(1) The Company intends to transfer this license to Avenue.

Research and Development Licenses Acquired

Fortress

 

Epidermal Growth Factor Receptors (“EGFR”) Inhibitors

 

In March 2015, the Company entered into an exclusive license agreement with NeuPharma to develop and commercialize novel irreversible, 3rd Generation EGFR inhibitors on a worldwide basis other than certain Asian countries. Under the terms of the agreement, the Company paid NeuPharma an up-front licensing fee of $1.0 million included in research and development-licenses acquired on the Unaudited Condensed Consolidated Statement of Operations. The Company will also make development and sales-based milestone payments and will pay a tiered single digit royalty on net sales.

 

Fortress Companies

 

 

 

In March 2015 Checkpoint entered into a license agreement with Dana-Farber to develop a portfolio of fully human immuno-oncology targeted antibodies. Under the terms of the agreement, Checkpoint paid Dana-Farber an up-front licensing fee of $1.0 million and on May 11, 2015, Checkpoint granted Dana-Farber 500,000 shares both of which have been included in research and development licenses acquired on the Unaudited Condensed Consolidated Statements of Operations. Also under the terms of the agreement, Checkpoint will pay development and sales-based milestone payments and royalties on net sales. The portfolio of antibodies licensed from Dana-Farber includes antibodies targeting Programmed-death Ligand 1 (“PD-L1”), glucocorticoid-induced TNFR-related protein (“GITR”) and carbonic anhydrase 9 (“CAIX”). Checkpoint plans to develop these novel immuno-oncology and checkpoint inhibitor antibodies on their own and in combination with each other, as data suggests that combinations of these targets can work synergistically together. Checkpoint expects clinical trials to start in the second half of 2016.

 

Dr. Wayne Marasco, MD, PhD, a professor in the Department of Cancer Immunology and AIDS at Dana-Farber whose laboratory generated the immune-oncology targeted antibodies, will chair the Scientific Advisory Board of Checkpoint. As payment for these services Checkpoint granted Dr.Marasco 1,500,000 shares of restricted stock will pay Dr. Marasco $0.2 million a year paid quarterly for these services.

 

An independent consultant valued the restricted stock Checkpoint granted to Dr. Marasco utilizing a discounted cash flow model to determine the weighted market value of invested capital, discounted by a lack of marketability of 44.8% and a weighted average cost of capital of 30%, net of debt utilized resulting in a value of $0.065 per share or $0.1 million. Under the terms of the stock grant, the shares vest 25% on the first anniversary of the grant date and monthly thereafter for 48 months.

 

During the three and six months ended June 30, 2015, Checkpoint recorded expense of approximately $9,000 and $12,000, respectively, in research and development related on the Unaudited Condensed Consolidated Statements of Operations to Dr. Marasco’s grant.

 

The 500,000 shares Checkpoint granted to Dana-Farber, vested immediately. The shares were valued by an independent consultant utilizing a discounted cash flow model to determine the weighted market value of invested capital, discounted by a lack of marketability of 44.8% and a weighted average cost of capital of 30%, net of debt utilized resulting in a value of $0.065 per share. During the three months ended June 30, 2015, Checkpoint recorded expense of $32,500 in research and development – licenses acquired on the Unaudited Condensed Consolidated Statements of Operations.

 

Collaboration Agreement with TG Therapeutics

 

In connection with the license agreement with Dana-Farber, Checkpoint entered into a collaboration agreement with TGTX to develop and commercialize the Anti-PD-L1 and Anti-GITR antibody research programs in the field of hematological malignancies. Under the terms of the agreements, Checkpoint retains the right to develop and commercialize these antibodies in the field of solid tumors. Both programs are currently in pre-clinical development. TGTX paid Checkpoint $0.5 million, representing an up-front licensing fee, and will make additional development and sales-based milestone payments as well as pay a tiered single digit royalty on net sales. During the three and six months ended June 30, 2015, the Company recognized $0 and $0.5 million, respectively, in revenue from its collaboration agreement with TGTX in the Unaudited Condensed Consolidated Statements of Operations.

 

Mustang Bio, Inc.

 

License Agreement with the City of Hope

 

In March 2015, Mustang entered into a license agreement with the City of Hope (“COH”) to acquire CAR-T technology. Pursuant to the agreement, in April 2015, Mustang paid the COH an upfront fee of $2.0 million which is included in research and development-licenses acquired in the Unaudited Condensed Consolidated Statements of Operations and granted 1,000,000 shares of Mustang common stock, with additional milestones due to the COH upon the achievement of certain development goals and royalty payments for sales of the product. In addition, Mustang entered into a Sponsored Research Agreement with the COH in which Mustang will fund continued research in the amount of $2.0 million per year, payable in four equal installments, over the next five years.

