits, conditions, or otherwise affects the
University’s right to prosecute a patent application with
respect to the Licensed Technology in any country. The University
retains the sole and exclusive right to file or otherwise prosecute
a patent application with respect to the Licensed Technology. In no
event shall the Licensee file a patent application with respect to
the Licensed Technology. The Licensee shall cooperate with the
University in the filing and prosecution of all patent applications
with respect to the Licensed Technology.
4.3
Rights in the
Licensed Patents and Licensed Patent Applications. No provision of
this Agreement grants the Licensee any rights, titles, or interests
(except for the grant of license in subsection 3.1.1) in the
Licensed Patents or Licensed Patent Applications, notwithstanding
the Licensee’s payment of all or any portion of the patent
prosecution, maintenance, and related costs.
5.1
Commercialization
and Performance Milestones. The Licensee shall use its commercially
reasonable efforts, consistent with sound and reasonable business
practices and judgment, to commercialize the Licensed Technology
and to manufacture and offer to sell and sell Licensed Products as
soon as practicable and to maximize sales thereof. The Licensee
shall perform, or shall cause to happen or be performed, as the
case may be, all the performance milestones described in section 9
of the EPLA.
5.2
Covenants Regarding
the Manufacture of Licensed Products. The Licensee hereby covenants
and agrees that (i) the manufacture, use, sale, or transfer of
Licensed Products shall comply with all applicable federal and
state laws, including all federal export laws and regulations; and
(ii) the Licensed Products shall not be defective in design or
manufacture. The Licensee hereby further covenants and agrees that,
pursuant to 35 United States Code Section 204, it shall, and it
shall cause each sublicensee, to substantially manufacture in the
United States of America all products embodying or produced through
the use of an invention that is subject to the rights of the
federal government of the United States of America.
5.3
Export and
Regulatory Compliance.
The
Licensee understands that the Arms
Export Control Act (AECA), including its implementing International
Traffic In Arms Regulations (ITAR,) and the Export Administration
Act (EAA), including its Export Administration Regulations (EAR),
are some (but not all) of the laws and regulations that comprise
the U.S. export laws and regulations. Licensee further understands
that the U.S. export laws and regulations include (but are not
limited to): (i) ITAR and EAR product/service/data-specific
requirements; (ii) ITAR and EAR ultimate destination-specific
requirements; (iii) ITAR and EAR end user-specific requirements;
(iv) Foreign Corrupt Practices Act; and (v) antiboycott laws and
regulations. The Licensee shall comply with all then-current
applicable export laws and regulations of the U.S. Government (and
other applicable U.S. laws and regulations) pertaining to the
Licensed Products (including any associated products, items,
articles, computer software, media, services, technical data, and
other information). The Licensee certifies that it shall not,
directly or indirectly, export (including any deemed export), nor
re-export (including any deemed re-export) the Licensed Products
(including any associated products, items, articles, computer
software, media, services, technical data, and other information)
in violation of U.S. export laws and regulations or other
applicable U.S. laws and regulations. The Licensee shall include an
appropriate provision in its agreements with its authorized
sublicensees to assure that these parties comply with all
then-current applicable U.S. export laws and regulations and other
applicable U.S. laws and regulations.
5.4
Commercialization
Reports. Throughout the Term and during the Post-termination
Period, and within thirty (30) days of the date specified in the
schedule set forth in section 10 of the EPLA, the Licensee shall
deliver to the University written reports of the Licensee’s
and the sublicensees’ efforts and plans to commercialize the
Licensed Technology and to manufacture, offer to sell, or sell
Licensed Products.
5.5
Use of the
University’s Name and Trademarks or the Names of University
Faculty, Staff, or Students. No provision of this Agreement grants
the Licensee or sublicensee any right or license to use the name,
logo, or any marks owned by or associated with the University or
the names, or identities of any member of the faculty, staff, or
student body of the University. The Licensee shall not use and
shall not permit a sublicensee to use any such logos, marks, names,
or identities without the University’s prior written
approval.
5.6
Governmental
Markings.
5.6.1
The Licensee shall
mark all Licensed Products, where feasible, with patent notice
appropriate under Title 35, United States Code.
5.6.2
The Licensee is
responsible for obtaining all necessary governmental approvals for
the development, production, distribution, sale, and use of any
Licensed Product, at the Licensee’s expense, including,
without limitation, any safety studies. The Licensee is responsible
for including with the Licensed Product any warning labels,
packaging and instructions as to the use and the quality control
for any Licensed Product.
5.6.3
The Licensee agrees
to register this Agreement with any foreign governmental agency
that requires such registration, and the Licensee shall pay all
costs and legal fees in connection with such registration. The
Licensee shall comply with all foreign laws affecting this
Agreement or the sale of Licensed Products.
6.
Payments,
Reimbursements, Reports, and Records.
6.1
Payments. The
Licensee shall pay all amounts due under this Agreement by check
(payable to the “Regents of the University of
Minnesota” and sent to the address specified in section
12.13), wire transfer, or any other mutually agreed-upon method of
payment.
6.2
Interest.
All amounts due under this Agreement shall bear interest at 12% per
annum on the entire unpaid balance computed from the due date until
the amount is paid.
6.3
Reimbursement of
Patent-Related Expenses. The Licensee shall pay invoices for
Patent-Related Expenses under this Agreement within thirty (30)
days of its receipt of the University’s invoice. With respect
to each invoice, the University shall use reasonable efforts to
specify the date on which the Patent-Related Expense was incurred
and the purpose of the expense (including, as applicable, a summary
of patent attorney services giving rise to the expense); provided,
however, the University is not required to disclose to the Licensee
any information that is protected by the University’s
attorney-client privilege. Patent-Related Expenses incurred as of
the Effective Date are set forth in section 6 of the EPLA. The
University reserves the right to require that Licensee provide and
maintain a reasonable advance deposit with the University or some
other form of security to ensure payment of Patent-Related
Expenses.
6.4
Royalty
Payments/Sales Reports. Within sixty (60) days after the last day
of the second and fourth calendar quarters during the Term and the
Post-termination Period, the Licensee shall deliver to the
University a written sales report in the form acceptable to the
University, recounting the number and Net Sales Amount (expressed
in U. S. dollars) of all sales, leases, or other dispositions of
Licensed Products, whether made by the Licensee or a sublicensee,
during such semi-annual period. The Licensee shall deliver such
written report to the University even if the Licensee is not
required hereunder to pay to the University a payment for sales,
leases, or other dispositions of Licensed Products during the
semi-annual period. The Licensee shall deliver along with such
sales reports its payment for royalties owed on all Net Sales of
Licensed Products by the Licensee and the sublicensees during such
semi-annual period.
6.5
Records Retention
and Audit Rights.
6.5.1
Throughout the Term
and the Post-termination Period and for five (5) years thereafter,
the Licensee, at its expense,
shall keep and maintain and shall
cause each sublicensee and each non-affiliated Third Party that
manufactures, sells, leases, or otherwise disposes of Licensed
Products on behalf of the Licensee to keep and maintain complete
and accurate records of all sales, leases, and other dispositions
of Licensed Products during the Term and the Post-termination
Period and all other records related to this
Agreement.
6.5.2
In connection with
an audit, the Licensee, upon written request, shall deliver to the
University and its representatives true, correct and complete
copies of all documents and materials (including electronic
records) reasonably relevant to the Licensee’s and
sublicensees’ performance of this Agreement, including,
without limitation, all sublicenses granted.
