Exhibit 10.2

 

SUPPLEMENT TO RESEARCH AND SERVICES AGREEMENT

 

This SUPPLEMENT is made and entered into as of this 23rd day of March 2020 (this
“Agreement”), by and among ONCOTELIC, INC., a Delaware corporation
(“Oncotelic”), MATEON THERAPEUTICS, INC., a Delaware corporation (“Mateon,” and
together with Oncotelic, the “Mateon Entities”), on the one hand, and GOLDEN
MOUNTAIN PARTNERS, LLC, a California limited liability company (“GMP”), on the
other hand, and is intended to supplement and, where applicable, amend and
modify that certain Research and Services Agreement dated February 3, 2020 (the
“Original Agreement”) entered into by Oncotelic and GMP. Capitalized terms used
in this Agreement without definition shall have the meanings given those terms
in the Original Agreement.

 

BACKGROUND

 

Pursuant to the terms of the Original Agreement, GMP and Oncotelic agreed that
Oncotelic would pursue certain research activities to develop a new proprietary
antisense compound (as further defined below, the “Product”) directed to the
treatment of coronavirus infectious disease-19 (“COVID-19”) in humans (the
“Research”).

 

Also pursuant to the terms of the Original Agreement, GMP agreed to provide
financial support for the Research.

 

In consideration for the financial support for the Research provided by GMP,
pursuant to the terms of the Original Agreement, GMP is entitled to obtain
certain exclusive rights to the use of the Product in the COVID Field, and an
economic interest in the use of the Product in the COVID Field. The purpose of
this Agreement is to elaborate upon those rights.

 

Without limiting the foregoing, this Agreement also sets forth certain rights
and obligations of the parties to use the Product, elaborating upon GMP and
Oncotelic’s rights and obligations pursuant to the Original Agreement.

 

NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1. Definitions. Capitalized terms used in this Agreement and not otherwise
defined or defined in the Original Agreement shall have the meanings given those
terms in this Section 1.

 

“CA4P” means Oncotelic’s proprietary Combretastatin A-4 phosphate.
Combretastatin A-4 phosphate is a microtubule destabilizing drug, a type of
vascular-targeting agent, a drug designed to damage the vasculature of cancer
tumors causing central necrosis. It is a derivative of combretastatin.
Combretastatin A-4 phosphate is a prodrug.

 

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“China Territory” means the Greater Area of the People’s Republic of China,
including (a) Mainland China, (b) the Hong Kong Special Administrative Region,
(c) the Macau Special Administrative Region, and (d) Taiwan.

 

“Effective Date” means March 23rd, 2020.

 

“COVID Field” means all human uses of the Product for the treatment or diagnosis
of COVID-19 and other diseases or health conditions caused by all coronaviruses
(e.g., SARS-CoV-1 and SARS-CoV-2), whenever identified.

 

“Joint Venture Transaction” means the establishment of a joint venture company
to be owned 50% by Oncotelic and 50% by GMP (or its designee), the principal
activities of which shall be to research, develop, bring to market and
commercialize: (i) the Products in the COVID Field on a global basis, (ii) the
Products in the OT101 Oncology Field in the Licensed Territory, (iii) OXi4503 in
the Licensed Territory; and (iv) CA4P in the Licensed Territory, as further
described in Section 6.

 

“Licensed Territory” means the China Territory, South Korea, Vietnam, Japan,
Singapore, Malaysia, Thailand, the Philippines, and the Middle East Countries.

 

“Middle East Countries” means Bahrain, Cyprus, Egypt, Iran, Iraq, Israel,
Jordan, Kuwait, Lebanon, Northern Cyprus, Oman, State of Palestine, Qatar, Saudi
Arabia, Syria, Turkey, United Arab Emirates and Yemen.

 

“OT-101” means Oncotelic’s proprietary single-stranded phosphorothioate
antisense oligooxynucleotide (18-mer) targeting the human TGF-Beta2 messenger
RNA, referred to by Oncotelic as Trabedersen.

