Licenses Acquired |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Licenses Acquired [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Licenses Acquired |
4. Licenses Acquired
In accordance with ASC 730-10-25-1, Research and Development, costs incurred in obtaining technology licenses are charged to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future use. The assets purchased by the Company, Mustang, Checkpoint, Coronado SO, Helocyte and Escala require substantial completion of research and development, regulatory and marketing approval efforts in order to reach technological feasibility. As such, for the nine months ended September 30, 2015, the purchase price of licenses, totaling approximately $10.9 million, was classified as research and development-licenses acquired in the Company’s condensed consolidated statements of operations. For the three months and nine months ended September 30, 2015, the Company’s research and development-licenses are comprised of the following:
(1) Fortress intends to transfer IV Tramadol to Avenue. Research and Development Licenses Acquired- Fortress Companies
Checkpoint Therapeutics, Inc. License Agreement with Dana-Farber Cancer Institute 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 of its common stock, all of which has been included in research and development - licenses acquired on the unaudited condensed consolidated statements of operations. Under the terms of the license agreement, Checkpoint also will pay development and sales-based milestone payments and royalties on net sales. The portfolio of antibodies licensed from Dana-Farber includes antibodies targeting PD-L1, GITR and 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. Effective March 2015, the Company assigned all of its rights under its agreement with NeuPharma to develop and commercialize novel irreversible, third generation EGFR inhibitors on a worldwide basis other than certain Asian countries, to Checkpoint in exchange for debt (see Note 8). Under the terms of the agreement, Fortress paid NeuPharma an upfront licensing fee of $1.0 million, which is included in research and development-licenses acquired on the condensed consolidated statements of operations. Checkpoint will also make development and sales-based milestone payments and will pay a tiered single digit royalty on net sales.
Dr. Marasco, a professor in the Department of Cancer Immunology and AIDS at Dana-Farber whose laboratory generated the immune-oncology targeted antibodies, will chair Checkpoint’s Scientific Advisory Board. As payment for these services, in March 2015, Checkpoint granted Dr. Marasco 1,500,000 shares of Checkpoint restricted stock and will pay Dr. Marasco $0.2 million a year, paid quarterly. The Company valued the restricted stock Checkpoint granted to Dr. Marasco as of September 30, 2015 utilizing a market approach, based upon a third party financing (see Note 8), resulting in a value of $4.39 per share. The share price was valued utilizing a volatility of 83%, a risk free rate of return of 1.54% and a term of five years. 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 nine months ended September 30, 2015, Checkpoint recorded expense of approximately $2.7 million in research and development on the unaudited condensed consolidated statements of operations in connection with Dr. Marasco’s grant. In connection with its license agreement with Dana-Farber, Checkpoint granted Dana-Farber 500,000 fully vested shares of its common stock. The share price was valued by the Company 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 $0.065 per share for which Checkpoint recorded expense of $32,500. Additionally, pursuant to the license agreement on September 30, 2015, Checkpoint granted to Dana-Farber an additional 136,803 shares of Checkpoint common stock resulting in a charge of $0.6 million. During the three and nine months ended September 30, 2015 and in connection with these grants, Checkpoint recorded expense of $0.6 million in research and development - licenses acquired on the unaudited condensed consolidated statements of operations. Collaboration Agreements with TG Therapeutics, Inc.
In connection with its 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 collaboration agreement, 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 nine months ended September 30, 2015, the Company recognized nil and $0.5 million, respectively, in revenue from its collaboration agreement with TGTX on the unaudited condensed consolidated statements of operations.
In connection with its license with NeuPharma, Checkpoint entered into an option with TGTX for $25,000, included in revenue, for a global collaboration in connection with the future development of the certain compounds licensed. The option expires on December 17, 2015. Mustang Bio, Inc. License Agreement with the City of Hope In March 2015, Mustang entered into a license agreement with the 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 on the unaudited condensed consolidated statements of operations, and granted 1,000,000 shares of Mustang common stock to the COH, with additional milestones payments 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. The Company 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 on March 31, 2015. During the three and nine months ended September 30, 2015, nil and $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. The Company 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 on March 31, 2015. During the three and nine months ended September 30, 2015, nil and $1.6 million of expense was 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 IV Tramadol for the U.S. market from 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, which has been included in research and development licenses-acquired on the unaudited condensed consolidated statements of operations. In addition, on June 17, 2015, the Company paid an additional $1.0 million to Revogenex after receiving all the assets specified in the 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 United States. The Company intends to transfer the IV Tramadol license and rights to Avenue during the fourth quarter 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 second quarter of 2015, Avenue granted 150,000 shares of its common stock to two consultants in exchange for services provided and 1 million shares of its common stock to its acting Chief Executive Officer, Dr. Lucy Lu, who is also the Chief Financial Officer of Fortress, for services provided. Dr. 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 the three and nine months ended September 30, 2015, we recorded $14,700 and $37,600 as general and administrative expenses on the unaudited condensed consolidated statements of operations. The Company 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 on May 31, 2015. Helocyte, Inc. License Agreement with the City of Hope On April 2, 2015, Helocyte entered into an agreement with the COH to secure the exclusive license to the worldwide rights for two T-cell immunotherapeutic vaccines for controlling CMV in HSCT and 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 the COH by the National Cancer Institute. In connection with the licensing of Triplex and PepVax, Helocyte further entered into 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, the COH will receive additional milestone and other payments. During the three and nine months ended September 30, 2015, Helocyte recorded an expense of $0.2 million in research and development-licenses acquired on the unaudited condensed consolidated statements of operations. Escala Therapeutics, Inc. On July 16, 2015, Escala acquired from NZP a license from the NIH and CRADAs for the development of oral ManNAc, a key compound in the sialic biosynthetic pathway, for the treatment of hyposialylation disorders, including GNE myopathy and various forms of nephropathy. As part of this agreement, Escala provided NZP and NIH an upfront payment of approximately $1.3 million comprised of an upfront milestone payment of $0.7 million to NZP and reimbursement of $0.6 million of development costs for Phase II Myopathy and Phase I Nephropathy Clinical Trial being conducted at the NIH. Additional development and sales-based milestone payments are payable upon achievement. During the three and nine months ended September 30, 2015, Escala recorded an expense of $1.3 million in research and development-licenses acquired on the unaudited condensed consolidated statements of operations. |
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