Related parties

12 Months Ended

Dec. 31, 2023

Related parties

Related parties

5.Related party

License agreement with Dong-A for DA-1241 and DA-1726

In September 2022, we entered into a license agreement with Dong-A pursuant to which NeuroBo received an exclusive global license (except for the territory of the Republic of Korea and certain other jurisdictions) to two proprietary compounds for specified indications (the “2022 License Agreement”) upon meeting certain financing milestones. The 2022 License Agreement covers the rights to DA-1241 for treatment of MASH and DA-1726 for treatment of obesity and MASH. The 2022 License Agreement also provides that we may develop DA-1241 for the treatment of T2DM.

Under the terms of the 2022 License Agreement, we agreed to pay Dong-A an upfront payment to be settled with 2,200 shares of a new series of preferred stock designated as “Series A Convertible Preferred Stock”, par value $0.001 per share (the “Series A Preferred Stock”), upon completion of a financing (see Note 7 – Stockholder’s Equity). The Series A Preferred Stock issued in connection with the 2022 License Agreement was recorded as IPR&D expenses in the amount of $8,210 based on the fair market value of the Series A Preferred Stock. The 2022 License Agreement did not include any processes or activities constituting a “business” acquired since none of the rights underlying the Dong-A License Agreement had alternative future uses or had reached a stage of technological feasibility. 

Also, Dong-A will be eligible to receive (i) regulatory milestone payments of up to $178,000 for DA-1726 and $138,000 for DA-1241, dependent upon the achievement of specific regulatory developments; (ii) commercial-based milestone payments, dependent upon the achievement of specific commercial developments; and (iii) single digit royalties on net sales received by us from the commercial sale of products covering DA-1241 or DA-1726.

The term of the 2022 License Agreement continues on a product-by-product and country-by country basis until the later of (i) the fifth anniversary of the first commercial sale of such product in such country, (ii) the expiration or termination of the last valid patent claim that covers a product in such country and (iii) the loss of regulatory exclusivity for such product in such jurisdiction. Either Dong-A or NeuroBo may terminate the 2022 License Agreement (i) if the other party is in material breach of the agreement and has not cured or started to cure the breach within 60 days of notice of such breach; provided that if the breach cannot be cured within the 60-day period and the breaching party started to remedy the breach, if such breach is not cured within 90 days of receipt of written notice, (ii) if the other party is subject to a bankruptcy or insolvency event (subject to a 30-day cure period in the case of a petition for bankruptcy), or (iii) in the event we failed to complete the public offering as further described in Note 7 -Stockholders’ Equity by December 31, 2022 (or January 31, 2023 under specified circumstances set forth in the 2022 License Agreement).

As of December 31, 2023, there were no potential milestones under the 2022 License Agreement that were yet considered probable; therefore, no liabilities were recorded.

As of December 31, 2023, Dong-A owns approximately 57% of our outstanding common stock.

Shared services agreement with Dong-A

In September 2022, in conjunction with the 2022 License Agreement, we entered into a shared services agreement with Dong-A (the “Shared Services Agreement”), relating to DA-1241 and DA-1726. The Shared Services Agreement provides that Dong-A may provide technical support, preclinical development, and clinical trial support services on terms and conditions acceptable to both parties. In addition, the Shared Services Agreement provides that Dong-A will manufacture all of our clinical requirements of DA-1241 and DA-1726 under the terms provided in the Shared Services Agreement.

Either party may terminate the Shared Services Agreement for the other party’s material breach that is not cured within 30 days of notice. Dong-A may also terminate the Shared Services Agreement in part on a service-by-service or product-by-product basis upon a breach by us which is not cured within 30 days.

We incurred R&D expenses of $2,438 for 2023 under the Shared Services Agreement, which are included in operating expenses in the accompanying consolidated statement of operations and comprehensive loss. As of December 31, 2023, we have a payable to Dong-A of $789 under the Shared Services Agreement, which is included in accrued liabilities in the accompanying consolidated balance sheets. We did not incur any expenses or liabilities under the Shared Services Agreement in 2022.

License agreement with Dong-A for NB-01 (a legacy therapeutic program)

In January 2018, we entered into an exclusive license agreement with Dong-A, (the “2018 License Agreement”) which agreement was amended in April 2018 and July 2019. Under the terms of the 2018 License Agreement, we obtained an exclusive, royalty-bearing, worldwide (except for the Republic of Korea) license to make, use, offer to sell, sell and import products covered by certain Dong-A intellectual property rights in its proprietary compound designated as DA-9801 (NB-01). Our license rights cover any and all applications and markets for the therapeutic, health, nutrition or well-being of humans. We may grant sublicenses to any affiliate or third party. We are responsible for all future patent prosecution costs.