Research and Development Agreements |
5. | Research and Development Agreements |
Duet (DUET-101 and DUET-301) License Agreements On June 25, 2021, the Company entered into two exclusive, worldwide license agreements with COH relating to Duet’s drug candidates. The Company obtained the rights to negotiate the DUET-101 (CpG-STAT3ASO) Patent Rights License Agreement and the DUET-301 (CpG-STAT3decoy) Patent Rights License Agreement (together, the “Duet License Agreements”) with COH as part of the Duet acquisition in June 2021. The Duet License Agreements shall expire, on a country-by-country basis, on the last date on which there exists a valid claim of the patent rights covering the assets subject to the agreements in such country. Under the terms of the Duet License Agreements, the Company is obligated to pay earned royalties based on a percentage of net sales, as defined in the Duet License Agreements, including net sales generated from sub-licensees. The Company incurred license maintenance fees of $12,500 as required by the Duet License Agreements during each of the three months ended June 30, 2023 and 2022. The Company incurred license maintenance fees of $25,000 as required by the Duet License Agreements during each of the six months ended June 30, 2023 and 2022. On April 19, 2022, the Company entered into an amendment to the DUET-101 Patent Rights License Agreement with COH to secure a non-exclusive royalty bearing right and license to use and make derivative works of certain technical information and know how related to DUET-101. In connection with the amendment, the Company agreed to make a one-time non-refundable license fee payment of $25,000 to COH within five days of the effective date of the amendment, included in Research and development expenses in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2022. License fees related to the Duet License Agreements of $262,307 and $233,076 were included in accounts payable and accrued expenses at June 30, 2023 and December 31, 2022, respectively. In addition, the Company is obligated to make payments in cash upon the achievement of certain clinical development and product approval milestones totaling $6,750,000 for each license, or $13,500,000 in the aggregate. None of the milestones in the Duet License Agreements have been reached as of June 30, 2023 and no related amounts have been recorded in the accompanying condensed consolidated financial statements, as there is no obligation to make any milestone payments. CpG-STAT3siRNA (DUET-201) Agreements In June 2020, the Company entered into an exclusive, worldwide license agreement with City of Hope (“COH”) relating to DUET-201 (the “DUET-201 Exclusive License Agreement”). The Company incurred license maintenance fees in relation to the DUET-201 Exclusive License Agreement of $7,500 during each of the three months ended June 30, 2023 and 2022 and $15,000 for each of the six months ended June 30, 2023 and 2022. Under the terms of the DUET-201 Exclusive License Agreement, the Company is obligated to pay earned royalties based on a percentage of net sales, as defined in the DUET-201 Exclusive License Agreement, including net sales generated from sub-licensees. In addition, the Company is obligated to make payments in cash upon the achievement of certain clinical development and product approval milestones totaling $3,525,000 in the aggregate. None of the milestones in the DUET-201 Exclusive License Agreement have been reached as of June 30, 2023 and no related amounts have been recorded in the accompanying condensed consolidated financial statements, as there is no obligation to make any milestone payments. Pursuant to the terms of the SRA, the Company has committed to fund research and development at COH for two years in accordance with a predetermined funding schedule. In addition to the DUET-201 Exclusive License Agreement, the Company also entered into a Sponsored Research Agreement (the “SRA”) relating to on-going research and development activities in collaboration with COH relating to DUET-201. In September 2022, the SRA was extended until September 2023 with no additional costs to the Company. Total expenses incurred in connection with the SRA were $0 and $48,611 for the three months ended June 30, 2023 and 2022, respectively and $0 and $111,111 for the six months ended June 30, 2023 and 2022, respectively. These expenses are included in “Research and development” expenses in the accompanying condensed consolidated statements of comprehensive loss. Further, the Company incurred costs of $0 during each of the three months ended June 30, 2023 and 2022, and $44,000 and $43,433 during the six months ended June 30, 2023 and 2022, respectively, pursuant to a clinical research support agreement (the “CRSA”) relating to a Phase 1 clinical trial for DUET-201 to be conducted at COH. These expenses are included in “Research and development” expenses in the accompanying condensed consolidated statements of comprehensive loss. On April 7, 2022, the Company entered into a sponsored research agreement (the “Kortylewski SRA”) with COH for research to be conducted by Marcin Kortylewski, Ph.D., a Co-Founder and Senior Advisor of Duet and Professor in the Department of Immuno-Oncology at COH. Pursuant to the Kortylewski SRA, Dr. Kortylewski and his lab are evaluating novel chemical structures and formulations to increase the stability of siRNA-based molecules to enable systemic delivery. The research under the Kortylewski SRA is conducted over a two-year period at a cost of approximately $200,000 per year. The Company incurred $50,722 and $47,119 during the three months ended June 30, 2023 and 2022, respectively, and $104,262 and $47,119 during the six months ended June 30, 2023 and 2022, respectively, related to the Kortylewski SRA, and is included in “Research and development” expenses in the accompanying condensed consolidated statements of comprehensive