 

“OT-101 Oncology Field” means the diagnosis, treatment or protection from the
following cancers in humans: pancreatic, brain, melanoma, pediatric acute
myeloid leukemia, pediatric melanoma and all other uses.

 

“OXi4503” means Oncotelic’s proprietary Combretastatin A1 diphosphate.
Combretastatin A1 diphosphate is a diphosphate prodrug of the stilbenoid
combretastatin A1. Upon administration, combretastatin A1 diphosphate (CA1P) is
dephosphorylated to the active metabolite combretastatin A1 (CA1), which
promotes rapid microtubule depolymerization; endothelial cell mitotic arrest and
apoptosis, destruction of the tumor vasculature, disruption of tumor blood flow
and tumor cell necrosis.

 

“2020 Patent Application” means patent application (a) 62991174, entitled
“Treatment of zoonoses - Antisenses” filed by Oncotelic on or about March 18th,
2020, (b) 62991178, entitled “Treatment of zoonoses - TGF beta inhibitors” filed
by Oncotelic on or about March 18th, 2020, and (c) 62992825, entitled “Treatment
of zoonoses - TGF beta inhibitors” filed by Oncotelic on or about March 20th,
2020, and all divisional, continuation, continued prosecution applications,
re-issue, and reexamination applications related thereto, each patent that
issues or reissues from any of these patent applications; and all foreign
counterparts to any of the foregoing.

 

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“Product” means (a) OT-101 as well as any other antisense drug candidates active
against COVID-19, the use, manufacture or sale of which would, without a license
or other similar rights thereto, infringe a claim of a patent issued from the
2020 Patent Application, and (b) all other compounds developed directly by
Oncotelic or its affiliates or third parties through the Research.

 

“Testing Results” means the confirmatory lab testing results for experiments
confirming the applicability and potential use of the Product for the treatment
of COVID-19.

 

2. Product License.

 

(i) Effective from and after the Effective Date, the Mateon Entities grant to
GMP an exclusive, sublicensable (through multiple tiers), assignable license
under all patents (including the 2020 Patent Application) and know-how owned and
controlled by the Mateon Entities and their affiliates to use, make, have made,
sell, have sold and import Products in the COVID Field on a global basis. It is
expressly understood by the Mateon Entities that this license may or may not be
royalty bearing, and GMP has the full right, in its sole discretion, to donate
the foregoing license rights to the public domain solely in Mainland China.

 

(ii) The parties acknowledge that the Product and the rights related to the
Product, including the 2020 Patent Application, allocated by the parties
pursuant to this Agreement constitute Deliverables under the Original Agreement.

 

3. Additional Research Funding. Oncotelic shall deliver the Testing Results to
GMP on or before April 3, 2020. Subject to the confirmation by GMP, in its
reasonable determination, of the Testing Results, GMP shall pay to Oncotelic the
following amounts on the following dates:

 

(i) $450,000 US, within three days following the delivery of the Testing Results
and GMP’s confirmation of the Testing Results; and

 

(ii) $450,000 US, on or before May 1, 2020.

 

For clarity, if the Testing Results are not delivered by Oncotelic to GMP on or
before April 3, 2020, or the Testing Results are not confirmed by GMP, then
neither payment set forth in this Section 3 is due or owed to Oncotelic.

 

4. Coordination of Additional Development Activities. From and after the
Effective Date, GMP shall be entitled to use its governmental relations and
local expertise in Mainland China to assist with coordinating the research,
development and commercialization of Products in the COVID Field.

 

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5. Product Revenue. From and after the Effective Date, Oncotelic shall pay to
GMP one-half of all Product Revenue (as defined below), on the terms and subject
to the provisions of this Agreement.

 

(i) “Product Revenue” means Product Net Sales and Licensing Revenue, in each
case relating to the COVID Field.