6.5.3
To determine the
Licensee’s compliance with the terms of this Agreement, the
University, at its expense (except as set forth in this
subsection), may inspect and audit the Licensee’s records
referred to in subsection 6.5.1 at the Licensee’s address as
set forth in this Agreement or such other location(s) as the
parties mutually agree during the Licensee’s normal business
hours. The Licensee shall cooperate in the audit, including
providing at no cost, commodious space in the Licensee’s
place of business for the auditor. The Licensee shall reimburse the
University for all its out-of-pocket expenses to inspect and audit
such records if the University, in accordance with the results of
such inspection and audit, determines that the Licensee has
underpaid amounts owed to the University by at least three percent
(3%) or twenty-five thousand dollars ($25,000), whichever is
smaller, in a reporting period. The Licensee shall cause each
sublicensee and each non-affiliated Third Party that manufactures,
sells, leases, or otherwise disposes of Licensed Products on behalf
of the Licensee to grant the University a right to inspect and
audit the sublicensee’s or Third Party’s records
substantially similar to the rights granted the University in this
subsection. In connection with, and before the commencement of, an
audit, if the Licensee requests in writing to the University, then
prior to conducting such audit, the Licensee, the University and
the auditor must enter into an agreement prohibiting the auditor
and the University from disclosing the Licensee’s nonpublic,
proprietary information to any Third Party without the
Licensee’s prior written consent; provided, however, that
consistent with generally accepted auditing standards and the
auditor’s professional judgment, the auditor may disclose
such information to the University and its agents, counsel, or
consultants. The Licensee acknowledges that such an agreement is
adequate to protect its legitimate interests, and the parties agree
that there shall be no additional nondisclosure agreement demanded
as a condition to the commencement of an audit and the
University’s exercising its rights under this
subsection.
6.6
Currency and
Checks. All computations and payments made under this Agreement
shall be in United States dollars. To determine the dollar value of
transactions conducted in non-United States dollar currencies, the
parties shall use the exchange rate for the currency into dollars
as reported in the
Wall Street
Journal
as the New York foreign exchange mid-range rate on
the last business day of the month in which the transaction
occurred.
7.1
If a party learns
of substantial, credible evidence that a Third Party is making,
using, or selling a product in the Field of Use in the Territory
that infringes a Licensed Patent, such party shall promptly notify
the other party in writing of the possible infringement and in such
notice describe in detail the information suggesting infringement
of the Licensed Patent. Prior to commencing any action to enforce a
Licensed Patent, the parties shall enter into good faith
negotiations on the desirability of bringing suit, the parties to
the action, the selection of counsel, and such other matters as the
parties may agree to discuss. No provision of this Agreement
limits, conditions, or otherwise affects a party’s statutory
and common-law rights to commence an action to enforce a Licensed
Patent. In any such action, the parties agree to cooperate fully
with each other and will use reasonable efforts to permit access to
relevant personnel, records, papers, information, samples and
specimens during regular business hours. Any amounts recovered
(less amounts actually paid for reasonable attorney’s fees
and legal expenses) by Licensee in any such action or settlement
that constitute compensation for lost profits or sales will be
considered subject to the royalty rate in subsection 11.4.1 of the
EPLA. All other amounts recovered (less amounts actually paid for
reasonable attorney’s fees and legal expenses) by Licensee in
such action or settlement shall be considered subject to the rate
for Sublicense Revenues in subsection 11.5.2 of the
EPLA.
7.2.
If any suit, action
or proceeding is brought or commenced against the Licensee alleging
the infringement of a patent or other intellectual property right
owned by a Third Party by reason of the manufacture, use or sale of
Licensed Products, the Licensee shall give the University prompt
notice thereof. If the validity of a Licensed Patent is questioned
in such suit, action or proceeding, the Licensee shall have no
right to make any settlement or compromise which affects the scope,
validity, enforceability or otherwise the Licensed Patent without
the University’s prior written approval.
8.1 University
may terminate this Agreement if Licensee
(A) is
delinquent on any report or payment;
(B) is
not diligently developing and commercializing Licensed
Product;
(C) misses
a milestone under Section 11.9 of the EPLA;
(D) is
in breach of any provision of this Agreement;
(E) provides
any false report; or
(F) fails
to enter into any of the following agreements by the dates
indicated below; or having so entered in to the following
agreements, defaults on any of the terms contained therein, or
terminates the agreement(s).
➢
Sponsored research
agreement within 90 days of the Effective Date of this Agreement
with the University to carry out further research on (1) the TriKE
platform including the cytokine linker and the best target antigens
on cancer targets and (2) building on higher production systems
that generate higher concentrations of TriKEs for expanded use
beyond the initial bacterial production used for phase I
testing.
Termination under
this Section 8.1 will take effect 30 days after written notice by
University unless Licensee remedies the default in that 30-day
period.
8.2
Licensee may
terminate this Agreement
(A)
any time prior to the dosing of the first patient in a Phase I
clinical trial upon payment of $200,000 to the University;
or
(B) any
time after the dosing of the first patient in a Phase I clinical
trial upon payment of $75,000 to the University.
8.2
Surviving Provisions. Surviving any termination or expiration
are:
(A)
Licensee's
obligation to pay royalties accrued or accruable;
(B)
any claim of
Licensee or University, accrued or to accrue, because of any breach
or default by the other party; and
(C)
the provisions of
Articles 8, 9, and 10 and any other provision that by its nature is
intended to survive.
9.
Indemnification,
and Insurance.
Licensee shall
indemnify, hold harmless, and defend all University Indemnitees
against any claim of any kind arising out of or related to the
exercise of any rights granted Licensee under this Agreement or the
breach of this Agreement by Licensee.
9.4
The
Licensee’s Insurance.
9.4.1
Throughout the
Term, or during such other period as the parties agree in writing,
the Licensee shall maintain, and shall cause each sublicensee to
maintain, in full force and effect comprehensive general liability
(“CGL”) insurance, with single claim limits acceptable
to the University. Such insurance policy shall include coverage for
claims that may be asserted by the University against the Licensee
under section 9.2 and for claims by a Third Party against the
Licensee or the University arising out of the purchase or use of a
Licensed Product. Such insurance policy must (i) name the
University as an additional insured if the University so requests
in writing and (ii) require the insurer to deliver written notice
to the University at the address set forth in section 12.13, at
least thirty (30) days before the termination of the policy. Upon
receipt of the University’s written request, the Licensee
shall deliver to the University a copy of the certificate of
insurance for such policy.
9.4.2
The provisions of
subsection 9.4.1 do not apply if the University agrees in writing
to accept the Licensee’s or a sublicensee’s, as the
case may be, self-insurance plan as adequate
insurance.
9.5
Sublicensees -
Release. The Licensee shall cause each sublicensee to grant the
University a release from liabilities substantially similar to the
release granted in favor of the University in section
9.1.
10.
Disclaimer
of Warranties.
UNIVERSITY PROVIDES
LICENSEE THE RIGHTS GRANTED IN THIS AGREEMENT AS IS AND WITH ALL
FAULTS. UNIVERSITY MAKES NO REPRESENTATIONS AND EXTENDS NO
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. AMONG OTHER
THINGS, THE UNIVERSITY EXPRESSLY DISCLAIMS ANY WARRANTIES
CONCERNING AND MAKES NO REPRESENTATIONS:
(i)
that the Licensed
Patent Applications will be allowed or granted or that a patent
will issue from any Licensed Patent Application;
(ii)
concerning the
validity, enforceability, interpretation of claims or scope of any
Licensed Patent; or
(iii)
that the exercise
of the rights or licenses granted to the Licensee under this
Agreement will not infringe a Third Party’s patent or violate
its intellectual property rights;
(iv)
that the
exploitation of Licensed Patent or Technology will be
successful
10.3
Sublicensees -
Warranties. The Licensee shall cause each sublicensee to give the
University warranties and disclaimers and exclusions of warranties
substantially similar to the warranty and disclaimers and
exclusions of warranties in favor of the University in section 10.1
and subsections 10.2.1 and 10.2.2.