loss. Agreement Related to Intellectual Property Rights In July 2017, VSI, as “Licensee,” entered into a Patent License Agreement (the “Patent License Agreement”) with the U.S. Department of Health and Human Services, as represented by the National Institute on Alcohol Abuse and Alcoholism (“NIAAA”) and the National Institute on Drug Abuse (“NIDA”) of the National Institutes of Health (“NIH”), (collectively “Licensor”). In the course of conducting biomedical and behavioral research, the Licensor developed inventions that may have commercial applicability. The Company acquired commercialization rights to certain inventions in order to develop processes, methods, or marketable products for public use and benefit. Patent fee reimbursement under the Patent License Agreement was $0 for the three and six months ended June 30, 2023. Patent fee reimbursement under the Patent License Agreement was $5,017 and $10,034 for the three and six months ended June 30, 2022, respectively. These costs are included in “Research and development” expenses in the accompanying condensed consolidated statements of comprehensive loss. Pursuant to the terms of the Patent License Agreement, VSI was required to make minimum annual royalty payments on January 1 of each calendar year, which shall be credited against any earned royalties due for sales made in that year, throughout the term of the Patent License Agreement. For the three months ended June 30, 2023 and 2022, $0 and $6,250 minimum royalty payments, respectively, were recognized in each period in “Research and development” expenses in the accompanying condensed consolidated statements of comprehensive loss. For the six months ended June 30, 2023 and 2022, $0 and $12,500 of this prepaid royalty expense was recognized in each period in “Research and development” expenses in the accompanying condensed consolidated statements of comprehensive loss. The Patent License Agreement also provides for payments from VSI to the Licensor upon the achievement of certain product development and regulatory clearance milestones, as well as royalty payments on net sales upon the commercialization of products developed utilizing the licensed patents (see below). Through June 30, 2023, the Licensor has not achieved any milestones and therefore VSI has not made any milestone payments. VSI is obligated to pay earned royalties based on a percentage of net sales, as defined in the Patent License Agreement, of licensed product throughout the term of the Patent License Agreement. Since April 18, 2017 (inception) through June 30, 2023, there have been no sales of licensed products. In addition, VSI is also obligated to pay the Licensor additional sublicensing royalties on the fair market value of any consideration received for granting each sublicense. Through June 30, 2023, VSI has not entered into any sublicensing agreements and therefore no sublicensing consideration has been paid to Licensor. The Company’s rights under its license with the NIH may overlap with rights which may have been granted to another company. The Company has been in communication with the NIH seeking clarification as to each company’s rights. The Company has also had, from time to time, discussions with such other company to explore possible collaborations. The Company has been unable to enter into any such arrangements. Notwithstanding the Company’s attempts to engage the NIH to clarify these overlapping rights, the NIH has disregarded such requests. By email dated August 15, 2022, the NIH purported to terminate the Company’s rights. The Company rejected the NIH’s purported action and intends to further seek to engage with the NIH in an attempt to protect and clarify its rights. Memorandums of Understanding Effective July 28, 2018, SBI entered into two Memorandums of Understanding (“MOUs”) with Yissum Research Development Company (“Yissum”) of the Hebrew University of Jerusalem Ltd. (“Hebrew University”). Research under the Yissum MOUs was completed in December 2019 and March 2020, respectively, resulting in the license agreements below. Effective March 5, 2019, the Company entered in a license agreement with Yissum with respect to the results of the research relating to the combination of cannabidiol with approved anesthetics as a potential treatment for the management of pain. Under the license agreement, the Company is obligated to pay earned royalties based on a percentage of net sales, as defined in the license agreement, including net sales generated from sub-licensees. In addition, the Company is obligated to make payments upon the achievement of certain clinical development and product approval milestones. From March 5, 2019 through June 30, 2023, there have been no sales of licensed products by the Company nor has the Company entered into any sub-licensing agreements. Further, none of the milestones in the agreement have been reached and therefore as of June 30, 2023, there is no obligation to make any milestone payments. Effective August 8, 2019, the Company entered into a second license agreement with Yissum with respect to the research results relating to the synthesis of novel cannabinoid dual-action compounds and novel chemical derivatives of cannabigerol and tetrahydrocannabivarin. Under this license agreement, the Company is required to pay earned royalties based upon a percentage of net sales at one percentage for regulated products and a lesser percentage for non-regulated products. The Company is obligated to pay development milestone payments tied to regulated products totaling $1,225,000 in the aggregate and $100,000 for non-regulated products in the aggregate. None of the milestones in the agreement have been reached as of June 30, 2023 and no related amounts have been recorded in the accompanying condensed consolidated financial statements, as there is no obligation to make any milestone payments.
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