 

(ii) “Product Net Sales” means the total dollar amount invoiced on sales of
Products by the Mateon Entities and their affiliates and sublicensees less
deductions accrued in accordance with generally accepted accounting principles
any charges where applicable and separately listed for (i) sales taxes or use
taxes (except for value-added taxes capable of reimbursement and income taxes
imposed on the sales of Products in foreign countries), tariffs, duties or
customs (all separately stated on the invoice), (ii) prepaid outbound shipping
and insurance charges, (iii) deductions for allowances given for returned or
defective goods that do not exceed the original invoice amount, (iv) trade
discounts given, not to exceed the original invoice amount, (v) charge back
payments and rebates given for Products to (a) managed healthcare organizations,
(b) federal, state, provincial and/or local governments or other governmental
agencies, and (c) purchasers and reimbursers. Products will be considered sold
when paid for; provided, however, that with respect to Products transferred by
the Mateon Entities to their licensees or affiliates in the circumstances
described in item (x) in the immediately following sentence, any such Products
will be considered sold when they are transferred to any such licensee or
affiliate. For the purpose of calculating Product Net Sales, transfers by the
Mateon Entities to its licensee or affiliate of Products under this Agreement
for (x) end use (but not resale) by the licensee or Affiliate shall be treated
as sales by the Mateon Entities at the average amount invoiced by the Mateon
Entities to third parties during such Net Sales calculation period or (y) resale
by a licensee or an affiliate shall be treated as sales at the average amount
invoiced by such licensee or affiliate to third parties during such Product Net
Sales calculation period, in each case subject in all respects to the deductions
under this Section 5(ii). Notwithstanding the foregoing, a sale of a Product to
a distributor, which is not a licensee or affiliate, in an arm’s-length
transaction, shall be treated as a sale if the Mateon Entities receive no
further compensation for that Product from any subsequent purchaser of that
Product.

 

(iii) “Licensing Revenue” means any and all consideration under or otherwise
payable in connection with a sublicense, covenant not to sue, or grant of other
or similar rights to Products received by the Mateon Entities or their
affiliates, including license issue fees, lump sum payments, milestone payments,
maintenance fees, profit sharing, joint marketing fee, equity or other payments
of any kind whatsoever, irrespective of whether such consideration is received
in the form of cash, offsets, barter, credit, stock, warrants, release from
debt, goods or services, licenses back, a payment for equity that exceeds the
pre-transaction fair market value by more than 125% of the equity, equity
exchanges, or any other form whatsoever, excluding royalties paid to GMP based
on Product Net Sales.

 

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(iv) Within 45 days after the end of each calendar quarter during the Term
(i.e., March 31, June 30, September 30 or December 31), Oncoletic shall pay to
GMP 50% of Product Revenues, in immediately available funds to an account
designated by GMP.

 

(vi) Oncoletic may not receive as License Revenue anything of value in lieu of
cash payments without the express prior written consent of GMP, such consent not
to be unreasonably withheld, conditioned or delayed.

 

(vii) The Mateon Entities shall keep books and records sufficiently to verify
the accuracy and completeness of their and their affiliates’ and licensees’
accounting, including without limitation, inventory, purchase and invoice
records, manufacturing records, sales analysis, general ledgers, financial
statements, and tax returns relating to the Products. The Mateon Entities shall
preserve these books and records for at least six (6) years after they are
created or as required by federal law, both during and after the term of this
Agreement.

 

(viii) The Mateon Entities shall take all steps necessary so that GMP may,
within thirty (30) days of its written request, audit, reasonably review and
copy all of the Mateon Entities’ books and records at a single United States
location to verify the accuracy of the Mateon Entities’ and their affiliates and
licensees’ accounting. The review may be performed by any authorized employees
of GMP as well as by any attorneys or accountants designated by GMP upon
reasonable notice and during regular business hours. If a deficiency with regard
to any payment is determined, Oncoletic shall pay the deficiency along with
applicable interest within thirty (30) days of receiving notice. If a payment
deficiency for a calendar year exceeds five percent (5%) of amounts paid for
that year, then Oncoletic shall pay GMP’s out-of-pocket expenses incurred with
respect to the review.

