PricewaterhouseCoopers Reviseurs d’Entreprises scrl, organised and existing under the laws of Belgium, with registered office at Woluwe Garden, Woluwedal 18, 1932 Sint-Stevens-Woluwé, Belgium, represented by Patrick Mortroux, has been appointed as our statutory auditor on 5 May 2014 for a term of three years. Patrick Mortroux is a member of the Belgian Institute of Certified Auditors ("Institut des Réviseurs d'Entreprises ") (membership number A01995).
The annual remuneration of the auditor for the performance of its three year mandate for the audit of our financial statements (including the statutory financial statements) amounts to 35,000€ for the year 2014 and 35,000€ for the year 2015 (excluding VAT).
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RELATED PARTY TRANSACTIONS
Since the end of the last financial period for which audited financial information has been published (31 December 2014), we have not entered into any related party transactions.
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MATERIAL CONTRACTS
Medisun Agreement
On 16 June 2014, we entered into an investment agreement, or Medisun Agreement, with Medisun International Limited, or Medisun, pursuant to which Medisun purchased 568,180 of our ordinary shares for an aggregate purchase price of €25.0 million. In connection with entry into the Medisun Agreement, we and Medisun also entered into a subscription and joint venture agreement, or JV Agreement. Pursuant to the JV Agreement, we and Medisun agreed to form Cardio3 Biosciences Asia Holdings Limited, or Cardio3 Asia, to conduct clinical trials of C-Cure in the Peoples Republic of China, Hong Kong, Macau and Taiwan, and other territories mutually agreed upon by us and Medisun, with the goal of obtaining marketing authorization for C-Cure in the applicable territories. We obtained a 40.0% initial ownership interest in Cardio3 Asia in exchange for our entry into a license agreement with Cardio3 Asia, or License Agreement, pursuant to which we granted an exclusive, royalty-free and non-transferable license to Cardio3 Asia for C- Cure and certain know-how for conducting clinical trials in the applicable territories, and Medisun obtained an initial 60.0% ownership interest in Cardio3 Asia for an aggregate payment of €500,000. Pursuant to the JV Agreement, Medisun agreed to provide additional funding as necessary for clinical trials to be conducted by Cardio3 Asia by purchasing additional shares of Cardio3 Asia. In the event that Cardio3 Asia receives marketing authorization in any of the applicable territories, we have agreed to grant to Cardio3 Asia, at Cardio3 Asia’s election, a commercialization license on the terms specified by the parties in the JV Agreement. Either party to the JV Agreement must also offer its shares to the other party before transferring or otherwise disposing of them. Under the JV Agreement, any minority shareholder of Cardio3 Asia must be offered the same pricing for its shares as is being received by a majority shareholder. The JV Agreement can be terminated by the mutual agreement of us and Medisun, by us if the first patient in clinical trials in the applicable territories has not been recruited by 16 June 2015, or the last patient for any of the clinical trials in the applicable territories has not been recruited within two years from the time that the first patient is recruited, and by Medisun if we cease to comply with certain warranties in the JV Agreement and License Agreement, or for reasons related to our failure to secure or maintain certain intellectual property protections. In those cases, the party who terminates is entitled to purchase the shares held by the other party at its fair price, defined in the JV Agreement by reference to their market value. A similar right to purchase the other party’s shares is also provided in a number of cases of default by such other party. Medisun is also entitled under the JV Agreement to subscribe for non-cash consideration to a number of additional shares, depending on the achievement of a number of business milestones, allowing it to obtain in total up to 70% of the share capital of Cardio 3 Biosciences Asia, with the remaining 30% held by us.
Licensing and Collaboration Agreements
In the two years preceding the date of this prospectus we have entered into several material contracts in the context of our core relationships and collaborations with the Mayo Foundation for Medical Education and Research, or the Mayo Clinic, and the Trustees of Dartmouth College, or Dartmouth. Reference is made to section 13.6 of this prospectus for a description of these contracts.
Acquisitions
On 5 January 2015, we (as purchaser) entered into a stock purchase agreement with Celdara Medical, LLC, a limited liability company organized under the laws of Delaware (as seller) for the acquisition of all the issued and outstanding membership interest of OnCyte, LLC, a limited liability company under the laws of Delaware. We acquired OnCyte for an upfront payment of $10 million, of which, $6 million was paid in cash and $4 million was paid in the form of 93,087 of our ordinary shares. Concurrently with closing of the acquisition, Celdara Medical, LLC and OnCyte, LLC entered into an asset purchase agreement effecting the transfer of certain assets and governing the milestone, royalty and opt-out payments related thereto and a research and development service agreement outlining each of the party’s responsibilities with regard to the development of the products. For the successful development of the most advanced product CM-CS1, Celdara could receive up to $50 million in development and regulatory milestones until market approval. Celdara will be eligible to additional payments on the other products upon achievement of development and regulatory milestones totalling up to $21 million per product. In addition, Celdara will receive up to $80 million in sales milestones when net sales will exceed $1 billion and royalties ranging from 5 to 8%.
On 5 November 2014, we entered into a share purchase agreement with Mr Didier de Canniere and Mr Serge Elkiner for the acquisition of a 100% interest in CorQuest Medical, Inc. (‘CorQuest’), a US private company based in Miami (Florida), through a single cash payment of 1.5MEUR. With this acquisition, the Group intends to strengthen its Medical Device division. The CorQuest technology platform is fully complementary with Celyad C-Cathez® and C-Cure® programs. The acquisition of CorQuest and the development of these technologies will not significantly affect the Company’s burn rate over the two coming years. However, the acquisition of an extra medical device with a potential
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to market by 2016, as well as other therapeutic applications, will enable the Company to create multiple short term value creation milestones for its shareholders.
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