| CONTINGENT LIABILITIES AND COMMITMENTS |
NOTE 8:- CONTINGENT LIABILITIES AND COMMITMENTS
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a. |
Liabilities to pay royalties: |
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According to the patent license agreement that the Company entered into with Leiden University in the Netherlands on November 2, 2009, which is affiliated with the National Institutes of Health (NIH), the Company was granted an exclusive license for the use of the patents of several compounds, including CF602 in certain territories. |
The Company is committed to pay royalties
as follows:
| | 1) | A one-time concession commission of €25 thousand; |
| | 2) | Annual royalties of €10 thousand until the clinical trials commence; |
| | 3) | 2%-3% of net sales (as defined in the agreement) received by the Company; |
| | 4) | Royalties in a total amount of up to €850 thousand based on certain progress milestones in the license stages of the products, which are the subject of the patent under the agreement, as follows: (i) €50 thousand upon initiation of Phase I studies; (ii) €100 thousand upon initiation of Phase II studies; (iii) €200 thousand upon initiation of Phase III studies; and (iv) €500 thousand upon marketing approval by any regulatory authority. |
| | 5) | If the agreement is sublicensed to another company, the Company will provide Leiden University royalties at a rate of 10%. A merger, consolidation or any other change in ownership will not be viewed as an assignment of the agreement as discussed in this paragraph. |
As of December
31 2021, no accrual has been recorded with respect to Leiden University.
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b. |
Commitments and license agreements: |
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1. |
In March 2015, the Company signed a distribution agreement with Cipher Pharmaceuticals (“Cipher”). As part of the distribution agreement, Cipher will distribute Can-Fite’s lead drug candidate, Piclidenoson for the treatment of psoriasis and rheumatoid arthritis in the Canadian market upon receipt of regulatory approvals. |
Under the terms of the agreement, Cipher
made an upfront payment of USD 1,292 (CAD 1,650 thousand) to the Company in March 2015. In addition, the agreement provides that additional
payments of up to CAD 2,000 thousand will be received by the Company upon the achievement of certain milestones plus royalty payments
of 16.5% of net sales of Piclidenoson in Canada.
Under the agreement, the Company shall
be responsible for conducting product development activities including management of the clinical studies required in order to secure
regulatory approvals and shall use commercially reasonable efforts in conducting such activities. In addition, the Company agreed to form
a joint steering committee with Cipher which will oversee the progress of the clinical studies.
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2. |
In October 2016, the Company signed a distribution agreement with Chong Kun Dang Pharmaceuticals Corp. (“CKD”) for future sales in South Korea. As part of the distribution agreement, CKD will distribute Namodenoson for the treatment of liver cancer in the South Korean market upon receipt of regulatory approvals. |
Under the terms of the agreement, CKD
made an upfront payment of USD 500 to the Company in December 2016 and in August 2017, the Company received a second milestone payment
in the amount of USD 500 from CKD, which has licensed the exclusive right to distribute Namodenoson for the treatment of liver cancer
in Korea upon receipt of regulatory approvals.
In addition, the agreement provides that
additional payments of up to USD 2,500 will be received by the Company upon the achievement of certain milestones.
Under the agreement, the Company shall
be responsible for conducting product development activities including management of the clinical studies required in order to secure
regulatory approvals and shall use commercially reasonable efforts in conducting such activities.
On February 25, 2019, the Company’s
Distribution Agreement with CKD was amended to expand the exclusive right to distribute Namodenoson for the treatment of NASH in addition
to liver cancer in South Korea. CKD has agreed to pay the Company up to an additional USD 6,000 in upfront and milestone payments payable
with respect to the NASH indication. The Company will also be entitled to a transfer price for delivering finished product to CKD following
commercial launch. In April 2019, the Company received an upfront payment of USD 1,000.
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3. |
On December 22, 2008, the Company signed an agreement
regarding the provision of a license for Piclodenoson with a South Korean pharmaceutical company, Kwang Dong Pharmaceutical Co. Ltd. (“KD”).
According to the license agreement, the Company granted the KD a license to use, develop and market its Piclodenoson for treating only
rheumatoid arthritis only in the Republic of Korea.
