The company has determined that additional investments of time and resources in these programs are not appropriate given the other opportunities in its product development pipeline.
The terminated programs were evaluating three synthetic endocannabinoid compounds, KAL436, KAL439 and KAL671, in bone fracture healing, and osteogenesis imperfecta and osteoporosis.
In connection with the termination of these programs, Kalytera has terminated its License Agreement with Yissum Research Development Company of the Hebrew University of Jerusalem, Ltd. (“Yissum”), under which Kalytera had licensed rights to KAL436, KAL439 and KAL671.
Kalytera president and CEO Robert Farrell said: “The decision to terminate these programs is part of our overall strategy to focus on the development of cannabinoid therapeutics, rather than synthetic endocannabinoid compounds.
“We will now accelerate and expand our programs evaluating cannabidiol (“CBD”) in prevention and treatment of graft versus host disease (“GVHD”), and our newly announced program evaluating a novel cannabinoid/naproxen conjugate in treatment of acute and chronic pain.
“We would like to thank the researchers from Hebrew University for their pioneering work in the field of cannabinoid science. Our decision to terminate these programs does not reflect a negative assessment of the compounds licensed from Yissum, but is, instead, a change in the Company’s product development strategy.”
As previously announced on March 20, 2018, Kalytera has entered into an exclusive, worldwide license with respect to its novel cannabinoid/naproxen conjugate with Beetlebung Pharma, Ltd. (“Beetlebung”).
As consideration for the exclusive license with Beetlebung, Kalytera will provide a combination of upfront payments (USD $25,000 plus historical patent costs), royalties equal to a single-digit percentage of Net Sales (as defined in the license agreement), sublicensing fees in the event that Kalytera sublicenses its rights under the license, and future contingent milestone payments payable in cash and securities.
Cash milestone payments are due upon recruitment of the first subject in Phase 1a, Phase 2a and pivotal registration clinical trials, and upon receipt of regulatory approvals in the US, the UK, Europe and Japan.
Following receipt of regulatory approval by the FDA, and subject to the approval of the TSX Venture Exchange, Kalytera will issue to Beetlebung 6,500,000 common shares of the Company, and will make an additional cash payment equal to the amount of any positive difference between (i) the value of 5% of Kalytera’s outstanding common shares based on the closing price of such shares on the date on which such FDA regulatory approval is announced and (ii) the value (based on the same closing price) of the Kalytera common shares being issued to Beetlebung.
In connection with the license agreement, Kalytera has also entered into a master services agreement pursuant to which Beetlebung will provide significant research, development, clinical trial research, manufacturing and related support services in connection with the development and commercialization of the licensed technology.
Kalytera may terminate the license agreement together with the master services agreement at any time.
October 2017 Stock Option Grant
As a separate matter, the company would like to clarify the terms of stock option grants made to certain directors, officers and consultants of the company, as previously disclosed as a subsequent event in Kalytera’s financial statements for the interim period ending September 30, 2017 and in its management’s discussion and analysis thereon.
On October 8, 2017, the company granted stock options to purchase a total of 7,717,671 common shares to its officers, directors and consultants. The options have an exercise price of C$0.12 per common share. These options include 539,879 options granted to consultants of the company, which vested immediately upon grant.
The remaining options consist of options to purchase 5,473,442 common shares granted to Robert Farrell, the company’s Chief Executive Officer; options to purchase 1,022,610 common shares granted to Ron Erickson, the Chair of the Board; and options to purchase 681,740 common shares granted to Jeff Paley, an independent member of the Board.
One-third of the options granted to directors and officers will vest on October 8, 2018 with the remaining two-thirds vesting in twenty-four (24) equal monthly installments commencing November 2018.
Source: Company Press Release.