Significant Agreements

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Significant Agreements

5. Significant Agreements

Feasibility and Development Agreement

On September 5, 2017, the Company entered into a Feasibility and Development Agreement to develop its drug candidate, PUR0200, for chronic obstructive pulmonary disease (COPD) for the U.S. market with Vectura Limited (“Vectura”). During the term of the agreement, Vectura and/or its partners were responsible for all future development costs to advance the product for the U.S. market, while the Company provided the data package for PUR0200 and assisted with the transfer of development and manufacturing activities to Vectura. On December 21, 2018, the Company and Vectura mutually agreed to terminate the Feasibility and Development Agreement and cease further joint development of PUR0200. The Company did not incur any termination fees or penalties in connection with the termination of the agreement. As of December 31, 2018, Pulmatrix owns the rights to PUR0200 across all geographies.

License, Development and Commercialization Agreement

On June 9, 2017, the Company entered into a License Agreement with RespiVert, a wholly owned subsidiary of Janssen Biotech, Inc., pursuant to which RespiVert granted the Company an exclusive, royalty-bearing license to its Licensed IP, to develop and commercialize products worldwide that incorporate the Licensed IP. The development, application, design and marketing of the Licensed IP for PUR1800 and PUR5700 and any licensed products will be managed exclusively by the Company.

Under the terms of the License Agreement, the Company paid RespiVert an up-front, non-refundable license fee of $1,000,000 in partial consideration for the rights granted by RespiVert to the Company and will pay RespiVert designated amounts when any licensed product achieves certain developmental milestones. Following the commencement of commercial sales of the licensed products, the Company will pay RespiVert designated amounts when certain milestone events occur. The development milestones and commercial milestones range from $1,000,000 to $80,000,000 depending upon the significance of the particular milestone. The Company is also required to pay RespiVert royalties on all sales of licensed products, with such royalties ranging from 6%—10% of sales. As of December 31, 2018, PUR1800 and PUR5700 remain in pharmaceutical development.

The License Agreement terminates upon the expiration of the Company’s obligation to pay royalties for all licensed products, unless earlier terminated. In addition, the License Agreement may be terminated (i) by the Company for any reason upon 120 days’ advance notice to RespiVert; (ii) by RespiVert upon receipt of notice from the Company of either voluntary or involuntary insolvency proceedings of the Company; and (iii) by either party for a material breach which remains uncured following the applicable cure period.

The Company recorded $1,000,000 in research and development expense for the upfront license fee during 2017. The next development milestone payment would be $1,000,000 and result from first dosing of a patient in a Phase 2b Clinical Trial for a licensed product. The payment will be made within 10 days of the first dosing of a patient in a Phase 2b Clinical Trial. No milestone payments were made during 2018.