Quarterly report pursuant to Section 13 or 15(d)

ASSET PURCHASE AGREEMENT WITH TRIGEMINA

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ASSET PURCHASE AGREEMENT WITH TRIGEMINA
9 Months Ended
Sep. 30, 2020
Contingent milestone payment obligation  
ASSET PURCHASE AGREEMENT WITH TRIGEMINA

NOTE 6 – ASSET PURCHASE AGREEMENT WITH TRIGEMINA 

 

On June 11, 2020, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Trigemina, Inc. (“Trigemina”) and certain shareholders named therein (the “Executive Shareholders”) pursuant to which Tonix acquired Trigemina assets related to migraine and pain treatment technologies (the “Assets”). In connection with the acquisition of the Assets, Tonix assumed Trigemina’s rights and obligations under that certain Amended and Restated Exclusive License Agreement, dated November 30, 2007, as amended, by and between Trigemina and The Board of Trustees of the Leland Stanford Junior University (“Stanford”) (the “License “Agreement”) pursuant to an Assignment and Assumption Agreement with Stanford (“Assignment and Assumption Agreement”), dated June 11, 2020. As consideration for entering into the Asset Purchase Agreement, Tonix has agreed to pay $824,759 to Trigemina and issued to Trigemina 2,000,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and valued at $0.68 per share, based on the closing stock price on June 11th , and has agreed to pay to Stanford $250,241 pursuant to the terms of the Assignment and Assumption Agreement. The Common Stock is unregistered and subject to a 12 month lock-up and a Shareholder Voting Agreement, dated June 11, 2020 (the “Voting Agreement”), pursuant to which Trigemina and the Executive Shareholders have agreed to vote the Common Stock on any matter put to a vote of the shareholders of the Company in accordance with management’s recommendations. Both the costs associated with the cash payments and share issuance, were recorded to research and development expenses in the statement of operations for the nine months ended September 30, 2020. Because the Trigemina intellectual property was acquired prior to United States Food and Drug Administration approval (“FDA”), the cash and stock consideration totaling $2.4 million,was expensed as research and development costs since there is no alternative future use and the acquired intellectual property does not constitute a business.

 

Pursuant to the terms of the Assignment and Assumption Agreement, Stanford has granted to Tonix an exclusive license, with the right to sublicense, certain patents related to the Assets. Stanford has reserved for itself the right to practice under the patents for academic research and educational purposes. Tonix is obligated to use commercially reasonable efforts to diligently develop, manufacture, and sell products claimed or covered by the patent and will use commercially reasonable efforts to diligently develop markets for such products. The License Agreement specifies developmental milestones and the period of time during which such milestones must be completed, and provides for an annual maintenance fee payable to Stanford.

 

As of September 30, 2020, no milestone payments have been accrued or paid in relation to this agreement.