Antibe Therapeutics Inc(Pre-Merger) ATBPF

IP Rights and how it relates to Holdings vs Therapeutics

[CalgaryATE]

Was going to reply to a thread, but figured I'd just post the info as a new post.

For those curious about the Intellectual Patent rights and relationships between Antibe Holdings and Antibe Therapeutics:

Go to Sedar for Antibe and scroll down to the very bottom, under Mar. 11, 2013, the third file from the bottom called "Other Material Contract(s)".

It details how Holdings and Therapeutics are related and the contract between them in regards to such things as patents, licences, royalties and what not.

Section 3.2.1 on page 12:  If Therapeutics actually takes the drugs to market and sells them (extremely unlikely) we would have to pay royalties to Holdings of 4% of net sales.

Section 3.3.2 on page 13:  If Therapeutics licenses out the drugs to Big Pharma (say we get a 12% royalty from Pfizer), then Therapeuics keeps 85% of that royalty and we have to give 15% of it to Holdings.

Schedule A on the last 2 pages lists the two types of drug families that Holdings applied patents for.  

1.  Hydrogen Sulfide Derivatives of Non-Steroidal Anti-inflammatory Drugs

This invention comprises:  Derivatives of non-steroidal anti-inflammatory drugs (NSAIDs) having improved anti-infmmatory properties.  NSAIDs are derivatized with a hydrogen sulfide (H2S) releasing moeity to produce novel anti inflammatory compounds.

2.  Hydroxybenzamide Derivatives of Drugs

This invention comprises:  Derivatives of drugs comprising the H2S-releasing moiety 4-hydroxythiobenzamide that is either covalently linked to the drug or forms a salt with the drug

So... Holdings basically patented the Carrier combined with NSAIDs (or other drugs).  Holdings own the patents to all of these, but Therapeutics can still make money off of these (keeps 85% of royalties).

If Antibe negotiates with Big Pharma and Big Pharma wants to pay royalties to Therapeutics (which Dan had pegged in the last biopub as more likely (75% vs 25% of buyout of otenaproxesul or the entire company), then nothing needs to be done.  No dilution, no buying the entire IP rights from Holdings.  Big Pharma just pays Therapeutics a royalty of say 13%, we just keep 85% of that (11.05%) and Therapeutics forwards on 15% of the royalty (1.95%) to Holdings.  

They don't have to combine, merge, unify the IP rights, or have to dilute to pay for the entire IP rights (4% of net sales or 15% of royalties).

I believe where unifying the IP comes into play is if Big Pharma wants to buy Antibe Therapeutics in its entirety or buy the entire rights to otenaproxesul (that haven't already been spoken for).  Pfizer or Bayer or whoever, is not going to want to pay for all the marketing, commercials, distribution, sales force, etc. only to have to give 4% of net sales to Antibe Holdings.  In that case unifying the IP before a Big Pharma offer would be required.

Tbh, I'm not even sure if dilution to pay for that has to happen right now either.  Lawyers & accountants for Holdings and lawyers & accountants for Therapeutics can figure out the chance of success, DCF models, etc. and can negotiate a current value for the 4% net sales.  If they come to a number say its 40 million dollars.  Sure Therapeutics can dilute to raise 40 million dollars to buy the entire patent rights, but they could also do something like pay 1 million to Holdings and have the rights to buy the rest of the patent rights for 39 million from Holdings.  Then if Big Pharma wants to buy the whole kit and kaboodle for a certain amount they can (and Therapeutics would then just exercise their option to buy up the rest of the patent rights).  I'm no corporate lawyer, but there's probably lots of ways to secure the rights without having to dilute at the current share price.

[MrMugsy]

Thanks CalgaryATE ... well said. I agree with your logic - there is no rush and the company shouldn't rush it. They just need a plan that would work ... if Big Pharma is interested. It should be telling when in fact they decide to combine the businesses. : )

[Pragmatist]

Those were my thoughts too, Calgary.  Merging is essential only if there is a sale, not necessarily licensing.  Licensing is adequately provided for  under the original AHI-Antibe agreement.   I would argue that there is additional existing IP in the form of propriatary data developed by Antibe during its many trials, lab tests, etc.  There will be additional IP coming

[RalphRalph]

Great post - I think this part of the licensing agreement is also relevant (p. 13/33):    Milestone Payments 4.2.1 Licensee shall pay or shall cause its Affiliates or Sub-Licensees, as the case may be, to pay Licensor the following milestones payment for each Product:    4.2.1.1 One hundred fifty thousand dollars ($150,000) upon enrolment of the first patient in the

[LasVegasNetwork]

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