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As of December 31, 2021, the Company estimates
that such contingent payments are remote.
| | 4. | On January 8, 2018, the Company entered into a Distribution and Supply Agreement with Gebro Holding GmBH (“Gebro”), granting Gebro the exclusive right to distribute Piclidenoson in Spain, Switzerland, Liechtenstein and Austria for the treatment of psoriasis and rheumatoid arthritis. |
Under the Distribution and Supply Agreement,
the Company is entitled to €1,500 thousand upon execution of the agreement plus milestone payments upon achieving certain clinical,
launch and sales milestones, as follows: (i) €300 thousand upon initiation of the ACRobat Phase III clinical trial for the treatment
of rheumatoid arthritis and €300 thousand upon the initiation of the COMFORT Phase III clinical trial for the treatment of psoriasis,
(ii) between €750 thousand and €1,600 thousand following first delivery of commercial launch quantities of Piclidenson for either
the treatment of rheumatoid arthritis or psoriasis, and (iii) between €300 thousand and up to €4,025 thousand upon meeting certain
net sales. In addition, following regulatory approval, the Company shall be entitled to future royalties on net sales of Piclidenoson
in the territories and payment for the manufacturing Piclidenoson. On January 25, 2018 the Company received a first payment of approximately
USD 2,200 from Gebro and in August 2018 received approximately USD 350 upon reaching the first milestone.
The Company estimates these services will
spread over a period ending December 2026. Component (iv) was not accounted as part of the research and development services and will
be recognized entirely upon the Company reaching sales stage.
| | 5. | On August 6, 2018, the Company entered into a License, Collaboration and Distribution Agreement with CMS Medical Venture Investment Limited (“CMS Medical”) for the commercialization of Piclidenoson for the treatment of rheumatoid arthritis and psoriasis and Namodenoson for the treatment of advanced liver cancer and NAFLD/NASH in China (including Hong Kong, Macao and Taiwan). Under the License, Collaboration and Distribution Agreement, the Company received USD 2,000 upon execution of the agreement and is entitled to additional milestone payments upon achieving certain regulatory and sales milestones. In addition, following regulatory approval, the Company shall be entitled to future double digit royalties on net sales in the territories and payment for the manufacturing of Piclidenoson and Namodenoson. |
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| 6. | On July 31, 2019, the Company signed a distribution agreement with Kyongbo Pharm Co., Ltd. (“Kyongbo Pharm”), to distribute Piclidenoson, for the treatment of psoriasis in South Korea, upon receipt of regulatory approvals. Under the terms of the distribution agreement, Kyongbo Pharm, in exchange for exclusive distribution rights to sell Piclidenoson in the treatment of psoriasis in South Korea, is required to make a total upfront payment of USD 750 to the Company, with additional payments of up to USD 3,250 upon achievement of certain milestones. The Company will also be entitled to a transfer price for delivering finished product to Kyongbo Pharm upon commercial launch. In August 2019, the Company received the upfront payment of USD 750 from Kyongbo Pharm. |
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| | 7. | On March 16, 2021, the Company announced it signed an exclusive distribution agreement with Switzerland-based Ewopharma for Piclidenoson in the treatment of psoriasis and Namodenoson in the treatment of liver diseases namely, hepatocellular carcinoma (HCC) the most common form of liver cancer and non-alcoholic steatohepatitis (NASH). Under the terms of the distribution agreement, Ewopharma paid Can-Fite non-refundable upfront payment in an amount of $2,250 and is entitled to up to an additional $40,450 payable upon the achievement of regulatory and sales milestones and 17.5% royalties on net sales. In exchange, Ewopharma will have the exclusive right to market and sell Piclidenoson in Central Eastern European (CEE) countries and Namodenoson in CEE countries and Switzerland. Ewopharma has the right to extend the distribution agreement to new indications that Can-Fite may identify for its drug candidates.
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| | 8. | On June 28, 2021, the Company announced it signed a development and commercialization agreement with Vetbiolix, a France-based veterinary biotech company, for the development of Piclidenoson for the treatment of osteoarthritis in companion animals including dogs and cats. According to the agreement, the Company will grant Vetbiolix an exclusive option to purchase its license of Piclidenoson in the veterinary osteoarthritis market for two years from the signature date, during which time Vetbiolix will conduct proof-of-concept studies and cover all associated costs. If the studies yield positive data and Vetbiolix exercises its option to obtain the license from Can-Fite, then Vetbiolix will be obligated to pay Can-Fite a non-refundable upfront payment in an amount of Euro 250 thousand, additional milestones payment equal to 30% upon each upfront payment received from sublicensee and 15%-40% royalties on net sales upon regulatory approval for veterinary use. |
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