 

6. Formation and Contribution to Joint Venture. During the Exclusivity Period,
the parties agree to facilitate due diligence by one another and subject to
GMP’s satisfactory due diligence review, the parties intend to negotiate and, if
mutually acceptable, enter into written definitive agreements for the Joint
Venture Transaction. Pursuant to the Joint Venture Transaction: the Mateon
Entities intend to license or assign intellectual property rights, including the
2020 Patent Application and any other intellectual property rights owned or
controlled by the Mateon Entities relating to the Product, OXi4503 and CA4P, to
the joint venture company, as well as providing management services and other
expertise to the joint venture company; GMP intends that it (or its designee, as
the case may be) shall provide funding to the joint venture company to support
its development and commercial activities in the joint venture company’s
relevant territories; in each case, on terms to be agreed by the parties; and
GMP shall be entitled to use its governmental relations and local expertise in
Greater China to assist with coordinating the research, development and
commercialization of (i) the Products in the COVID Field, (ii) the Products in
the OT101 Oncology Field, (iii) OXi4503; and (iv) CA4P, in each case in Greater
China.

 

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7. Exclusive Negotiating Period. Commencing immediately on the date hereof and
continuing until the earliest to occur of (y) 11:59 p.m., Eastern Daylight Time,
on the date that is 90 calendar days after the Effective Date, and (z) the date
of the execution of a written definitive agreement for the Joint Venture
Transaction or any other similar transaction between the parties relating to the
Products (the “Exclusivity Period”), the Mateon Entities shall, and shall
instruct and cause their respective officers, directors, employees, agents,
advisors, investment bankers, attorneys, accountants and other representatives
to, (a) cease any and all discussions or negotiations with any third party
conducted on or before the date hereof with respect to any Competing Transaction
(as defined below), and (b) not, directly or indirectly, (i) solicit, initiate,
seek or knowingly encourage, facilitate or induce the making, submission or
announcement of any Competing Transaction, (ii) disclose to any person or entity
any non-public information relating to the Product in connection with the
making, submission, or announcement of, or the intent to encourage or assist,
any Competing Transaction, (iii) agree to, accept, recommend or endorse (or
publicly propose or announce any intention or desire to agree to, accept,
recommend or endorse) any Competing Transaction, or (iv) authorize, propose or
enter into any confidentiality agreement, term sheet, letter of intent, purchase
agreement or other agreement, arrangement or understanding relating to any
Competing Transaction; provided, that it shall not be a violation of any
provision of this Agreement for the Mateon Entities to communicate with a third
party that it is ceasing, terminating and/or will not enter into discussions
regarding a Competing Transaction because of its obligations under this
Agreement, except that the Mateon Parties shall not provide the name of the
other party without the other party’s consent; provided, further, that,
notwithstanding the foregoing, Oncotelic may publicly disclose any information
that it reasonably determines, after having received the advice of legal
counsel, it is required to disclose pursuant to applicable securities laws or
listing standards. For purpose of this Agreement, the term “Competing
Transaction” means with respect to the Mateon Entities (other than the Joint
Venture Transaction) any transaction or business combination of any nature,
including without limitation a reverse merger transaction; or any other
transaction, which would prevent, preclude, limit, restrict or otherwise
adversely impact the negotiation or consummation of, or materially delay, the
consummation of the Joint Venture Transaction.

 

8. Compliance with Applicable Laws. The parties shall comply with all local,
state, federal, and international laws and regulations that are applicable to
their activities under this Agreement and the development, manufacture, use, and
sale of Products, including:

 

(i) The parties acknowledge that they are subject to and agree to abide by
United States laws and regulations (including the Export Administration Act of
1979 and Arms Export Control Act) controlling the export of technical data,
computer software, laboratory prototypes, biological material, and other
commodities. The transfer of those items may require a license from an agency of
the United States Government or written assurances by the parties that it will
not export items to certain foreign countries or persons without prior approval
by that agency.