11.1
No
Indirect Liability. University is not liable for any special,
consequential, lost profit, expectation, punitive or other indirect
damages in connection with any claim arising out of or related to
this Agreement,
12.1
Access to
University Information.
12.1.1
Data Practices Act.
The parties acknowledge that the University is subject to the terms
and provisions of the Minnesota Government Data Practices Act,
Minnesota Statutes §13.01
et
seq.
(the “Act”), and that the Act requires,
with certain exceptions, the University to permit the public to
inspect and copy any information that the University collects,
creates, receives, maintains, or disseminates.
12.1.2
Confidentiality. To the extent permitted by law, including as
provided in the Act, the University shall hold in confidence and
disclose only to University employees, agents and contractors who
need to know the reports described in sections 5.4 and 6.4 and the
records inspected in accordance with section 6.5 of the Terms and
Conditions. No provision of this Agreement is to be construed to
further prohibit, limit, or condition the University’s right
to use and disclose any information in connection with enforcing
this Agreement, in court or elsewhere.
12.2 Amendment
and Waiver.
The
Agreement may be amended from time to time only by a written
instrument signed by the parties. No term or provision of this
Agreement may be waived and no breach excused unless such waiver or
consent is in writing and signed by the party claimed to have
waived or consented. No waiver of a breach is to be deemed a waiver
of a different or subsequent breach.
12.3 Applicable
Law and Forum Selection. The internal laws of the state of
Minnesota, without giving effect to its conflict of laws
principles, govern the validity, construction, and enforceability
of this Agreement. A suit, claim, or other action to enforce the
terms of this Agreement may be brought only in the state courts of
Hennepin County, Minnesota. The Licensee hereby submits to the
jurisdiction of that court and waives any objections it may have to
that court asserting jurisdiction over the Licensee or its assets
and property.
12.4 Assignment
and Sublicense. Except as permitted under subsection 3.1.2 and
section 12.5 of the Terms and Conditions, the Licensee shall not
assign or sublicense its interest or delegate its duties under this
Agreement. Any assignment, sublicense, or delegation attempted to
be made in violation of this section is void. Absent the consent of
all the parties, an assignment or delegation will not release the
assigning or delegating party from its obligations. The Agreement
inures to the benefit of the Licensee and the University and their
respective permitted sublicensees and trustees.
12.5 Change
of Control.
Licensee
may assign this Agreement as part of a Change of Control upon prior
and complete performance of the following conditions:
(A) Licensee
must give University 30 days prior written notice of the
assignment, including the new assignee’s contact
information;
(B) the
new assignee must agree in writing to University to be bound by
this Agreement; and
(C)
University must
have received the full Change of Control Fee.
12.6 Collection
Costs and Attorneys’ Fees. If a party fails to perform an
obligation or otherwise breaches one or more of the terms of this
Agreement, the other party may recover from the non-performing
breaching party all its reasonable costs (including actual
attorneys’ and investigative fees) to enforce the terms of
this Agreement.
12.7 Consent
and Approvals. Except as otherwise expressly provided, in order to
be effective, all consents or approvals required under this
Agreement must be in writing.
12.8 Construction.
The headings preceding and labeling the sections of this Agreement
are for the purpose of identification only and are not to be
employed or used for the purpose of construction or interpretation
of any portion of the EPLA. As used herein and where necessary, the
singular includes the plural and vice versa, and masculine,
feminine, and neuter expressions are interchangeable.
12.9 Enforceability.
If a court of competent jurisdiction adjudges a provision of this
Agreement to be unenforceable, invalid, or void, such determination
is not to be construed as impairing the enforceability of any of
the remaining provisions hereof and such provisions will remain in
full force and effect.
12.10
Entire Agreement. The parties intend this Agreement (including all
attachments, exhibits, and amendments hereto) to be the final and
binding expression of their contract and agreement and the complete
and exclusive statement of the terms thereof. The Agreement
cancels, supersedes, and revokes all prior negotiations,
representations and agreements among the parties, whether oral or
written, relating to the subject matter of this
Agreement.
12.11
Language and Currency. Unless otherwise expressly provided in this
Agreement and in order to be effective, all notices, reports, and
other documents and instruments that a party elects or is required
to deliver to the other party must be in English, and all notices,
reports, and other documents and instruments detailing revenues and
earned under this Agreement or expenses chargeable to a party must
be United States dollar denominated.
12.12
No Third-Party Beneficiaries. No provision of this Agreement,
express or implied, is intended to confer upon any person other
than the parties to this Agreement any rights, remedies,
obligations, or liabilities hereunder. No sublicensee may enforce
or seek damages under this Agreement.
12.13
Notices. In order to be effective, all notices, requests, and other
communications that a party is required or elects to deliver must
be in writing and must be delivered personally, or by facsimile or
electronic mail (provided such delivery is confirmed), or by a
recognized overnight courier service or by United States mail,
first-class, certified or registered, postage prepaid, return
receipt requested, to the other party at its address set forth
below or to such other address as such party may designate by
notice given under this section:
If to
the
University:
University of Minnesota
Office
for Technology Commercialization
200 Oak
Street, SE
Suite
280
Minneapolis, MN
55455
Phone:
612.624.0550
Fax:
612.624.6554
E-mail:
otcagree@umn.edu
For notices
sent
|
University of
Minnesota
|
under section
8,
|
Office of the
General Counsel
|
with a copy
to:
|
Attn: Transactional
Law Services
|
|
360 McNamara Alumni
Center
|
|
200 Oak Street
S.E.
|
|
Minneapolis, MN
55455-2006
|
|
Facsimile No.:
612.626.9624
|
|
E-mail:
contracts@mail.ogc.umn.edu
|
|
|
If to the
Licensee:
|
As indicated in
section 12 of the EPLA
|
|
|
12.14 Relationship
of Parties. In entering into, and performing their duties under
this Agreement, the parties are acting as independent contractors
and independent employers. No provision of this Agreement creates
or is to be construed as creating a partnership, joint venture, or
agency relationship between the parties. No party has the authority
to act for or bind the other party in any respect.
12.15 Security
Interest. In no event may the Licensee grant, or permit any person
to assert or perfect, a security interest in the Licensee’s
rights under this Agreement.
12.16 Survival.
Immediately upon the termination or expiration of this Agreement,
except for certain rights granted for the Post-termination Period,
all the Licensee’s rights under this Agreement terminate;
provided, however, the Licensee’s obligations that have
accrued before the effective date of termination or expiration
(
e.g
., the obligation to
report and make payments on sales, leases, or dispositions of
Licensed Products and to reimburse the University for costs) and
the obligations specified in section 6.1 survive. The obligations
and rights set forth in sections 6.4 and 8.3 and sections 9, 10,
and 11 also survive the termination or expiration of this
Agreement.
