RespireRx Pharmaceuticals (OTC:RSPI) Inc revealed that the company and the Board of Trustees of University of Illinois (UIL), have agreed to a second amendment to their Exclusive License Agreement.
In a statement, RespireRx interim CEO Arnold Lippa said: “As we have previously announced, the company has formed ResolutionRx, an unlisted public Australian company, for the purpose of developing pharmaceutical cannabinoids, with an initial focus on our proprietary formulated dronabinol.”
Dronabinol, is a synthetic form of ∆9-tetrahydrocannabinol (Δ9-THC) that acts upon the nervous system’s endogenous cannabinoid receptors.
“It is our intention to transfer all of our cannabinoid assets, including the License Agreement and certain liabilities, into ResolutionRx. The terms of this Second Amendment have relieved RespireRx and ultimately ResolutionRx of some of the short-term financial liabilities and allows it to focus on drug development,” added Lippa.
The Glen Rock, New Jersey-based company focused on the development of medicines for the treatment of psychiatric and neurological disorders, said the License Agreement from June 27, 2014, was first amended on August 2, 2017. The Second Amendment is effective from December 15, 2022, and was signed by RespireRx and UIL on January 3, 2023, and January 18, 2023, respectively.
Reducing financial obligations
According to the firm, the parties struck the Second Amendment to wipe out accrued financial obligations to UIL and reduce future obligations. Annual $100,000 payments by the company to UIL are eliminated and the unpaid amount of $200,000 for calendar years 2021 and 2022 are no longer due and payable, noted RespireRx.
The $75,000 payment that was due after the dosing of the first patient in a Phase II study anywhere in the world is now reduced to $10,000, it added.
In exchange for these and other changes, RespireRx said UIL has been given an extension in the term of the License and a deferred compensation obligation, including the 4% royalty on net sales due to UIL has been extended for up to 8 years after the original patent rights expire by including a royalty on the net sales protected by a patent application submitted by the company describing a new formulation of dronabinol.
Guaranteed minimum annual payments of $350,000 begin the first year with a market approval from the US Food and Drug Administration (FDA), or a foreign equivalent and increase to $400,000 beginning the first year of a commercial sale of a product, said the company.
Some, or all these annual minimum payments may be satisfied by royalty payments, added RespireRx. Three annual minimum payments associated with the application for product approval, the actual approval, and first commercial sale that had totaled $600,000 are now $750,000.
Moreover, the $350,000 milestone payment that would have been due on the dosing of the first patient in a Phase III study is now two payments totaling $500,000, and $150,000, due on the dosing of a first patient in a Phase III study anywhere in the world and $350,000 due upon the earlier of enrolling 80% of the patients in a Phase III study, or one year after the initiation of the Phase III study, or the termination of the Phase III study.
Finally, a $500,000 payment is due within five days of the filing of a New Drug Application (NDA), or foreign equivalent and $1 million is due within 12 months of first commercial sale of a product, said the company.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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