 

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(ii) Each party shall obtain all necessary approvals from the United States Food
& Drug Administration, Environmental Protection Agency, Department of
Agriculture and any similar governmental authorities of foreign jurisdictions in
which such party intends to make, use, sell or otherwise exploit Products.

 

9. Assignment. This Agreement may not be transferred or assigned by the Mateon
Entities (including by operation of law, in connection with a merger, share
exchange or other change of control transaction) except with the prior written
consent of GMP. GMP may assign any of its rights, interests or obligations
hereunder, provided however that no such permitted assignment shall reduce or
otherwise affect GMP’s liabilities or obligations hereunder. Any attempted
assignment in contravention of this Section 9 is void and constitutes a material
breach of this Agreement.

 

10. Confirmation of Relationship between Oncoletic and Mateon; Representations
and Warranties. Oncoletic is a wholly owned subsidiary of Mateon. The Mateon
Entities own or control the rights to the Products. The Mateon Entities have the
right to grant all rights and licenses they purport to grant to GMP under this
Agreement. The Mateon Entities have not granted any right or license to any
third party that would conflict or interfere with any of the rights or licenses
granted to GMP hereunder.

 

11. Term and Termination. The term of this Agreement shall commence on the
Effective Date and shall continue until the later of (a) the 50th anniversary of
the Effective Date and (b) the expiration of the last patent subject to the
license set forth in Section 2.1 (the “Term”). The Mateon Entities, on one hand,
or GMP on the other hand, may terminate this Agreement upon the material breach
of this Agreement by the other such party(ies), provided, that the allegedly
breaching party is provided with written notice of the breach and the
opportunity to cure such breach for 30 days following the delivery of such
written notice and the breach persists at the conclusion of this cure period.
GMP may terminate this Agreement upon 30 days prior written notice. Termination
or expiration of this Agreement for any reason shall be without prejudice to any
rights that shall have accrued to the benefit of any party prior to such
termination or expiration and any and all damages arising from any breach
hereunder.

 

12. Entire Agreement; Agreement Controlling. This Agreement and the Original
Agreement constitute the full understanding between the parties with reference
to its subject matter, and no statements or agreements by the parties, whether
oral or in writing, may modify the terms of this Agreement. Neither party may
claim any amendment, modification, or release from any provisions of this
Agreement, unless the mutual agreement is in writing and signed by both parties.
If there is a conflict between this Agreement and the Original Agreement, then
this Agreement shall control.

 

13. Further Assurances. Following the Effective Date, each of the parties shall,
and shall cause their respective affiliates to execute and deliver such
additional documents, instruments, conveyances and assurances and take such
further actions as may be reasonably required to carry out the provisions hereof
and give effect to the transactions contemplated by the Agreement and the
Original Agreement.

 

14. Public Announcements. No party shall issue or make any press release, public
announcement or other public statement with respect to this Agreement or the
transactions contemplated herein without the prior consent of the other parties,
except to the extent required by applicable law or by the applicable rules or
requirements of any national securities exchange, market or automated quotation
system; provided, that the party proposing to issue any press release, public
announcement or other public statement in compliance with any such disclosure
obligations shall consult in good faith with each other party before doing so.

 

15.  General Provisions. Sections 7, 10.2, 10.3, 10.6, 10.7, 10.8, 10.9 and
10.10 of the Original Agreement, are incorporated into this Agreement by
reference, as if fully set forth herein.

 

[signatures on following page]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be entered into,
and delivered by their duly authorized representatives to be effective from and
after the Effective Date.

 

 

ONCOTELIC, INC.,   GOLDEN MOUNTAIN PARTNERS, LLC, a Delaware corporation   a
California limited liability company           By: /s/ Vuong Trieu   By: /s/
Clinton Teng                     Name: Vuong Trieu   Name: Clinton Teng Title:
CEO   Title: Owner’s Representative           MATEON THERAPEUTICS, INC.       a
Delaware corporation                 By: /s/ Vuong Trieu                        
    Name: Vuong Trieu       Title: CEO      

 

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