 

An independent consultant valued the stock grant to the COH utilizing a discounted cash flow model to determine the weighted market value of invested capital, discounted by a lack of marketability of 44.8%, weighted average cost of capital of 30%, and net of debt utilized, resulting in a value of $0.147 per share or $0.1 million. During the six months ended June 30, 2015, $0.1 million of expense was included in research and development-licenses acquired on the Unaudited Condensed Consolidated Statements of Operations.

Coronado SO Company

License Agreement

In February 2015, Coronado SO entered into an exclusive license agreement with a third party for a topical product used in the treatment of Hand-Foot Syndrome, a common painful side effect of chemotherapeutics. Coronado SO paid $0.9 million upfront, included in research and development-licenses acquired on the Unaudited Condensed Consolidated Statements of Operations, issued a stock grant of 150,000 shares of common stock of Coronado SO and will pay an additional $0.5 million nine months from the execution date. Additional milestone payments are due upon the achievement of certain development milestones and royalties will become due on sales of the product. During the six months ended June 30, 2015, $1.4 million was recorded and is included in research and development-licenses acquired on the Unaudited Condensed Consolidated Statements of Operations.

 

An independent consultant valued the stock grant to the third party utilizing a discounted cash flow model to determine the weighted market value of invested capital, discounted by a lack of marketability of 44.8% and a weighted average cost of capital of 30%, and net of debt utilized, resulting in a value of $1.19 per share or $0.2 million, included in research and development-licenses acquired on the Unaudited Condensed Consolidated Statements of Operations.

Avenue Therapeutics, Inc.

 

License Agreement with Revogenex Ireland Ltd

 

In February 2015, the Company purchased an exclusive license to an intravenous (“IV”) formulation of Tramadol for the U.S. market from Revogenex Ireland Ltd (“Revogenex”), a privately held company in Dublin, Ireland. Fortress made an upfront payment of $2.0 million to Revogenex upon execution of the exclusive license included in research and development licenses-acquired on the Unaudited Condensed Consolidated Statements of Operations and on June 17, 2015, paid an additional $1.0 million after receiving all the assets acquired in this agreement. Under the terms of the agreement Revogenex is eligible to receive additional milestone payments upon the achievement of certain development milestones, in addition to royalty payments for sales of the product. Tramadol is a centrally acting synthetic opioid analgesic for moderate to moderately severe pain and is available as immediate release or extended-release tablets in the U.S.

 

The Company intends to transfer the IV Tramadol license and rights to Avenue during the second half of 2015 in order to establish a Fortress Company focused on the acquisition, license, development and commercialization of products principally for use in the acute/intensive care hospital setting.

 

During the three month ended June 30, 2015, Avenue granted 150,000 shares to two consultants in exchange for services provided and 1,000,000 shares to its acting Chief Executive Officer, Lucy Lu, who is also the Chief Financial Officer of Fortress, for services provided. Dr. Lucy Lu’s grant vests 50% in four annual equal tranches of 12.5%, with the remaining 50% vesting upon the achievement of certain performance goals. In connection with these grants for both the three and six months ended June 30, 2015, $23,000 was recorded on the Unaudited Condensed Consolidated Statements of Operations.

 

An independent consultant valued the stock utilizing a discounted cash flow model to determine the weighted market value of invested capital, discounted by a lack of marketability of 44.8%, weighted average cost of capital of 30%, and net of debt utilized, resulting in a value of $0.146 per share of Avenue.

 

Helocyte Biosciences, Inc.

License Agreement with COH

   

On April 2, 2015, Helocyte, entered into an agreement with COH to secure the exclusive license to the worldwide rights, for two T-cell immunotherapeutic vaccines for controlling CMV in allogeneic hematopoietic stem cell transplant (HSCT) and solid organ transplant (SOT) recipients, for an upfront payment of $150,000.. As further consideration for the license, Helocyte is to grant to the COH, upon their acceptance of the terms of the grant, 500,000 shares of Helocyte common stock. Known as Triplex and PepVax, the programs are expected to enter Phase II clinical studies later this year and are supported by grants paid and payable to COH by the National Cancer Institute. In connection with the licensing of Triplex and PepVax, Helocyte further entered into an option agreement with City of Hope (the “Option”) for exclusive worldwide rights to Pentamer, a universal immunotherapeutic vaccine being developed for the prevention of CMV transmission in utero. On April 28, 2015, Helocyte exercised the Option and secured exclusive worldwide rights to the Pentamer vaccine from the COH for an upfront payment of $50,000. If Helocyte successfully develops and commercializes PepVax, Triplex and Pentamer, City of Hope will receive additional milestone and other payments. During the three and six months ended June 30, 2015, Helocyte recorded an expense of $0.2 million in research and development-licenses acquired on the Unaudited Condensed Consolidated Statements of Operations.