Exhibit 10.4
LICENSE AGREEMENT
THIS
LICENSE AGREEMENT (this “Agreement”) dated as of
September 3, 2015 (the “Effective Date”), is entered
into between Daniel A. Vallera, an individual having a place of
residence at ____________________________________ , Jeffrey Lion,
an individual having a place of residence at
____________________________________ (collectively hereinafter
“Licensor”), and Oxis Biotech, Inc., a Delaware
corporation (“Company” or “Oxis”), having a
place of business at
1402 North
Beverly Drive, Beverly Hills, CA 90210
.
WHEREAS, Licensor
owns or has rights in the Technology (as defined
below).
WHEREAS, Oxis
desires to obtain an exclusive license under Licensor’s
rights in the Technology on the terms and conditions set forth
below.
NOW,
THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereby agree as
follows:
For
purposes of this Agreement, the terms defined in this
Section 1 shall have the respective meanings set forth
below:
1.1
“
Affiliate
” shall mean,
with respect to any Person, any other Person which directly or
indirectly controls, is controlled by, or is under common control
with, such Person. A Person shall be regarded as in control of
another Person if it owns, or directly or indirectly controls, at
least fifty percent (50%) of the voting stock or other ownership
interest of the other Person, or if it directly or indirectly
possesses the power to direct or cause the direction of the
management and policies of the other Person by any means
whatsoever.
1.2
“
Competent Authority(ies)
”
or “
Competent
Regulatory Authority(ies)
” shall mean, collectively,
(a) the governmental entities in each country or supranational
organization that is responsible for the regulation of any Product
intended for use in the Field or the establishment, maintenance
and/or protection of rights related to the Licensed IP Rights
(including the FDA, the EMEA and the MHLW), or (b) any other
applicable regulatory or administrative agency in any country or
supranational organization that is comparable to, or a counterpart
of, the foregoing.
1.3
“
EMEA
” shall mean the
European Agency for the Evaluation of Medicinal Products of the
European Union, or the successor thereto.
1.4
“
FDA
” shall mean the Food
and Drug Administration of the United States, or the successor
thereto.
1.5
“
Field
” shall mean
compounds and methods for the treatment of any disease, state or
condition in humans.
1.6
“
First
Commercial Sale
” shall mean, with respect to any
Product, the first sale of such Product after all applicable
marketing and pricing approvals (if any) have been granted by the
applicable governing health authority of such country.
1.7
“
Licensed IP Rights
” shall
mean, collectively, the Licensed Patent Rights and the Licensed
Know-How Rights.
1.8
“
Licensed Know-How Rights
”
shall mean all trade secret and other know-how rights in and to all
data, information, compositions and other technology (including,
but not limited to, formulae, procedures, protocols, techniques and
results of experimentation, all CD19 scFv and CD22 scFv clones used
to manufacture DT2219ARL, the aggregation reducing linker (ARL)
technology used to manufacture DT2219ARL, and the mutated and
deimmunized form of truncated diphtheria toxin used to manufacture
DT2219ARL) which are necessary or useful for Oxis to make, use,
develop, sell or seek regulatory approval to market a composition
such as DT2219ARL, or to practice any method or process, at any
time claimed or disclosed in any issued patent or pending patent
application within the Licensed Patent Rights or which otherwise
relates to the Technology.
1.9
“
Licensed Patent Rights
”
shall mean (a) the patents and patent applications listed on
Schedule A hereto, (b) all patents and patent applications in
any country of the world that claim or cover the Technology in
which Licensor heretofore or hereafter has an ownership or
(sub)licensable interest, (c) all divisions, continuations,
continuations-in-part, that claim priority to, or common priority
with, the patent applications listed in clauses (a) - (b) above or
the patent applications that resulted in the patents described in
clauses (a) - (b) above, and (d) all patents that have issued
or in the future issue from any of the foregoing patent
applications, including utility, model and design patents and
certificates of invention, together with any reissues, renewals,
extensions or additions thereto.
1.10
“
NDA
”
shall mean a New Drug Application, or similar application for
marketing approval of a Product for use in the Field submitted to
the FDA, or its foreign equivalent.
1.11
“
Net
Sales
” shall mean, with respect to any Product, the
gross sales price of such Product invoiced by Oxis or its Affiliate
to customers who are not Affiliates (or are Affiliates but are the
end users of such Product) less, to the extent actually paid or
accrued by Oxis or its Affiliate (as applicable), (a) credits,
allowances, discounts and rebates to, and chargebacks from the
account of, such customers for nonconforming, damaged, out-dated
and returned Product; (b) freight and insurance costs incurred
by Oxis or its Affiliate (as applicable) in transporting such
Product to such customers; (c) cash, quantity and trade
discounts, rebates and other price reductions for such Product
given to such customers under price reduction programs;
(d) sales, use, value-added and other direct taxes incurred on
the sale of such Product to such customers; (e) customs
duties, tariffs, surcharges and other governmental charges incurred
in exporting or importing such Product to such customers;
(f) sales commissions incurred on the sale of such Product to
such customers; and (g) an allowance for uncollectible or bad
debts determined in accordance with generally accepted accounting
principles.
1.12
“
Net
Sublicensing Revenues
” shall mean, with respect to any
Product, the aggregate cash consideration received by Oxis or its
Affiliates in consideration for the sublicense under the Licensed
Patent Rights or Licensed Know-How Rights by Oxis or its Affiliates
to a Third Party sublicensee with respect to such Product
(including royalties received by Oxis or its Affiliates based on
sales of such Product by such sublicensee, but excluding amounts
received to reimburse Oxis’ or its Affiliates’ cost to
perform research, development or similar services conducted for
such Product after signing the agreement with the Third Party, in
reimbursement of patent or other out-of-pocket expenses relating to
such Product, or in consideration for the purchase of any debt or
securities of Oxis or its Affiliates).
1.13
“
Person
”
shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.
1.14
“
Phase I
Clinical Trial
” shall mean a human clinical trial that
is intended to initially evaluate the safety and/or pharmacological
effect of a Product in subjects or that would otherwise satisfy
requirements of 21 C.F.R. 312.21(a), or its foreign
equivalent.
1.15
“
Phase II
Clinical Trial
” shall mean a human clinical trial in
any country that is intended to initially evaluate the
effectiveness of a Product for a particular indication or
indications in patients with the disease or indication under study
or would otherwise satisfy requirements of
21 CFR 312.21(b), or its foreign equivalent.
1.16
“
Phase III
Clinical Trial
” shall mean a human clinical trial in
any country, the results of which could be used to establish safety
and efficacy of a Product as a basis for an NDA or would otherwise
satisfy requirements of 21 CFR 312.21(c), or its foreign
equivalent.
1.17
“
Product(s)
”
shall mean DT2219ARL, a CD19/CD22 bispecific scFv antibody-drug
conjugate containing aggregation reducing linkers and a mutated and
deimmunized form of a truncated diphtheria toxin for use in the
Field that if made, used, sold, offered for sale or imported absent
the license granted hereunder would infringe a Valid Claim, or that
otherwise uses or incorporates the Licensed Know-How
Rights.
1.18
“
Registration(s)
”
shall mean any and all permits, licenses, authorizations,
registrations or regulatory approvals (including NDAs) required
and/or granted by any Competent Authority as a prerequisite to the
development, manufacturing, packaging, marketing and selling of any
product.
1.19
“
Royalty
Term
” shall mean, with respect to each Product in each
country, the term for which a Valid Claim remains in effect and
would be infringed but for the license granted by this Agreement,
by the use, offer for sale, sale or import of such Product in such
country.
