UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): March
15,
2006
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Neuro-Hitech
Pharmaceuticals, Inc.
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(Exact
Name of Registrant as Specified in its Charter)
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Delaware
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(State
or Other Jurisdiction of
Incorporation)
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333-125699
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20-4121393
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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One
Penn Plaza, Suite 2514, New York, NY
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10019
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(212)
798-8100
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(Registrant’s
Telephone Number, Including Area
Code)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4c))
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Item
1.01. Entry into a Material Definitive Agreement
On
March
15, 2006, Neuro-Hitech Pharmaceuticals, Inc. (the “Company”) entered into a
Development Agreement (the “Agreement”) with Xel Herbaceuticals, Inc. (“XEL”)
for XEL to develop a Huperzine A Transdermal Delivery System (the “Product”).
Under the terms of the Agreement, the Company paid XEL a $250,000 fee upon
the
execution of the Agreement and will pay XEL $92,500 per month during the
development of the Product, which development is estimated to take approximately
16 months. The monthly payment is subject to quarterly adjustment and subject
to
a limit on aggregate development cost overruns of $250,000. XEL
has
agreed to pay any cost overruns in excess of $250,000. The
Company and XEL intend to seek domestic and foreign patent protection for the
Product.
If
the
Company elects to exercise its right to license the Product in the United States
and Canada (“North America”) and to develop the Product on its own, the Company
will pay XEL an initial license fee of $400,000 and up to an aggregate of $2.4
million in additional payments upon the achievement of certain milestones,
including completion of a prototype, initial submission to the FDA, completion
of phases of clinical studies and completion of the FDA submission and FDA
approval. Similarly, if the Company elects to exercise its option to license
the
Product worldwide excluding China, Taiwan, Hong Kong, Macau and Singapore
(“Worldwide”), and develop the Product on its own, the Company will pay XEL an
additional initial license fee of $400,000 and up to an aggregate of $2.4
million in additional payments upon the achievement of comparable milestones.
If
XEL fails to obtain a U.S. or international patent, the corresponding license
fee and milestone payments will be reduced by 50% until such time as XEL obtains
such patent, at which time the unpaid 50% of all such milestone payments
previously not made will be due.
The
Company will also be obligated to pay XEL royalty payments of between 7% and
10%
of net sales, with such royalty payments subject to reduction upon the
expiration of the patent or the launch of a generic product in the applicable
territory. If a patent has not been issued in either the United States or
Canada, the royalty payments will be subject to reduced rates of between 3%
and
5% of net sales. Royalty payments for sales in the Worldwide territory will
be
subject to good faith negotiations between the parties.
If
the
Company exercises its right to license the Product in North America and to
develop the Product with a third party, the Company will pay XEL 50% of any
initial signing fees and milestone fees (excluding any research and development
fees) paid by such third party. Similarly, in the event that the Company decides
to exercise its option to license the Product Worldwide and to develop the
Product with a third party, the Company will pay XEL 50% of any initial signing
fees and milestone fees (excluding any research and development fees) paid
by
such third party. If XEL fails to obtain a U.S. or international patent, the
percentage of the corresponding fees will be reduced to 25%. The Company will
pay XEL 20% of any royalty payments received by the Company from third-party
sublicensees or if the Product is not protected by at least one patent, 10%
of
any royalty received by the Company from sublicensees.
If
the
Company elects not to exercise its right to license the Product and XEL elects
to further develop the Product without the Company, XEL will be obligated to
pay
the Company 30% of any net profits realized up to a maximum of two times the
amount paid by the Company to XEL during development, excluding the initial
$250,000 signing fee. Upon such election, XEL will be entitled to full ownership
of the intellectual property of the Product. If the Company elects to exercise
its rights to license the Product in North America, but not Worldwide, XEL
will
have certain rights to obtain intellectual property protection in any country
outside North America upon payment to the Company for such rights, such fees
to
be negotiated in good faith by the parties.
In
connection with the execution of the Agreement, Dr. Dinesh Patel, Chairman
of
the Board of Directors and co-founder of XEL, has agreed to serve as a formal
scientific advisor to the Company during the development of the Product.
A
copy of
the press release announcing the execution of this Agreement is attached as
an
exhibit under Item 9.01(d) of this report.
Item
9.01. Financial Statements and Exhibits.
| 99.1 |
Press
Release dated March 21, 2006
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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NEURO-HITECH PHARMACEUTICALS, INC. |
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| Date:
March 21, 2006 |
By: |
/s/
Reuben Seltzer |
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Reuben
Seltzer |
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President
and
Chief Executive Officer |