Item 1.01. Entry into a Material Definitive Agreement.
River's Edge Amendment to License Agreement
As previously reported, on August 12, 2008, DUSA Pharmaceuticals, Inc. ("DUSA")
entered into a non-exclusive patent license agreement (the "License Agreement")
to its U.S. Patent, No. 6,979,468, covering Nicomide® (the "Licensed Products")
with River's Edge Pharmaceuticals, LLC. Under the License Agreement, River's
Edge agreed to pay DUSA a share of the net revenues as defined in the License
Agreement. The Licensed Products were acquired by DUSA in connection with its
merger with Sirius Laboratories, Inc. in March, 2006.
As of April 21, 2009, DUSA and River's Edge entered into an Amendment to the
License Agreement (the "License Amendment") granting River's Edge an exclusive
license to U.S. Patent, No. 6,979,468, and a license to use the trademark
associated with the products. Under the License Amendment, DUSA is required to
transfer all of its rights, title and interest in and to DUSA's patent, know-how
and trademark relating to the Licensed Products (but not the copyright
registration on the product labeling) to River's Edge upon DUSA's receipt of
$5,000,000. Of the $5,000,000, River's Edge is required to make a minimum
guaranteed payment to DUSA of $2,600,000, in thirteen monthly installments of
$200,000, subject to reduction under certain conditions, and pay additional
consideration of $2,400,000 payable over time based on a share of River's Edge's
net revenues as defined in the License Amendment. The License Amendment has a
term of 30 months, subject to a further extension under certain circumstances to
48 months, and may be terminated early by River's Edge on 30 days' prior written
notice to DUSA. Under the terms of the License Agreement, River's Edge has
assumed all responsibility for the regulatory compliance of the Licensed
Products. If River's Edge terminates the License Amendment prior to the payment
of the $5,000,000, all of the rights and licenses granted by DUSA to River's
Edge under the License Amendment will revert to DUSA.
Third Amendment to Merger Agreement
Also, on April 21, 2009, DUSA Pharmaceuticals, Inc. and the former shareholders
of Sirius Laboratories, Inc., some of whom were acting through their shareholder
representatives, entered into a letter agreement providing for the consent of
the former Sirius shareholders to the Amendment to the License Agreement with
River's Edge mentioned above, a release, and the Third Amendment to the Merger
Agreement, dated as of December 30, 2005, by and among DUSA Pharmaceuticals,
Inc., Sirius Laboratories, Inc. and the shareholders of Sirius. Pursuant to the
Merger Agreement prior to this amendment, DUSA agreed to pay additional
consideration after the closing of the merger to the former shareholders of
Sirius based upon the attainment of pre-determined total cumulative sales
milestones for the products acquired from Sirius over the period ending
50 months from the date of the March 2006 closing of the original Merger
Agreement. Pursuant to the documents entered into on April 21, 2009, DUSA has
agreed to extend the Milestone Termination Date from 50 months from the date of
the closing of the original Merger Agreement until December 31, 2011 and to
include in the definition of Net Sales, in the Merger Agreement, payments which
DUSA may receive from the divestiture of Sirius products. The Third Amendment to
the Merger Agreement also deletes DUSA's obligation to market the Sirius
products according to certain previously required standards and allows DUSA to
manage all business activities relating to the products acquired from Sirius
without further approval from the former Sirius shareholders.
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DUSA has agreed to pay to the former Sirius shareholders, on a pro rata basis,
$100,000 within 10 business days. In addition, in the event that the $1,000,000
milestone payment that would become due to the former Sirius shareholders under
the Merger Agreement if cumulative Net Sales of the Sirius products reach
$35,000,000 is not, in fact, triggered by the new Milestone Termination Date,
then DUSA has agreed to pay $250,000 to the former Sirius shareholders on a pro
rata basis on or before January 6, 2012.
Except for historical information, this report contains certain forward-looking
statements that involve known and unknown risk and uncertainties, which may
cause actual results to differ materially from any future results, performance
or achievements expressed or implied by the statements made. These
forward-looking statements relate to payments from River's Edge, River's Edge's
right to terminate the License Amendment and reversion of the licensed interests
to DUSA, and payments from the divestiture of Sirius products. These
forward-looking statements are further qualified by important factors that could
cause actual results to differ materially from future results, performance or
achievements expressed or implied by those in the forward-looking statements
made in this release. These factors include, without limitation, actions by
health regulatory authorities, River's Edge's success marketing Nicomide®,
reliance on third party manufacturers, the likelihood of third-party interest in
the Sirius products, and other risks and uncertainties identified in DUSA's Form
10-K for the year ended December 31, 2008 and other SEC filings from time to
time.
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