1.20
“
Technology
”
shall mean all compositions, CD19 scFv producing clones, CD22 scFv
producing clones, aggregation reducing linkers (ARL), mutated and
deimmunized form of a truncated diphtheria toxin, formulae,
procedures, formulations, methods of manufacture,
in vitro
data, and animal and human
in vivo
data related to
Products, and all uses thereof for treating diseases in
humans.
1.21
“
Territory
”
shall mean worldwide.
1.22
“
Third
Party
” shall mean any Person other than Licensor, Oxis
and their respective Affiliates.
1.23
“
Valid
Claim
” shall mean a claim of an issued and unexpired
patent included within the Licensed Patent Rights, which has not
been held permanently revoked, unenforceable or invalid by a
decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or
otherwise.
2.
REPRESENTATIONS
AND WARRANTIES
2.1
Mutual Representations and
Warranties
. Each party hereby represents and warrants to the
other party as follows:
2.1.1
Such
party is an individual, or is a corporation duly organized, validly
existing and in good standing under the laws of the state in which
it is incorporated.
2.1.2
Such
party (a) has the power and authority and the legal right to
enter into this Agreement and to perform its obligations hereunder,
and (b) has taken all necessary action on its part to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been
duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against
such party in accordance with its terms.
2.1.3
All
necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained
by such party in connection with this Agreement have been
obtained.
2.1.4
The
execution and delivery of this Agreement and the performance of
such party’s obligations hereunder (a) do not conflict with
or violate any requirement of applicable laws or regulations, and
(b) do not conflict with, or constitute a default under, any
contractual obligation of it.
2.2
Licensor Representations and
Warranties
. Licensor hereby represents and warrants to Oxis
as follows:
2.2.1
Licensor
(a) is the owner of the Licensed IP Rights and has the sole
right to execute this Agreement, and has not granted to any Third
Party any license or other interest in the Licensed IP Rights,
(b) is not aware of any Third Party patent, patent application
or other intellectual property rights that would be infringed
(i) by practicing any process or method or by making, using or
selling any composition which is claimed or disclosed in the
Licensed Patent Rights or which constitutes Licensed Know-How
Rights, or (ii) by making, using or selling Products, and
(c) is not aware of any infringement or misappropriation by a
Third Party of the Licensed IP Rights.
3.
LICENSE
GRANT
3.1
Licensed IP Rights
. Licensor
hereby grants to Oxis an exclusive license (with the right to grant
sublicenses) under the Licensed IP Rights to conduct research and
to develop, make, have made, use, offer for sale, sell, have sold,
and import Products in the Territory for use in the
Field.
3.2
Sublicenses
. Licensor
grants to Oxis the right to grant sublicenses to third parties,
provided that (i) the Sublicensee agrees to abide by all the terms
and provisions of this Agreement; (ii) Oxis remains fully liable
for the performance of its and its Sublicensee’s obligations
hereunder; and (iii) Oxis notifies Licensor of any grant of a
sublicense and provide to Licensor upon Licensor request a copy of
any sublicense agreement.
3.3
Availability of the Licensed IP
Rights
. Licensor shall provide Oxis with a copy of all
information available to Licensor relating to the Licensed IP
Rights, Products or Technology, including without limitation:
(a) regulatory submissions, (b) communications with the
Competent Authorities (including the minutes of any meetings),
(c) trial master files, including case report forms,
(d) listings and tables of results from the clinical trials,
(e) treatment-related serious adverse event reports from the
clinical trials, (f) storage of and access permission to any
retained samples of materials used in clinical trials, (g)
manufacturing and quality control procedures and formulation
procedures, and (h) access to CMOs and CROs involved in the
clinical trials.
3.4
Registrations
. Licensor
acknowledges and agrees that Oxis shall own all Registrations for
Products for use in the Field in each country in the Territory.
Additionally, Licensor acknowledges and agrees that Oxis shall have
the right to conduct pre-clinical and clinical development
activities outside of the Territory. Licensor hereby grants to Oxis
a free-of-charge right to reference and use and have full access to
all other Registrations and all other regulatory documents that
relate to the Licensed IP Rights, Products or Technology, including
INDs, BLAs, NDAs and DMFs (whether as an independent document or as
part of any NDA, and all chemistry, manufacturing and controls
information), and any supplements, amendments or updates to the
foregoing (for the purposes of this Section, the “Right of
Reference”). Oxis shall have the right to (sub)license the
Right of Reference to its sublicensees and Affiliates.
3.5
Access to Manufacturers
.
Licensor shall use his commercially reasonable efforts to provide
access to Oxis to any suppliers of Products and any form of any
Product for use in the Field on terms and conditions no less
favorable than those terms and conditions between Licensor and such
supplier.
4.
FINANCIAL
CONSIDERATIONS
4.1.1
Royalty Rate
. During the
applicable Royalty Term for a Product, subject to the terms and
conditions of this Agreement, Oxis shall pay to Licensor royalties,
with respect to each Product, equal to (a) THREE percent (3%)
of Net Sales of such Product by Oxis and its Affiliates, and
(b) TWENTY-FIVE percent (25%) of Net Sublicensing
Revenues for such Product. Only one royalty shall be owing for a
Product regardless of how many Valid Claims cover such Product for
the life of the last to expire Patent in a country having Valid
Claim.
4.1.2
Third Party Royalties
. If Oxis,
its Affiliates or sublicensees is required to pay royalties to any
Third Party in order to exercise its rights hereunder to make, have
made, use, sell, offer to sale or import any Product, then Oxis
shall have the right to credit one percent (1%) of such Third Party
royalty payments against the royalties owing to Licensor under
Section 4.2.1 above with respect to sales of such Product in
such country; provided, however, that Oxis shall not reduce the
amount of the royalties paid to Licensor under Section 4.2.1
above by reason of this Section 4.2.2, with respect to sales
of such Product in such country, to less than one percent (1%) of
Net Sales of such Product in such country. In consideration of the
right to sublicense third parties granted under Section 3.2, Oxis
shall pay to Licensor ten percent (10%) of all royalties received
by Oxis from its Sublicensees if the sublicense is executed on or
before the first anniversary of the Effective Date of the License
Agreement signed between the parties, and ten percent (10%) of all
royalties received by Oxis from its Sublicensees if the Sublicense
is executed thereafter. In no event, however, shall Oxis pay
Licensor less than the amount which would have been due under
Section 4.2.2 of this Agreement in the absence of a
sublicense.
4.2
License Fee
. Oxis shall pay
Licensor a non-refundable license fee of ONE HUNDRED AND FIFTY
THOUSAND dollars ($150,000.00) which shall be payable upon
execution of this Agreement.
4.3
Milestone Payments
. Oxis shall
pay to Licensor the following clinical development milestone
payments within thirty (30) days following the first achievement of
the applicable milestone:
4.3.1
TWO
HUNDRED FIFTY THOUSAND dollars ($250,000.00) due upon initiation of
a Phase Ib/II clinical trial;
4.3.2
TWO
HUNDRED FIFTY THOUSAND dollars ($250,000.00) due upon initiation of
a Phase III clinical trial;
4.3.3
ONE
MILLION dollars ($1,000,000.00) due upon receipt by Oxis of
marketing approval by any Competent Regulatory Authority within the
Territory.
Each of
the foregoing Milestone Payments shall be paid only one
time.
5.
