Thought this was interesting from the 10K that was just filed on FRI.
STRATEGIC ALLIANCES
To accelerate the early research and development of its products, the Company has pursued a strategy of entering into strategic alliances to fund research and development programs for selected cancer assays. These agreements typically involve up-front and milestone payments in exchange for the right to obtain exclusive distribution rights in selected geographical markets. In order to retain control of its core NMP technology, the Company has not
licensed or sublicensed any of its technology to third-parties. The Company has retained manufacturing rights for its NMP22 Test Kit and all other products in development, except for certain rights that could be granted to certain of its corporate partners if the Company fails to deliver required quantities of product. Under the terms of these funded development arrangements and other distribution arrangements discussed below, the Company's partners purchase finished products or components from Matritech at prices based on Matritech's list price, local reimbursement rates or the partners' net selling price.
Konica. In 1994, the Company entered into a distribution agreement with Konica. The Konica agreement grants exclusive distribution rights in Japan for the NMP22 Test Kit in exchange for $325,000 in licensing fees. Under the terms of its agreement with Konica, Matritech will sell NMP22 Test Kits to Konica for resale in Japan at prices based on Japanese reimbursement rates. Konica is
responsible for obtaining the necessary approvals from the Japanese Ministry of Health and Welfare ("Koseisho") to import and sell the NMP22 Test Kit. Clinical trials must be conducted in Japan and the results submitted to Koseisho prior to obtaining such approvals. Konica submitted clinical trial data to Koseisho in December 1996. Konica has limited manufacturing rights if the Company fails to deliver required quantities of test kits.
Bayer. In June 1995, Matritech signed a joint development and distribution agreement with Bayer and received an initial payment of $150,000. Under the terms of the agreement, Bayer provided funding to Matritech for the identification of cervical cancer-specific NMPs and is currently funding the development of monoclonal antibodies which recognize malignant and pre-malignant or dysplastic cervical cancer cells. These antibodies will be used in clinical laboratories, in conjunction with instruments developed by Bayer, to automate the review and evaluation of cells obtained from cervical smears.
Under the terms of the Company's agreement with Bayer, Bayer has the option, upon payment to Matritech, to acquire exclusive worldwide rights to distribute the cervical cancer assay for automated systems and non-exclusive worldwide rights for a manual assay product. If Bayer exercises its option, it would purchase components from Matritech and would pay Matritech a percentage of Bayer's net selling price. In the year ended December 31, 1996, the Company received $120,000 in milestone payments under this agreement.
Yamanouchi. In 1991, Matritech and Yamanouchi entered into a development and supply agreement for the development of seven serum assays (breast, colorectal, lung, liver, pancreatic, stomach and renal cancers) for exclusive sale by Yamanouchi in Japan and Taiwan. The agreement provides for development payments to the Company by Yamanouchi to be paid upon the accomplishment of certain milestones. Matritech has received $1 million in milestone payments to date. Yamanouchi did not make any payments to the Company in 1996. In May
1996, Yamanouchi's rights with respect to the Company's colorectal cancer test were terminated. The purchase price for any products distributed by Yamanouchi will be based on Yamanouchi's net selling price.
Sangtec. In 1990, Matritech and Sangtec, a Swedish company, entered into a development and supply agreement which provides for the payment by Sangtec to Matritech of up to $700,000 for the development of breast cancer products, of which $60,000 has been paid to Matritech as of December 31, 1996. The development payments are to be made over time, upon the successful achievement of certain technical milestones by Matritech and Sangtec. Sangtec has the exclusive right to market in Europe any breast cancer serum assay developed under the agreement. The purchase price to be paid to the Company for any products distributed by Sangtec will be based on Sangtec's net selling price. Sangtec has limited manufacturing rights if the Company fails to meet Sangtec's product delivery requirements. |