ROYALTY REPORTS AND
ACCOUNTING
5.1
Royalty Reports
. Within sixty
(60) days after the end of each calendar quarter during the term of
this Agreement following first to occur of the First Commercial
Sale of a Product and the receipt by Oxis or its Affiliates of Net
Sublicensing Revenues, Oxis shall furnish to Licensor a quarterly
written report showing in reasonably specific detail (a) the
calculation of Net Sales during such calendar quarter; (b) the
calculation of Net Sublicensing Revenues for such quarter;
(c) the calculation of the royalties, if any, that shall have
accrued based upon such Net Sales and Net Sublicensing Revenues;
(d) the withholding taxes, if any, required by law to be
deducted with respect to such sales; and (e) the exchange
rates, if any, used in determining the amount of United States
dollars. With respect to sales of Products invoiced in United
States dollars, the gross sales, Net Sales and royalties payable
shall be expressed in United States dollars. With respect to
(i) Net Sales invoiced in a currency other than United States
dollars and (ii) cash consideration paid in a currency other
than United States dollars by Oxis’s sublicensees hereunder,
all such amounts shall be expressed both in the currency in which
the distribution is invoiced and in the United States dollar
equivalent. The United States dollar equivalent shall be calculated
using the average of the exchange rate (local currency per US$1)
published in
The Wall
Street Journal
, Western Edition, under the heading
“Currency Trading” on the last business day of each
month during the applicable calendar quarter.
5.2.1
Upon
the written request of Licensor and not more than once in each
calendar year, Oxis shall permit an independent certified public
accounting firm of nationally recognized standing selected by
Licensor and reasonably acceptable to Oxis, at Licensor’s
expense, to have access during normal business hours to such of the
financial records of Oxis as may be reasonably necessary to verify
the accuracy of the payment reports hereunder for the eight (8)
calendar quarters immediately prior to the date of such request
(other than records for which Licensor has already conducted an
audit under this Section.
5.2.2
If
such accounting firm concludes that additional amounts were owed
during the audited period, Oxis shall pay such additional amounts
within thirty (30) days after the date Licensor delivers to Oxis
such accounting firm’s written report so concluding. The fees
charged by such accounting firm shall be paid by Licensor;
provided, however, if the audit discloses that the royalties
payable by Oxis for such period are more than one hundred ten
percent (110%) of the royalties actually paid for such period, then
Oxis shall pay the reasonable fees and expenses charged by such
accounting firm.
5.2.3
Licensor
shall cause its accounting firm to retain all financial information
subject to review under this Section 5.2 in strict confidence;
provided, however, that Oxis shall have the right to require that
such accounting firm, prior to conducting such audit, enter into an
appropriate non-disclosure agreement with Oxis regarding such
financial information. The accounting firm shall disclose to
Licensor only whether the reports are correct or not and the amount
of any discrepancy. No other information shall be shared. Licensor
shall treat all such financial information as Oxis’
Confidential Information.
6.
PAYMENTS
6.1
Payment Terms
. Royalties shown
to have accrued by each royalty report provided for under
Section 5 above shall be due on the date such royalty report
is due. Payment of royalties in whole or in part may be made in
advance of such due date.
6.2
Exchange Control
. If at any
time legal restrictions prevent the prompt remittance of part or
all royalties with respect to any country in the Territory where
the Product is sold, Oxis shall have the right, in its sole
discretion, to make such payments by depositing the amount thereof
in local currency to Licensor’s account in a bank or other
depository institution in such country. If the royalty rate
specified in this Agreement should exceed the permissible rate
established in any country, the royalty rate for sales in such
country shall be adjusted to the highest legally permissible or
government-approved rate.
6.3
Withholding Taxes
. Oxis shall
be entitled to deduct the amount of any withholding taxes,
value-added taxes or other taxes, levies or charges with respect to
such amounts, other than United States taxes, payable by Oxis, its
Affiliates or sublicensees, or any taxes required to be withheld by
Oxis, its Affiliates or sublicensees, to the extent Oxis, its
Affiliates or sublicensees pay to the appropriate governmental
authority on behalf of Licensor such taxes, levies or charges. Oxis
shall use reasonable efforts to minimize any such taxes, levies or
charges required to be withheld on behalf of Licensor by Oxis, its
Affiliates or sublicensees. Oxis promptly shall deliver to Licensor
proof of payment of all such taxes, levies and other charges,
together with copies of all communications from or with such
governmental authority with respect thereto.
7.
RESEARCH
AND DEVELOPMENT OBLIGATIONS
7.1
Research and Development
Efforts
. Oxis shall use its commercially reasonable efforts
to conduct such research, development and preclinical and human
clinical trials as Oxis determines are necessary or desirable to
obtain regulatory approval to manufacture and market such Products
as Oxis determines are commercially feasible in the Territory, and
shall use its commercially reasonable efforts to obtain regulatory
approval to market, and following approval to commence marketing
and market each such Product in such countries in the Territory as
Oxis determines are commercially feasible.
7.2
Records
. Licensor and Oxis
shall maintain records, in sufficient detail and in good scientific
manner, which shall reflect all work done and results achieved in
the performance of its research and development regarding the
Products.
7.3
Reports
. Within ninety (90)
days following the end of each calendar year during the term of
this Agreement, Licensor shall prepare and deliver to Oxis a
written summary report which shall describe (a) the research
performed to date employing the Licensed IP Rights, (b) the
progress of the development, and testing of Products in clinical
trials, and (c) the status of obtaining regulatory approvals
to market Products.
8.
CONFIDENTIALITY
8.1
For purposes of
this Agreement “Confidential Information" means any and all
information and material disclosed by the disclosing party to the
recipient or obtained by recipient through inspection or
observation of discloser’s property or facilities (before or
after the signing of this Agreement, and whether in writing, or in
oral, graphic, electronic or any other form), including, but not
necessarily limited to, trade secret, know-how, idea, invention,
process, technique, algorithm, program (whether in source code or
object code form), hardware, device, design, schematic, drawing,
formula, data, plan, strategy and forecast of, technical,
engineering, manufacturing, product, marketing, all notes, books,
papers, diagrams, documents, reports, memoranda, servicing,
financial, personnel and other information and materials of,
discloser and its employees, consultants, investors, affiliates,
licensors, suppliers, vendors, customers, clients and other persons
and entities, disclosed by one Party to the other.
8.2
Licensor and Oxis
agree that the recipient of Confidential Information shall not
disclose, cause, or permit to be disclosed said information to any
third party or parties, subject to the exceptions contained herein,
without the prior written consent of the disclosing
Party.
8.3
Confidential
Information may be disclosed to consultants, agents, and advisors
of either Licensor or Oxis; provided, those to whom information or
data is disclosed, regarding or concerning the matters contemplated
herein, shall become parties to this Agreement or otherwise be
bound to maintain such information in confidence under terms at
least as protective as those provided herein. Either Party may also
disclose such information as it deems appropriate to its employees
provided such employees have a need to know. Licensor and Oxis
agree to enforce the terms and provisions of this Agreement as to
any such employee, consultant, agent or advisor who receives
Confidential Information hereunder, and to assume liability for
breach of this Agreement by any or all such persons.
8.4
Notwithstanding
anything to the contrary contained herein, the recipient of
Confidential Information disclosed hereunder shall be under no duty
to maintain the confidentiality of any such information which it
can reasonably establish:
8.4.1
At
the time of disclosure is within the public domain;
8.4.2
After
disclosure becomes a part of the public domain through no fault,
act or failure to act, error, effort or breach of this Agreement by
the recipient;
8.4.3
Is
known to the recipient at the time of disclosure as evidenced by
recipient’s contemporaneous written
documentation;
8.4.4
Is
required by order, statute or regulation, of any government
authority to be disclosed to any federal or state agency, court or
other body, provided, however that any Party directed to disclose
information pursuant to a subpoena or other legal compulsion shall
use its best efforts under the circumstances to promptly notify the
disclosing Party of same so as to provide or afford the disclosing
Party the opportunity to obtain such protective orders or other
relief as the compelling court or other entity may
grant.
8.4.5
Confidential
Information will not be deemed to have been published merely
because individual portions of the information have been separately
published, but only if all material features comprising such
information have been published in combination.
8.5
Neither Licensor
nor Oxis will use for its own purpose(s), nor cause or permit to be
used by others, either directly or indirectly, any Confidential
Information disclosed hereunder without the prior written consent
of the Party making such disclosure.
9.1
Patent Prosecution and
Maintenance
. Oxis shall have the right to control, at its
sole cost, the preparation, filing, prosecution and maintenance of
all patents and patent applications within the Licensed Patent
Rights. Oxis shall give Licensor an opportunity to review and
comment on the text of each patent application subject to this
Section 9.1 before filing, and shall supply Licensor with a
copy of such patent application as filed, together with notice of
its filing date and serial number. Licensor shall cooperate with
Oxis, execute all lawful papers and instruments and make all
rightful oaths and declarations as may be necessary in the
preparation, prosecution and maintenance of all patents and other
filings referred to in this Section 9.1. If Oxis, in its sole
discretion, decides to abandon the preparation, filing, prosecution
or maintenance of any patent or patent application in the Licensed
Patent Rights, then Oxis shall notify Licensor in writing thereof
and following the date of such notice (a) Licensor shall be
responsible for and shall control, at its sole cost, the
preparation, filing, prosecution and maintenance of such patents
and patent applications, and (b) Oxis shall thereafter have no
license under this Agreement to such patent or patent
application.
9.2
Notification of Infringement
.
Each party shall notify the other party of any substantial
infringement in the Territory known to such party of any Licensed
Patent Rights and shall provide the other party with the available
evidence, if any, of such infringement.
9.3
Enforcement of Patent Rights
.
Oxis, at its sole expense, shall have the right to determine the
appropriate course of action to enforce Licensed Patent Rights or
otherwise abate the infringement thereof, to take (or refrain from
taking) appropriate action to enforce Licensed Patent Rights, to
defend any declaratory judgments seeking to invalidate or hold the
Licensed Patent Rights unenforceable, to control any litigation or
other enforcement action and to enter into, or permit, the
settlement of any such litigation, declaratory judgments or other
enforcement action with respect to Licensed Patent Rights, in each
case in Oxis’ own name and, if necessary for standing
purposes, in the name of Licensor and shall consider, in good
faith, the interests of Licensor in so doing. If Oxis does not,
within one hundred twenty (120) days of receipt of notice from
Licensor, abate the infringement or file suit to enforce the
Licensed Patent Rights against at least one infringing party in the
Territory, Licensor shall have the right to take whatever action it
deems appropriate to enforce the Licensed Patent Rights; provided,
however, that, within thirty (30) days after receipt of notice of
Licensor’s intent to file such suit, Oxis shall have the
right to jointly prosecute such suit and to fund up to one-half
(½) the costs of such suit. The party controlling any such
enforcement action shall not settle the action or otherwise consent
to an adverse judgment in such action that diminishes the rights or
interests of the non-controlling party without the prior written
consent of the other party. All monies recovered upon the final
judgment or settlement of any such suit to enforce the Licensed
Patent Rights shall be shared, after reimbursement of expenses, in
relation to the damages suffered by each party. If Oxis does not
receive sufficient monies from a final judgment or settlement to
cover its expenses for such suit, Oxis shall have the right to
credit up to fifty percent (50%) of such expenses against any
royalties or other fees owing by Oxis pursuant to Section 4
above.
9.4
Cooperation
. In any suit to
enforce and/or defend the License Patent Rights pursuant to this
Section 9, the party not in control of such suit shall, at the
request and expense of the controlling party, reasonably cooperate
and, to the extent possible, have its employees testify when
requested and make available relevant records, papers, information,
samples, specimens, and the like.
10.
TERMINATION
10.1
Expiration
.
Subject to Sections 10.2 and 10.3 below, this Agreement shall
expire on the expiration of Oxis’ obligation to pay royalties
to Licensor under Section 4.1 above. The license grant under
Section 3.1 shall be effective at all times prior to such
expiration and following such expiration of this Agreement
(a) Oxis shall have a fully paid-up, non-exclusive license
under the Licensed Know-How Rights to conduct research and to
develop, make, have made, use, sell, offer for sale and import
Products in the Territory for use in the Field, and
(b) Sections 3.5 and 3.6 shall survive.
10.2
Termination by Oxis
. Oxis may
terminate this Agreement, in its sole discretion, upon thirty (30)
days prior written notice to Licensor. This includes and is not
limited to the failure of U.S. Patent Application Serial No.
13/256,812 to issue as a U.S. patent, or for Product to fail during
clinical development.
10.3
Termination for Cause
. Except
as otherwise provided in Section 12, Licensor may terminate
this Agreement upon or after the breach of any material provision
of this Agreement by Oxis if Oxis has not cured such breach within
ninety (90) days after receipt of express written notice thereof by
Licensor; provided, however, if any default is not capable of being
cured within such ninety (90) day period and Oxis is diligently
undertaking to cure such default as soon as commercially feasible
thereafter under the circumstances, Licensor shall have no right to
terminate this Agreement.
10.3.1
Termination by
Licensor: Estimated costs associated with DT2219 ARL are estimated
to be $639,351.23 as per the University of Minnesota Clinical Trial
Office’s 3 year budget, hereby included as Exhibit A.
Licensor may terminate this agreement if Oxis does not fund over
the next three years all costs associated with the 30 subjects
(patients) needed to finish the Phase 1-2 trial estimated to be
$639,351.23. Oxis’s obligations to Licensor shall be
considered to be in compliance once the 30 subjects have been
treated or if Oxis has paid $639,351.23 towards the budget for the
Clinical trial, or the Clinical Trial is cancelled.
10.4 :
Expiration or termination of this Agreement shall not relieve the
parties of any obligation accruing prior to such expiration or
termination, and the provisions of Sections 8, 11, 13 shall survive
the expiration or termination of this Agreement brought about by a
default or non-compliance by Licensor of any portion or provision
of this agreement. Upon termination of this agreement, Licensor
shall grant a direct license to any sublicense of Oxis hereunder
having the same scope as such sublicense and on terms and
conditions no less favorable to such sublicensee than the terms and
conditions of this Agreement, provided that such sublicensee is not
in default of any applicable obligations under this Agreement and
agrees in writing to be bound by the terms and conditions of such
direct license. However, upon any termination of this agreement
brought about by a default or non-compliance of any portion or
provision of this agreement by Licensee shall result in the
revocation of Oxis’s license and any sublicenses for DT2219
ARL (Product).
11.1
Indemnification
.
Oxis shall defend, indemnify and hold Licensor harmless from all
losses, liabilities, damages and expenses (including
attorneys’ fees and costs) incurred as a result of any claim,
demand, action or proceeding arising out of any breach of this
Agreement by Oxis, or the gross negligence or willful misconduct of
Oxis in the performance of its obligations under this Agreement,
except in each case to the extent arising from the gross negligence
or willful misconduct of Licensor or the breach of this Agreement
by Licensor.
11.2
Procedure
.
Licensor promptly shall notify Oxis of any liability or action in
respect of which Licensor intends to claim such indemnification,
and Oxis shall have the right to assume the defense thereof with
counsel selected by Oxis. The indemnity agreement in this
Section 11 shall not apply to amounts paid in settlement of
any loss, claim, damage, liability or action if such settlement is
effected without the consent of Oxis, which consent shall not be
withheld unreasonably. The failure to deliver notice to Oxis within
a reasonable time after the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve
Oxis of any liability to Licensor under this Section 11, but
the omission so to deliver notice to Oxis will not relieve it of
any liability that it may have to Licensor otherwise than under
this Section 11. Licensor under this Section 11, its
employees and agents, shall cooperate fully with Oxis and its legal
representatives in the investigation and defense of any action,
claim or liability covered by this indemnification.
11.3
Insurance
.
Oxis shall maintain product liability insurance with respect to the
research, development, manufacture and sales of Products by Oxis in
such amount as Oxis customarily maintains with respect to the
research, development, manufacture and sales of its similar
products. Oxis shall maintain such insurance for so long as it
continues to research, develop, manufacture or sell any Products,
and thereafter for so long as Oxis customarily maintains insurance
covering the research, development, manufacture or sale of its
similar products.
Neither
party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this
Agreement to the extent, and for so long as, such failure or delay
is caused by or results from causes beyond the reasonable control
of the affected party including but not limited to fire, floods,
embargoes, war, acts of war (whether war be declared or not), acts
of terrorism, insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts,
omissions or delays in acting by any governmental authority or the
other party.
13.
MISCELLANEOUS
13.1
Notices
.
Any consent, notice or report required or permitted to be given or
made under this Agreement by one of the parties hereto to the other
party shall be in writing, delivered by any lawful means to such
other party at its address indicated below, or to such other
address as the addressee shall have last furnished in writing to
the addressor and (except as otherwise provided in this Agreement)
shall be effective upon receipt by the addressee.
Licensor:
Daniel A. Vallera, Ph.D.
________________________
________________________
Jeffrey
Lion
________________________
________________________
Oxis:
Anthony Cataldo
Chairman &
CEO
Oxis
Biotech, Inc.
1402
North Beverly Drive
Beverly
Hills, CA 90210
with a
copy
to:
DLA Piper US
4365
Executive Drive, Suite 1100
San
Diego, California 92130
Attention: Lisa A.
Haile, Ph.D, Esq.
13.2
Governing
Law
. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard
to the conflicts of law principles thereof. All legal fees
attributed to completion of any lawsuits brought on be either party
will be the responsibility of the loosing party.
13.3
Assignment
.
Oxis shall not assign its rights or obligations under this
Agreement without the prior written consent of Licensor; provided,
however, that Oxis may, without such consent, assign this Agreement
and its rights and obligations hereunder (a) to any Affiliate, or
(b) in connection with the transfer or sale of all or substantially
all of its business to which this Agreement relates, or in the
event of its merger, consolidation, change in control or similar
transaction. Any permitted assignee shall assume all obligations of
its assignor under this Agreement.
13.4
Waivers
and Amendments
. No change, modification, extension,
termination or waiver of this Agreement, or any of the provisions
herein contained, shall be valid unless made in writing and signed
by duly authorized representatives of the parties
hereto.
13.5
Entire
Agreement
. This Agreement embodies the entire agreement
between the parties and supersedes any prior representations,
understandings and agreements between the parties regarding the
subject matter hereof. There are no representations, understandings
or agreements, oral or written, between the parties regarding the
subject matter hereof that are not fully expressed
herein.
13.6
Severability
.
Any of the provisions of this Agreement which are determined to be
invalid or unenforceable in any jurisdiction shall be ineffective
to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or unenforceable the
remaining provisions hereof and without affecting the validity or
enforceability of any of the terms of this Agreement in any other
jurisdiction.
13.7
Waiver
.
The waiver by either party hereto of any right hereunder or the
failure to perform or of a breach by the other party shall not be
deemed a waiver of any other right hereunder or of any other breach
or failure by said other party whether of a similar nature or
otherwise.
13.8
Counterparts
.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.10
Bankruptcy
.
In the event Company enters into voluntary bankruptcy, involuntary
bankruptcy, or such similar proceeding or order that would
adversely affect its ability to perform its obligations hereunder,
this Agreement shall terminate.
IN
WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.
For LICENSOR:
By: /s/
Daniel A. Vallera
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By: /s/
Jeffrey Lion
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Name:
Daniel A.Vallera, Ph.D.
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Name:
Jeffrey Lion
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For Oxis Biotech Inc.:
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By: /s/ Anthony J. Cataldo
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Name:
Anthony J. Cataldo
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Title:
Chairman & Chief Executive Officer
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SCHEDULE A
LICENSED PATENT RIGHTS
SCHEDULE B
ASSIGNMENT DOCUMENTS
1.
Assignment document
from University of Minnesota to Licensor granting exclusive
ownership to patent family of USSN 13/256,812 to
Licensor.
Schedule
C
Clinical
Services Agreement (To Be Added Upon Execution of the CSA as per
7.1.1)
Exhibit 31.1
CERTIFICATIONS
I, Tony Cataldo, certify that:
1.
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I have
reviewed this quarterly report on Form 10-Q of GT Biopharma,
Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
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3.
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Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
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4.
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The
registrant’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
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b)
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Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
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c)
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Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
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5.
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The
registrant’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and
the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
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b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
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Date:
August 11, 2017
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/s/ Tony
Cataldo
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Tony
Cataldo
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Chief
Executive Officer, Chairman, and Director
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Exhibit 31.2
CERTIFICATIONS
I, Steven Weldon, certify that:
1.
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I have
reviewed this quarterly report on Form 10-Q of GT Biopharma,
Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
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3.
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Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
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4.
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The
registrant’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
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b)
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Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
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c)
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Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
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5.
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The
registrant’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and
the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
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b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
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Date: August
11, 2017
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/s/ Steven
Weldon
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Steven
Weldon
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CFO,
President, Chief Accounting Officer, and Director
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Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form
10-Q of GT Biopharma, Inc. (the “
Company
”),
for the quarterly period ended June 30, 2017, as filed with the
Securities and Exchange Commission on the date hereof (the
“
Report
”),
I, Tony Cataldo, Chief Executive Officer of the Company, pursuant
to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, do hereby certify, to my knowledge
that:
(1) The
Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 15 U.S.C. 78m(a) or
780(d)); and
(2) The
information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Date:
August 11, 2107
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/s/
Tony Cataldo
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Tony
Cataldo
|
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Chief
Executive Officer, Chairman, and Director
|
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A signed original of this written statement required by Section 906
has been provided to GT Biopharma, Inc. and will be retained by GT
Biopharma, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form
10-Q of GT Biopharma, Inc. (the “
Company
”),
for the quarterly period ended June 30, 2017, as filed with the
Securities and Exchange Commission on the date hereof (the
“
Report
”),
I, Steven Weldon, Chief Financial Officer of the Company, pursuant
to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, do hereby certify, to my knowledge
that:
(1) The
Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 15 U.S.C. 78m(a) or
780(d)); and
(2) The
information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
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Date:
August 11, 2017
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/s/ Steven
Weldon
|
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Steven
Weldon
|
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CFO,
President, Chief Accounting Officer, and Director
|
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A signed original of this written statement required by Section 906
has been provided to GT Biopharma, Inc. and will be retained by GT
Biopharma, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.